Makeup sales may be down this year (who wants to wear lipstick under a mask?), but the skincare industry is thriving.
Even before the pandemic, women were seeking out a more natural and less time-consuming look. Without trips to the office or nights out, and limited tourism travel, there seem to be fewer reasons than ever to get all made up. On the other hand, with more time to get ready in the mornings sans-commute and a huge emphasis on self-care, consumers are looking at the wellness of their skin in a whole new light. Skincare surpassed makeup sales for the first time ever in 2020, and the growth doesn’t seem to be slowing down.
Investors may be wary of diving into a luxury product market during such a time of uncertainty, but there are a lot of reasons to take the leap. With growth on the horizon, new distribution channels opening up, nearly unlimited educational resources for new entrepreneurs, and the general resiliency of the beauty market as a whole, now just might be exactly the time to lean into that new business idea or invest capital in an up and coming skincare brand. Not convinced? Here are five reasons that the outlook for the skincare industry is strong.
1. There is more space in the market than in recent years
The skincare industry has sometimes felt crowded, with new enterprise opening up what feels like daily.
However, COVID-19 brought an unexpected downturn in the cosmetics industry (20-30%), leaving space for new ideas and new startups. What has been a difficult industry to stand out in suddenly seems very much within reach.
Starting a business is always difficult work. The key in the coming year is that there are holes in the marketplace where other small businesses had to shut their doors. This has created an opportunity to use creativity and strong differentiation messaging to fill in those gaps with a bit less competition.
2. Online sales are surging
Beauty used to be all about retail stores. The experience of going in for a makeover, touching and feeling a product were very important. Because of retail shutdowns, customers have been forced into different buying decisions. As a result, online revenues during COVID have risen as much as 30-50%. Even as retail locations open, many customers won’t forfeit the convenience of online shopping. Companies with innovative ways to bring the retail experience to online platforms (think VR, personalization, great customer service, etc.) have a huge potential to pull in customers.
eCommerce offers a variety of advantages. For one, it opens up your business to a global customer base instead of a regional one. You can have instant exposure online without the backing of a larger retail store. There is also less overhead involved in starting with an online platform. There are pitfalls as well, to be sure, but a boutique brand with a strong marketing team has every reason to be optimistic about the future of online skincare sales.
3. The beauty industry always rebounds
People want self-care products. As far back as the ancient Greeks, humankind was looking for remedies for acne, aging, dry skin and more. Here we are, thousands of years later, and people are still using similar products. There have been historical slumps in the cosmetics marketplace, but skincare has always rebounded.
Facial products are a small luxury that people can still afford, even when a recession strikes and larger purchases such as cars and homes level off. A consistent skincare routine is a small way that consumers can exert control over their lives and feel some sense of normalcy.
And in the age of a million Zoom calls, healthy skin is almost a necessity.
4. Online coaching is available like never before
We live in an age where information has never been more readily available. Would-be entrepreneurs have instant access to billions of videos and articles containing advice on everything from trending skincare ingredients to contract manufacturing. New start-ups have the ability to learn anything they need to know, for free.
But the opportunities for the coming year go beyond the general wealth of knowledge that the internet offers. As cosmetic industry events were canceled and brands and manufacturers scrambled to offset the disruption, online content rose to fill the gaps. Small businesses have greater access to seasoned professionals, who are looking to make online connections with up and comers. What used to come at a premium cost, including travel expenses and high trade show fees, is now within reach via YouTube and even private video calls.
5. Personalized products are trending
Today’s customers want products that are hyper-personalized to their needs. This means that indie brands that can fill a very specific niche are in high-demand. New startups can find success by catering to specific audiences and doing it well. While this limit’s a business's customer base, if they do it well, they will enjoy high conversion rates and loyal customers.
Part of the appeal of personalized products is the relationship consumers feel like they can build with their chosen brand. Creating a sense of community through connecting like-minded people is part of the key experience. So is expert-level customer service. Companies with a reputation for listening and responding to people’s needs as quickly as possible will especially thrive.
2020 threw a huge curveball to many industries, and skincare has not been immune from the adverse effects. The good news is, the skincare industry is poised to rise stronger than ever. New and existing brands willing to utilize innovation and hard work can take advantage of customers that are more than ready to get back to the business of feeling great in their own skin.
Author Bio
Jordan has spent his entire career in the manufacturing and R&D world. Jordan started his career at a large contract manufacturing facility, Wasatch Product Development, in Draper Utah. At Wasatch Product Development he wore many hats in R&D, manufacturing, formulations, etc. Jordan holds an MBA in International Business from Northeastern University.