The beauty sector had a standout year in 2023. Numerator found that beauty sales growth was the fastest among consumer sectors, increasing by 15.8% year-over-year as of December 31, 2023. This growth was particularly surprising in a year of high inflation. Beauty’s success was driven by increased consumption, with trips per household rising by 6.2%, and premiumization, where product mix outpaced inflation. Notably, every major category within beauty contributed to this growth.
In our latest in-depth report, Breakthrough Beauty, Numerator shared the key beauty consumer trends that propelled the industry to record highs and what trends are expected in the future for the beauty industry. Read further to see the main findings.
How is the beauty industry growing?
Numerator identified three primary themes that fueled beauty’s expansion:
- The Clean Movement: Consumers increased their use of hygiene and body care products as they ventured out more frequently.
- The Ingredients Movement: Shoppers became more educated about skincare ingredients and sought brands that offered clear benefits like anti-aging and sun protection.
- The Beauty-for-All Movement: There is a market split between value and prestige brands within the cosmetics industry, showing consumers’ desire for both affordability and experiential luxury.
The Clean Movement: What is changing in the beauty industry?
In 2023, consumers were more active than in recent years and their beauty purchases reflect that. Traffic to limited-service restaurants grew by 4.8%, and out-of-home experiences, such as Taylor Swift and Beyoncé concerts and a 13% increase in TSA checkpoint usage, drove this trend. As a result, 34% of consumers reported increased focus on their hygiene, while only 4% reported less focus.
Numerator’s purchasing data validated these sentiments, showing growth in household penetration for bar soaps, body wash, and hair and scalp treatments, primarily driven by Gen Z and Millennials. Outside of price, consumers showed a significant preference for clean products and ingredients that address certain needs. Gen Z and Millennials skewed even more towards natural products, along with those that are new and offer variety.
Brands addressing these needs grew fast and at a premium. Procter & Gamble’s Native became the fastest-adopted skin cleansing brand in 2023, capturing over 7.3 million new households. Native achieved this while having an average spend per unit 23% higher than the industry average. Native's growth came from branding clean ingredients free from sulfates and parabens and offering refreshing, fruity flavors like coconut. Additionally, Procter & Gamble anticipated increased travel in 2023, leading to significant penetration growth in Native’s 3.0-ounce travel-size products (up +1.5 percentage points).
As more consumers travel and Gen Z drives the adoption of natural and sensorial products, brands should innovate through concept tests, qualitative interviews with young consumers, and investment in R&D. Retailers should support brands that offer these benefits.
The Ingredients Movement: What are the most trending skincare products?
Skincare adoption has increased significantly in recent years, and in 2024, Numerator expects consumers to incorporate more products into their skincare regimen. Both established and emerging categories have gained household adoption over the past year.
Consumers prioritize factors like hydration, anti-aging, and skin sensitivity when purchasing skincare. Categories experiencing explosive growth include non-acne facial moisturizers, facial serums, and acne and blemish patches, driven by brands like CeraVe, The Ordinary, and Hero Cosmetics. These brands focus on clinically driven results and highlight their products based on ingredients such as niacinamide and retinol.
Two implications emerge from these findings:
- Consumers are becoming more educated about skincare and prefer brands that prioritize ingredient transparency and clear benefits.
- Consumers are opting for lower baseline price products that still drive premiumization through higher value-per-volume ratios. Prestige brands must justify their higher prices by adding meaningful benefits.
Additionally, sun protection has become a priority, with nearly 54% of beauty consumers purchasing SPF products and 63% using them daily. Younger generations care even more about using sun protection, but the brands they purchase could be different than expected. Gen Z households are increasingly choosing skincare brands like CeraVe and Neutrogena over traditional sun care brands like Banana Boat and Coppertone.
Beauty brands can capitalize on this trend by incorporating SPF into their products and partnering with retailers to optimize product placement.
The Beauty-for-All Movement: What's trending in cosmetics?
Makeup also saw considerable growth, with consumers focusing more on products for specific facial areas such as lipsticks and foundation rather than sets and palettes. This trend reflects consumers' desire to customize their looks and express their identities. Over half (58%) of makeup consumers use makeup to feel confident, and at least 1 in 5 use it for self-expression and experimentation. Gen Z is significantly more likely to view makeup as a way to showcase their identity.
Price remains a major factor, with 68% of makeup consumers considering it important. However, consumers are also looking for specific and clean ingredients. Forty-four percent seek products with skincare benefits, and over a third (35%) prioritize clean ingredients. Similar to the ingredients trend in skincare, 3 in 10 consumers also search for makeup with SPF.
Priorities vary by generation. Outside of price, Gen Z and Millennials care more about clean ingredients and SPF, while older consumers focus more on shade range and variety. However, younger consumers, accustomed to brands with extensive shade ranges, now view this as a baseline requirement.
While beauty continues to premiumize, consumers lean into both value and prestige makeup brands. High-end celebrity brands like Fenty Beauty and Rare Beauty have shown strong penetration gains, boosting Sephora’s market share for makeup by +270bps to 17%, trailing Ulta Beauty at 18%.
Meanwhile, brands like E.L.F. and L’Oreal are also experiencing growth. E.L.F. has built a community of trend-following, budget-conscious shoppers, significantly increasing sales among TikTok users. Their strategy includes a “Makeup Trending on TikTok” landing page, which helped double their sales among TikTok users in 2023 compared to 2022. Beauty manufacturers and retailers should look to maintain a balanced assortment of value and prestige brands to maintain appeal across the consumer base.
Final Considerations: What do consumers want from beauty in 2024 and beyond?
As beauty brands and retailers plan for 2024, Numerator’s analysis suggests focusing on three core actions:
- Adopt a Gen Z-first mindset: Gen Z beauty is different from other generations and is significantly influencing beauty industry trends, from ingredient awareness to sensorial experiences.
- Emphasize sun protection: Incorporating SPF into beauty products is increasingly important, and brands that innovate in this area will benefit.
- Balance the pricing portfolio: While premiumization continues, there is still a strong demand for value. Brands should ensure they cater to both segments to avoid alienating value-seeking consumers.
By addressing these trends and consumer preferences, beauty brands and retailers can build on the successes of 2023.
