Death by a Thousand Cuts for the Legacy Beauty Brands That Do Not Change

July 2015

Traditional brands have shrinking share of consumer beauty spending.

Dissatisfied consumers are switching to products that meet their beauty and lifestyle requirements.

Companies are paying a high price for losing touch with beauty buyers.

Companies must adapt their products, as regards both formulation and marketing, if they wish to benefit from new consumer behaviour and growth opportunities. An analysis of our global research findings shows just how much and how fast the beauty landscape is changing:

Ingredient consciousness There is heightened awareness of ingredients and their impact on health and wellness. It is perfectly normal for consumers to scrutinise a product's ingredients and accept or reject brands based on what is, or is not, listed. In our interviews we have seen how consumer concern has moved beyond chemicals to synthetic ingredients in general. The natural movement is very influential and is contributing to people questioning the use of synthetic and chemical ingredients in hair and skincare products.

More demanding All experts consulted tell us that consumers demand more and want products to deliver immediate and sustainable outcomes. They question whether the brands, used by their mothers or older sisters for hair and skincare, can meet these new requirements. Social media has made it easier than ever for like minded consumers to band together to express their preferences and create beauty market trends.

Monopoly weakens For increasing numbers of people, the cosmetic is no longer THE reference point in beauty. It now must compete for sales with wellness or beauty from within, scientific or medicalised skincare or even technological devices. Beauty retailers and professionals report that key consumer segments - anti-ageing, millennials, men are amongst the most likely to switch, to a greater or less degree, from the cosmetic. What is truly remarkable here is that each of these innovations has come from outside the 'cosmetic box' while the big legacy beauty brands have remained firmly within traditional categories.

Future sales Emerging markets worldwide have been flagged as the great white hope of the beauty industry. But we know that these hundreds of millions of new consumers are looking for products that are formulated for different hair types and skin tones not to mention different beauty regimes and behaviours. Product formulations must be retweaked because, as the demographics change, many of what are minority beauty products today will inevitably become more mainstream.

Evidence Advertising no longer cuts the mustard with buyers. The triggers which make people buy that hair or skincare product have changed. People want information and proof. They are increasingly underwhelmed by advertising claims which are not supported by evidence. Buyers need to see that these products will improve their appearance. This is a whole new set of consumer touch points in beauty marketing.

Competition The number of companies has increased exponentially in beauty. Most of the companies winning sales are quite tiny but, in aggregate, account for a increasing share of the market. The game changer has been that small, close-to-consumer companies understood new growth opportunities created by changing buyer behaviour and social media.

Our global beauty market analysis is based on our proprietary consumer research. Each year we talk to many hundreds of experts who understand consumer beauty behaviour, regimes and product preferences. We have been compiling this intelligence worldwide since the late 1990s. Our interviews are conducted with many types of marketing channel experts - beauticians, cosmetologists, therapists, stylists, colourists, retailers - to obtain a global perspective of consumer beauty behaviour.