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21.07.21

THG Ingenuity
Beauty Industry Outlook
Beauty Trends Report
21.07.21

By 2023, ecommerce is
projected to account for
48% of beauty sales.

In this report we highlight

the key industry trends, top
priorities and challenges faced
by major brands. We also
explore key insights surrounding
consumer beauty preferences
and new customer habits.

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How COVID-19 has affected

the beauty industry.

Online beauty brands sales grew 20%-30% yearly. Many brands like L’Oréal are investing heavily in
Beauty-product brands and retailers are showing smart beauty devices. They aim to provide more
ecommerce sales twice as high as their pre-COVID personalised and unique experiences to their customers
levels. through features like speakers, AI and augmented
reality. The market for smart beauty devices is not yet
The pace of innovation accelerates. Beauty brands
fully developed, but there are already a wide range of
are partnering with other companies to diversify their
technology applications used among the few providers
product lines and achieve product innovation. There is
such as L’Oréal and Shiseido. Typically, these devices are
also potential for closer collaboration—among brands
connected to smart speakers, such as Amazon Alexa,
and retailers – through data sharing and inventory
but AI and augmented reality are also becoming more
pooling.
frequently integrated.
Retailers and brands are turning to promotions to
J-beauty (Japanese beauty) will change the market
attract new consumers. Many high-end brands are
and drive new technologies and cosmetic innovations.
offering online discounts of up to 40%, competing with
J-beauty is extremely focused on the use of technology
specialty beauty-product and department stores to
within the beauty market. There have already been
capture promotion-oriented consumers. Promotions
cosmetics innovations such as oil cleansing, stem-
also help to clear out inventory.
cell-based beauty, cosmetics devices and more. For
The digital sphere grows. As consumers worldwide are instance, Shiseido is one of the biggest beauty investors
increasing their online engagement and spending, DTC in cosmetics and beauty innovations using artificial
ecommerce is becoming more and more popular for intelligence. J-beauty brands have also established
brands. skin food products with natural ingredients such as
seaweed, green tea and rice. Unlike western skincare,
Also, consumer concerns about in-person consultations J-beauty is more about anticipating skin-care problems.
and safety led companies to implement the use of AI for On the other hand, in western countries, consumers
testing, discovery, and customization. mainly search for ingredients like niacinamide, witch
The return to in-store shopping in China is slow and hazel and benzoyl peroxide when purchasing skin care
differentiated. In store traffic remains down 43% products. Enthusiasm toward beauty tech also exists in
compared with pre-COVID levels. Mall-based stores western countries and is highest in the US with 36% of
struggle to recover. consumers being interested in skin-scanning devices,
33% in smart mirrors and 28% in personalised skincare
Mergers and acquisitions continue to rise. Many recommendations.
companies will need to find new sources of capital to
recover from the COVID-19 economic crisis.

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Major beauty ecommerce

trends for 2021

Inclusivity is crucial. Consumers progressively seek for Having an agile, consistent, diverse, and outstanding
value-driven products and brands they can relate to. presence online. As consumers research for products
They mainly look for brands that share their values and online across a variety of different channels, brands
ideas which help to create a deeper connection, build should invest in a broad online presence that extends
trust, and boost customer loyalty. This also enables beyond marketplaces, where price is the biggest driver
brands to achieve customers loyalty, typically at a pace of sales.
double the conventional methods.
Owning the customer relationship. Once brands
have successfully enabled DTC sales, they should give
customers the opportunity to join loyalty programs
and provide tangible benefits like periodic discounts
Influencers as an investment. Influencer marketing has or access to exclusive content or events, so they can
once more given the ecommerce industry a notable
economic boost. With influencers -- and now micro 23% of consumers worldwide
influencers --, beauty brands can get closer to their
customers in a way that traditional advertising cannot. are willing to pay 20% more for
When consumers see and hear from real people testing
the products in their homes, they tend to trust their
customised beauty products.
results and feedback more.
learn more about their customers and move toward a
VR, AR, and tech partnerships. Alibaba partnered personalisation strategy.
with Perfect Corp, the world’s leading AR company,
and integrated their YouCam MakeUp AR virtual try-on Product distribution is a big opportunity. Today, brands
technology into Alibaba online shopping experiences. need to have a strategy to educate customers about
Thanks to this, Alibaba revealed an increase in their how to buy authorised products and to protect them
conversion rate by 4x. Since then, new technology in from counterfeit goods sold on third-party retail sites
the beauty industry has surged, immersing AI, AR, and and marketplaces. Otherwise, brands risk damaging
VR into household brands like MAC, NARS, and L’Oréal. their brand equity and reputation when customers buy
These disruptive technologies are changing the way inferior or fake product.
consumers discover, experience, and connect with
Hyper-personalised skincare is growing in popularity.
health and beauty brands.
Consumers increasingly show a desire for personalization
Leveraging real-time data for new product and connection with brands. As a result, brands are
development. Across the beauty industry, more brands leveraging AI technology and data-driven conversations
are embracing the use of real-time data collection to create a new form of hyper-personalisation in the
and analysis and watching it exceed their development beauty ecommerce industry.
processes. Brands should activate their customers, their
A successful example of this is Neutrogena which
followers and their fans, and really bring them into their
introduced MaskiD – a 3D-printed face mask tailored to
brand, empowering consumers to build the brand via
the specific needs of a customer’s skin, based on data
product development, packaging, materials used and
collected from a selfie.
marketing.
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Key Facts and Figures for

Beauty Brands in 2021

The major purchasing factors for global consumers in the The majority (80%) of skincare buyers approved of
beauty sector are: price (77%), quality (75%), and brand brands providing funny/light-hearted content during the
(59%). pandemic.

Of all pre-existing ecommerce purchasers, 49% say they Daily, 63% of skincare buyers visit YouTube, followed by
plan to shop online more frequently after the outbreak. Facebook (56%) and Instagram (49%). Their top reasons
A third of those who weren’t purchasing online regularly for using social media are to stay up to date with news
prior to the outbreak plan to spend more time shopping or current events (43%), with 36% using it for brand
online after the onset of the COVID-19 pandemic. research.

APAC is home to a large number of skincare buyers: Globally, skincare buyers want brands to take actions to
research shows that more than half of all skincare buyers protect the world and the environment, with 51% saying
(57%) reside in the APAC region. In contrast, 17% are they want brands to be eco-friendly, closely followed
based in Europe, 13% in LATAM, 9% in North America by 48% who want brands to operate in a socially
and 5% in MENA. responsible way.

Skincare buyers are highly engaged with brands –- over Nearly two-thirds of consumers worldwide would pay
half have visited a brand’s website and one in three have more for sustainable and eco-friendly products.
watched a video made by a brand in the past month.

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Insights into
Consumers Preferences

What are the key priorities for beauty

and cosmetics brands in 2021?
Natural beauty products are increasing in popularity. A focus on DTC. Brands can actively encourage
Growing concerns regarding the side effects of consumers to shop directly from them through features
chemicals on the skin such as skin irritation, allergies, like payment instalment plans, access to exclusive
and skin dullness, have been one of the key factors content and early shopping for new products, and even
fuelling the market growth. The global market value for consultations for the brand’s best customers — whilst
natural cosmetics and personal care is expected to also maintaining a consideration on price matching.
reach $54.5 billion in 2027.
Product and brand innovation. Brands should use
Uk and US consumers report the highest consumption real time data from customer touchpoints to improve
of beauty products compared to other countries. their products and experiences. As customers’ needs
and expectations constantly change, the lack of an
In the US and Germany, 16% own up to 100 items. In the innovation culture, access to data, or inventors are all
UK, the share rises to 21%. significant short- and long-term growth impediments
that may lead to customers unsatisfaction.
Beauty products are now part of consumers’ daily
routines, and this represents a huge opportunity for Offering replenishments and subscription options.
brands. Researches show that the beauty consumers Beauty brands can use replenishment to gain insights
could not live without are moisturiser and mascara. into their customers’ buying behaviours. Additionally,
they can learn even more about their customers through
Preferences for premium cosmetics and body care is
innovative website features like quizzes and beauty tools.
growing. Luxury and prestige cosmetics and personal
They can then use that data to put together personally
care segments have the highest growth potential.
curated subscription boxes.
Nowadays consumers are highly interested in quality,
sustainability, and good ingredients. For instance, China, Rigorously protect intellectual property. Supply chains
UK, Switzerland, US, Austria, and Italy have the highest must now be both flexible and resilient, and brands must
share of people buying luxury products (above 22%). enforce their governance more tightly around which
seller gets what product, and at what price, globally.
DIY beauty and pampering has grown significantly.
They must ensure products are authentic, authorised for
Do-it-yourself (DIY) products, including nail kits, body
sale, and managed under every condition and stipulation
waxing, boxed hair dye, and facial kits became more
that the brand demands.
popular with the COVID-19 pandemic. Shaving and hair
removal products saw an annual order volume increase Support e-control attempts. Brands should establish
of 97% and nail supplies jumped by 175%. YouTube explicit reseller parameters and inform consumers about
videos and tutorials related to at-home pampering saw a where authentic and authorised products are available.
substantial increase in viewership. A fifth of US consumers worry about products on
marketplaces, so e-control remains fundamental.
83% of Generation Z worldwide
For instance, MAC has a counterfeit warning page,
purchases organic and natural and OPI has explicit callouts about how it deals with
skincare products. unauthorised products.

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Four key takeaways for

continued success in 2021

1
Redefine what value means, beyond just
2
Develop strategies that drive
cost, through customers experience and commerce to own-brand sites that
satisfaction as well as convenience with support authenticity, as well as
an emphasis on quality. challenge big marketplaces that have
yet to provide clear-supply chain
transparency assurances.

3
Invest in more diverse touchpoints
4
Focus on marrying ethics with safety
that ensure optimal product discovery, to cater to the conscious and careful
especially as consumers move across beauty consumer. Use real data to
brands to research for the best improve product performance and
products. features as well as to deliver a more
personalised experience.

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 Beauty Trends Report
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THG Ingenuity has grown LookFantastic to the largest beauty

e-retailer globally and now owns several other successful e-retail
prepositions and beauty brands including Glossybox, Mankind,
ESPA, Illamasqa and many more. We also provide additional services
and solutions like product registration assistance and product
manufacturing capabilities.
With over 17 years’ experience, we have the knowledge and expertise
to build and grow successful online beauty brands.

Contact us for more information on how we can support your

business: [email protected]

Sources: Digital Go-To-Market Review: Beauty Brands, 2020 (forrester.com) How-COVID-19-is-changing-the-world-of-beauty-vF.pdf (mckinsey.com) How to Engage Consumers Now: Insights for Skincare Brands - GWI (globalwebindex.com)