The cosmetics industry covers a lot of ground, offering products from makeup to hair styling to people around the world, but despite a consistent level of demand for these types of products, the industry itself is undergoing several massive changes, which collectively could dictate how companies survive in the future. Internal and external pressures are converging to force established cosmetics brands to adapt—and allow new cosmetics brands to emerge as formidable competitors. But the only way for cosmetics brands to keep up with these changes (and not get left behind) is to be aware of them, and proactively address them.
Key Factors Precipitating Changes
As we cover these major changes, you’ll notice a handful of recurring themes:
- As with all industries, the cosmetics industry must evolve alongside technology; new technology allows for new types of products, new modes of production, new ways to communicate with customers, and even fundamentally new customer experiences. Leaving these opportunities on the table could spell your doom to irrelevance.
- Consumer expectations. Customer expectations are also evolving. Today’s customers expect more from the brands they buy from, both in terms of the products they’re buying and the actions that drive the companies that make them.
- There’s also a host of new competitors emerging to challenge the status quo of the cosmetics industry, including companies that produce more innovative products, or produce them more efficiently, as well as companies engaging in new markets or territories.
Big Changes to Anticipate
So which changes are most important for cosmetics brands to anticipate?
- The blur between product and technology. One of the most significant changes has been unfolding steadily over the past several years: the blurring of the line between technology and product. A new technology may allow a product to be created much more efficiently, or distributed in a way that makes it more convenient for the consumer. While this may not change the core product, it radically changes how the product can be made, distributed, and consumed by the customer, which means one company can get a serious edge over another with lower prices, further reach, or greater consumer appeal. This forces companies to think proactively about how technologies can reshape their products, and adopt new approaches aggressively.
- The increasing importance of transparency. Customers are demanding more transparency in nearly all areas, thanks in part to declining trust in corporations and in part to the public accessibility of information. Customers want to know how their products are being made, which ingredients feature most prominently in those ingredients, how the companies they buy from are operating, and where their money is going. Cosmetics companies are no longer getting away with leaving ingredients off the label, and are forced to provide more information about the function, safety, and limitations of those ingredients.
- The rise of small- to mid-sized brands. Also motivated by a declining lack of trust in corporations, small- to mid-sized, independent brands in the cosmetics industry are seeing a boost. Customers feel better buying products from an independent manufacturer than they do buying from a mega-corporation, and for several reasons; smaller brands tend to offer rarer, more unique products, they’re more sustainable, they’re sometimes perceived to have more ethical business practices, and they have a more local impact. Big corporations are forced to find an angle that makes them seem more approachable, or more human.
- The need for inclusivity. We’re also seeing a major push for inclusivity in marketing, advertising, and even operations. For example, some brands have utilized gender-neutral advertising campaigns to appeal equally to men, women, and nonbinary people. Others have made a concentrated effort to recruit models who better reflect their target demographics, such as including models of different races or of different weights and figures. If brands want to stay relevant to as many people as possible, they need to broaden their communications, and represent historically under-represented groups.
- The demand for personalization. Customers are also demanding more personalization. They’re used to a world that caters to their individual wants and needs (including custom-curated Facebook newsfeeds and unique recommendations from Netflix and other streaming services), and thanks to the sheer number of cosmetics brands to choose from, they don’t have to put up with a generically marketed product. Ultimately, that means brands need to offer more unique products, and offer more options to their customers so they can get exactly what they want.
The cosmetics industry is forecast to grow considerably through 2025, especially in emerging markets, but that’s not a guarantee of success for cosmetics companies. If you want to survive in an era with improving technologies, changing consumer values, and cutthroat competition, you need to be prepared to adapt to these ever-evolving trends.