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A new report by McKinsey & Company finds that all beauty categories are experiencing growth and likely to expand by 6% annually in the next four years.
The report, ‘The State of Fashion: Beauty’, defines the beauty market as being comprised of skincare, fragrance, make-up and haircare, and predicts it will reach around $580 billion by 2027, up from $430 billion in revenue in 2022.
It states: “Today, beauty is on an upward trajectory across all categories. The industry has proven to be resilient amid global economic crises and in a turbulent macroeconomic environment. Beauty is now an industry that many people, from top-tier financiers to A-list celebrities, want to be a part of – and with good reason.
“We expect the landscape to become even more competitive, as a range of independent brands that successfully came to market over the past decade seek to scale and as new challengers emerge. Intensifying competition will prompt incumbent brands and retailers to change as well.”
The report observes that consumers are increasingly shopping across price points and that both online and offline stores influence their shopping behaviour. Their preference for omnichannel shopping is expected to continue to fuel legacy brands’ shift online and independent labels’ move into a brick-and-mortar presence. E-commerce in beauty nearly quadrupled between 2015 and 2022
McKinsey forecasts that the premium beauty tier (particularly make-up and fragrance) will grow at an annual rate of 8% (compared with 5 percent in mass beauty) between 2022 and 2027.
In addition, McKinsey expects a growth opportunity across all regions to be products and services in the top tier of the pricing pyramid, believing that the luxury and ultra-luxury beauty market has the potential to double.