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    Expert's Opinion

    Where Beauty Finds Success in 2021

    NPD’s Larissa Jensen on which industry markers to keep in mind.

    Where Beauty Finds Success in 2021
    In 2020, consumers, brands, and retailers behaved in new ways.
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    Larissa Jensen, Vice President, Industry Advisor, Beauty, The NPD Group01.08.21
    Is it just me or does it feel as though we’ve packed 10 years of events into one? There is no question that this pandemic, among many other things in 2020, has hit us hard. Consumers, brands, and retailers are all behaving in new ways, and flexibility, tenacity, and resilience have become the new success metrics. In the world of prestige beauty, as with many other industries, consumer behavior has shifted in ways no one could have predicted. As we look ahead into year two of the 2020’s, there are several key indicators we are watching that could have profound effects on our industry.
     
    A big question on many of our minds is, when will experience spending return and what will it mean for beauty? Making it through an elongated period of time when consumer demand for your products has waned certainly requires tenacity. The good news for beauty is that spending on experiences will come back. Demand has not waned for experiences; we are just forced to forgo them for a period of time. While this is a threat to retail overall with a shift in spend, it could bring a much-needed boost to beauty as consumers look to our products again when they prep for a well-deserved night out.
     
    The Effects of City Life

    Secondly, at what point will major cities have their revival? Recovery in big cities is dependent on many things, including the rise of tourism and return to the workplace. Resilience is an important component of surviving an urban exodus and all that comes with it – especially when those urban areas and major cities are the largest players in our industry. With many of us currently working from home, we found that for the cities that over-indexed on staying home there was a direct correlation to how poorly the makeup category performed in each city. This dynamic is one we will need to watch closely, as the recovery of this category is in many ways tied to the recovery of these cities and the broader work-from-home trend.
     
    Channel-Blurring

    And last but certainly not least, what will the acceleration of channel blurring mean for the fate of both physical and online beauty retail? Brick-and-mortar and e-commerce channel dynamics were upended earlier in the year, followed by major shakeups later in the year with the recent partnership announcements from Ulta and Target, and Sephora and Kohl’s. Navigating all of this requires tremendous flexibility on the part of brands and retailers. The industry will need to consider what the retail landscape will look like as e-commerce matures. What will be the role of brick-and-mortar in this new environment? How will direct-to-consumer further disrupt channel dynamics, and what will the impact be as a true democratization of beauty brands plays out across new retail partnerships? As the industry looks to understand how to maximize these dynamics, it is crystal clear that consumers are the real winners in all this disruption.
     
    Industry Markers

    These are just a few of the industry markers we are watching today as we enter another year of the 2020’s. But what about the markers we were watching as we first set foot into the new decade?
     
    In my outlook last year, I shared four predictions for what the decade would bring to the beauty industry. Here is where my expectations stand, one year in:
     
    Makeup would make a comeback. Well, 2020 has been especially rough for the makeup category, but I still believe that makeup will return in force and we have nine more years to make it happen.
     
    The growth in natural skincare would slow. In fact, it already has, with sales in 2020 being surpassed for the first time by clinical brands, which have now become the largest brand type in skincare.
     
    Sustainability and clean products would take center stage. This is also beginning to take shape as we saw the importance of ingredients and social issues become an even bigger priority for brands and retailers in 2020.
     
    And finally, I said that our industry would look different at the end of the next decade. Well, 2020 proved how different our industry could look at the end of just one year – and we’re only getting started.
     
    While 2020 was filled with many challenges, there is no doubt that we are amidst exciting times for the beauty industry. The changes ahead of us are unknown, but ripe with opportunities. One year does not define a decade and there is still time for another round of the Roaring Twenties, which could provide a significant lift for the beauty industry in the years to come.
     

     

    About the Author

    Larissa Jensen is Vice President, Industry Advisor, Beauty, The NPD Group—and a member of Beauty Packaging’s Board of Advisors.  @ljensen_beauty
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