Five Themes Shaping the Global Beauty Industry

05/26/23 • 28 min

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BoF’s Imran Amed sits down with Priya Rao, executive editor of The Business of Beauty, to go inside the findings of our new report ‘The State of Fashion: Beauty.’

Background:

The global beauty industry is booming.

“Beauty remains one of the most dynamic, challenging and sought-after industries, much more than other consumer goods — or even fashion,” says Priya Rao, executive editor of The Business of Beauty. “What we've seen is that consumers are so rabid and fervent for their beauty products... and brands are still really excited about bringing a new proposition to market.”

This week on The BoF Podcast, editor-in-chief Imran Amed sits down with Rao to break down the five critical themes covered in BoF’s new report, “The State of Fashion: Beauty,” created in partnership with McKinsey & Company.

Key Insights:

In the oversaturated beauty and wellness market, it can be difficult for new brands to gain consumer attention. To break through, they should first focus on one product or theme before moving to other categories. “[Rihanna’s] Fenty Beauty was known for colour cosmetics until they most recently launched skin care,” says Rao. “They didn't try to launch hair care and injectables and sexual wellness devices all at once.”
Expert voices are key when it comes to building trust as a beauty brand. “What dermatologists or aestheticians have done for skin care, we need that in wellness,” says Rao. “The way that wellness really grows is with credibility from the people who are founding these brands and selling these products.”
Gen-Z wants beauty products that are more environmentally friendly but also affordable. According to Rao, brands like E.l.f and Milani have been able to address that demand. “They are giving the best experience to beauty consumers, but they also check those boxes of being socially conscious and value driven,” says Rao.
Beauty M&A will consist of smaller deals driven by strong underlying financials. Big deals like L’Oréal buying Aesop for $2.5 billion will be a more of a rare occurrence. “Profitability is going to come into play much more... that's across the businesses out there in consumer goods,” says Rao.

Additional Resources:

The State of Fashion Special Edition | The New Face of Beauty: The special edition of The State of Fashion report by BoF and McKinsey & Company explores the reshaping of the global beauty industry. Download the full report to learn about the key dynamics that will impact all categories in the years ahead, from the rise of wellness to the influence of Gen-Z.
The Business of Beauty Global Forum 2023: Streaming Live from Napa Valley, California on May 30-31.

To subscribe to the BoF Podcast, please follow this link.

Hosted on Acast. See acast.com/privacy for more information.

BoF’s Imran Amed sits down with Priya Rao, executive editor of The Business of Beauty, to go inside the findings of our new report ‘The State of Fashion: Beauty.’

Background:

The global beauty industry is booming.

Key Insights:

In the oversaturated beauty and wellness market, it can be difficult for new brands to gain consumer attention. To break through, they should first focus on one product or theme before moving to other categories. “[Rihanna’s] Fenty Beauty was known for colour cosmetics until they most recently launched skin care,” says Rao. “They didn't try to launch hair care and injectables and sexual wellness devices all at once.”
Expert voices are key when it comes to building trust as a beauty brand. “What dermatologists or aestheticians have done for skin care, we need that in wellness,” says Rao. “The way that wellness really grows is with credibility from the people who are founding these brands and selling these products.”
Gen-Z wants beauty products that are more environmentally friendly but also affordable. According to Rao, brands like E.l.f and Milani have been able to address that demand. “They are giving the best experience to beauty consumers, but they also check those boxes of being socially conscious and value driven,” says Rao.
Beauty M&A will consist of smaller deals driven by strong underlying financials. Big deals like L’Oréal buying Aesop for $2.5 billion will be a more of a rare occurrence. “Profitability is going to come into play much more... that's across the businesses out there in consumer goods,” says Rao.

Additional Resources:

The State of Fashion Special Edition | The New Face of Beauty: The special edition of The State of Fashion report by BoF and McKinsey & Company explores the reshaping of the global beauty industry. Download the full report to learn about the key dynamics that will impact all categories in the years ahead, from the rise of wellness to the influence of Gen-Z.
The Business of Beauty Global Forum 2023: Streaming Live from Napa Valley, California on May 30-31.

To subscribe to the BoF Podcast, please follow this link.

Hosted on Acast. See acast.com/privacy for more information.

Previous Episode

A Reality Check on Fashion and the Metaverse

BoF’s Marc Bain and a group of panellists break down the state of web3 in fashion and where the technology is headed.

Background:

Over the last couple of years, the fashion industry couldn’t stop talking about the potential of NFTs, the metaverse, known in tech industry speak as web3. Now, the fervour around web3 has cooled and the speculators are long gone. But for those committed to the web3 space, the work continues, even as the discussion has shifted.

“People are pulling back, but people are investing,” said Brian Trunzo, metaverse lead at Polygon Labs. “If folks are still at the education stage, doing research either internally or through agencies, they may have cut budgets and pulled back a little bit, whereas folks who have beefed up and built out teams to execute against their web3 strategy, who have had that requisite education, they're doubling down.”

This week on The BoF Podcast, we share a conversation from The BoF Professional Summit: An Inflection Point in Fashion Tech, where our technology correspondent Marc Bain speaks with three web3 experts — Brian Trunzo, Alice Delahunt, founder and CEO of Syky, and Milton Pedraza, the founder and CEO of consulting firm the Luxury Institute — to debate the future of web3 and fashion.

Key Insights:

“Something that we say in web3 is that it's not so much a bear market, it's a build market,” says Trunzo. Rather than letting a drop in investments define how brands should approach the digital world, consider the performance of the brands that are actually putting resources towards building in the space.
Still, there are details that still need to be figured out, the panellists acknowledged. For Delahunt, purchasing a digital Gucci bag on Roblox made her realise how murky digital ownership could be, because virtual items must exist on the platform where they’re purchased. She believes blockchain has the power to change that standard. “Think about the physical world. We’ll go out on the street and there's public infrastructure that is owned by the US government... It’s public, but private enterprise sits on top of it,” she said. “I think of the blockchain as the public infrastructure that people start to build on.”
According to Pedraza, this idea of digital identity will only become more paramount as the lines between the online and offline worlds continue to blur. “The technology keeps evolving... but the core principles of data identity, controlling your identity, taking control, monetising or doing whatever you want with your data... will all be supported by these emerging technologies,” he said.
No matter what’s trending, Delahunt said the fact that digital tools like Blender and Fortnite can free users of the physical world’s limits. “You've always wanted to be a butterfly, you are not confined in the same way physically... and your ability to express yourselves in those spaces will inevitably be a huge part of the future,” said Delahunt.

Additional Resources:

How AI and Web3 Are Shaping Fashion’s Future: At BoF’s tech summit experts in technology and creative innovators share their insights on how emerging technologies are impacting the fashion industry.

To subscribe to the BoF Podcast, please follow this link.

Hosted on Acast. See acast.com/privacy for more information.

Next Episode

Imran Amed: ‘It Is in Our Struggles That We Find Our Purpose’

At Egypt Fashion Week, BoF founder Imran Amed shared the origin story of BoF and reflects on the forces that will shape fashion in the coming decade.

Background: In the 16 years since he published his first post on The Business of Fashion, Imran Amed has seen the fashion industry try to adapt to adjust to seismic changes in technology, culture and business — and BoF has been a leading voice in guiding the industry through all that change.

But he may never have created BoF if it weren’t for the challenges that he was confronting in his own life. “It is in our struggles that we find ourselves — and that we find our purpose,” he says.

In this wide-ranging conversation which took place during Egypt Fashion Week, Amed sits down with Malak Fouad, host of the “What I Did Next” podcast to discuss BoF’s early days, Covid-19’s impact on the fashion industry, fashion in the Middle East and the impact of new technologies including the metaverse and artificial intelligence.

Key Insights:

Amed, left his job as a management consultant and set up an incubator to support young fashion designers. When that project failed, he channelled his energy into the personal blog he had been keeping and called it The Business of Fashion. “It was for my friends and family to see my journey from McKinsey to the fashion world,” says Amed.
During the Covid-19 pandemic, Amed saw BoF’s role as providing guidance and information to those working in the fashion industry in the midst of great uncertainty. “I said, we have no idea what's going to happen. Our job is to act as a guide for the industry as we navigate a once-in-a-century global health crisis,” says Amed.
Amed advises companies to lean on local expertise to connect with customers and find success in new markets. “[Fashion brands] need to empower local teams so they can create activations, products, experiences that resonate with customers,” says Amed.
Amed believes innovations like AI will change how people work in the industry, though fashion will always need creative people “AI has the potential to impact a lot of the parts of the industry that I think people thought were a bit untouchable,” says Amed.

Additional Resources:

The Fashion Jobs Most Vulnerable to AI: BoF’s Sheena Butler-Young takes readers through the effects AI can have on the fashion industry, and the creative job market.
Luxury Adapts to the ‘New Ramadan Rush’: As the Middle Eastern market grows in the fashion industry, luxury brands like: Dior, Fendi and Valentino are adjusting to the change.

To subscribe to the BoF Podcast, please follow this link.

Hosted on Acast. See acast.com/privacy for more information.