Major global trends are fuelling a new era of expansion, according to ‘The State of Fashion: Beauty’ report from The Business of Fashion and McKinsey & Company, with various categories forecast to grow strongly. Skin care is predicted to move up from $190 billion to $260 billion, fragrance is expected to increase in market size from $70 billion to nearly $100 billion, colour cosmetics up from $80 billion to $105 billion, and hair care from $90 billion to $120 billion.
Some of this growth is expected to be generated by the geographic diversification of the beauty players. Although the markets of China and the US are expected to maintain their positions as key territories of scale, other regions could play larger roles in the future including the Middle East and Africa as they benefit from economic modernisation and increased levels of disposable income. They will also be bolstered by large, younger, digital-savvy generation of shoppers.
Another major contributor to the growth in the beauty industry is predicted to come from wellness that is now very much part of the mainstream in the US, China and Europe. The industry is currently worth $1.5 trillion and projected to enjoy growth of 10% by 2027 and this will be reflected in the rise of products that merge beauty and wellness such as sleep-enhancements, sexual wellness and supplements.
Achim Berg, global leader of the apparel, fashion and luxury group at McKinsey’s, says: “The beauty market is on an upward trajectory across all categories and has proven resilient amid global economic crises and a turbulent macro-economic environment. Following a firm recovery since Covid-19, the industry is expected to reach $580 billion by 2027. At the same time, we expect this competitive sector to become even more competitive, driven by the continued rise of new challengers.”
These new challengers will have to focus on channel and geographic expansion for their growth because of the competitive nature of the industry, according to the report, with its finding that of a group of 46 brands with global retail sales of between $50 million and $200 million in 2017 only four managed to reach turnovers of over $400 million five years later.
This is not in any way deterring the challengers and in the UK alone we have the likes of Boohoo, Next and Sephora all building out their beauty propositions. This is alongside the growth of bigger players like Aesop whose expansion will be accelerated by the funding and experience of its new owner L’Oréal.