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Jul 9, 2021
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US beauty sector recovery to be led by digital

Jul 9, 2021

According to Kline’s latest “The State of Beauty” report, further digital innovation and integration hold the key to the U.S. beauty sector’s route to recovery in 2021 and beyond.

New digital tools are improving beauty consumers' online experience - Instagram: @esteelauder

The study, which discusses the effects of the Covid-19 pandemic on the U.S. beauty industry in 2020 and highlights continuing trends in 2021, pointed out that the sector saw a 0.2% increase in revenues between 2019 and 2020, when beauty retail sales totaled $78 billion.  
This slight annual increase reflected the “explosive growth” of essential categories, such as liquid hand soaps and sanitizers, which was offset by declines in makeup and fragrances.

Alongside the rise in sales of hygiene essentials, driven by concerns resulting from the health crisis, a number of key macro trends from previous years were also amplified in 2020 due to the shift in consumer priorities motivated by pandemic-related stay-at-home orders.
At-home wellness and DIY beauty, for example, both saw solid growth last year as consumers were forced to take products, processes and treatments that they might usually entrust to professionals into their own hands.
Prompted by the spotlight cast on both social inequality and environmental issues by the events of last year, consumers were also increasingly drawn to products and brands representing real social and environmental engagements, with social activism, inclusivity, sustainable packaging and social impact awareness all proving to be notable trends.
In contrast, sales in some categories that have driven growth in recent years, including skincare and fragrances, decreased. Makeup, in particular, saw declines, as mask wearing reduced consumers’ opportunities to wear facial cosmetics, lipstick and lip glosses.
Sales of hair styling products and sprays also fell, although overall haircare revenues increased, with hair coloring products and multicultural haircare both seeing strong growth. Personal cleansing products and nail polishes also posted rises in sales.
The pandemic affected the channels through which beauty consumers make their purchases as well, accelerating the sector’s shift towards digital and direct sales, with e-commerce accounting for 22.9% of beauty sales in 2020, compared to 6.6% in 2015 and 1.5% in 2010.
In terms of brick-and-mortar beauty retailers, professional outlets, specialty stores and department stores all saw declines due to temporary pandemic-related closures, while mass channels saw growth thanks to the availability of flexible shopping services, such as curbside pick-up options.
These were just some of the adaptations being made by brick-and-mortar retailers to deal with the restrictions imposed in reaction to the health crisis. Other important strategies included elevating their in-store tech experience and creating virtual shopping experiences.
According to Kline, it is this kind of digital and tech-focused initiative that will drive the U.S. beauty sector’s recovery moving forward. In-store virtual innovations, such as Lottie London’s launch of a QR code-based virtual try-on service at Walmart stores and MAC Cosmetic’s recent opening of a digitally oriented concept store in Queens, New York, will allow for a safer return to brick-and-mortar shopping. At the same time, out-of-store apps and tools, such as Estée Lauder's online Foundation Finder, and wider efforts in digital marketing and e-commerce will continue to facilitate sales and communication with consumers.
In particular, Kline highlighted TikTok as an increasingly important cornerstone for brands’ digital strategies, as it is a key point of contact with Gen Z. Both Estée Lauder and Sally Beauty seem to have cottoned on to this, with the former having joined the platform in June 2021, while the latter recently launched its “You by Sally” TikTok campaign.
Overall, Kline expects the U.S. cosmetics and toiletries market to increase 3.5% from 2020 to 2025, with another significant contribution to this growth coming from sustainability-focused and clean beauty.

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