Beauty’s outlook remains strong for 2024, a difficult fete given the growth it’s experienced over the past two years. Success for both the mass and prestige markets are expected, however prestige beauty is predicted to outpace mass over the next 12 months driven by consumer shopping behavior.
In a recent blog post for Circana, Larissa Jensen, SVP, Global Beauty Industry Advisor, writes that unit sales of prestige beauty in 2023 outperformed the mass market and every other general merchandise and CPG industry tracked by Circana.
“In other words, consumers are not only spending more, they’re also buying more prestige beauty products during a time when they’re being more selective in their purchases overall,” writes Jensen. “Regardless of which side of the business, consumers are very engaged with beauty products. Not only in a physical sense, such as enhancing their appearance, but also to meet their inner, emotional needs. Beauty brings joy, which is a universal aspiration. My call to action for brands and retailers is to ensure you harness this high engagement to drive growth into 2024 and beyond.”
Several dynamics have contributed to prestige beauty’s ability to defy expectations. Here, four factors Jensen cites that will contribute to growth in 2024.
- Prestige beauty products have become the little luxuries consumers are using to treat themselves. This mentality has proven to be a key driver happening across beauty categories, especially areas that are experiencing premiumization. Key dynamics fueling this include who’s shopping, how often they shop, and where they’re shopping.
- Higher income consumers remain the largest consumer group purchasing prestige beauty products, representing 50% of the shopper base, and they continue to increase their spending, offsetting the pullback from consumers among households earning below $100K per year. Higher-income consumers are also less affected by inflationary pressures and less likely to cut back on their beauty spending.
- Shorter replenishment cycles are another factor keeping the beauty industry afloat. This cadence is particularly true for the skin and hair care categories, both of which have higher daily usage frequencies. Adding to this behavior is a new cohort that is rapidly making their mark on beauty, especially in skin care, that will likely drive growth for years to come: Gen Alpha. Prestige beauty products, specifically skin care, topped the holiday lists of many young consumers in 2023, and their enthusiasm should continue into 2024 and beyond.
- Last but certainly not least is the power of physical retail. Brick-and-mortar stores are important to the success of the beauty industry. In fact, the in-store experience is prestige beauty’s point of difference, compared to the mass market. For prestige beauty, the store is not only a destination, but an experience, allowing consumers to touch and feel the products and interact with others. We don’t expect this popularity to wane anytime soon, and as a result we anticipate the brick-and-mortar channel to outperform e-commerce in 2024. Given that the brick-and-mortar channel accounts for a larger portion of overall sales, in both the mass and prestige markets, physical retail will be a significant growth driver across most beauty categories this year.