Market Intelligence | C&T ®

KEY POINTS
• Cosmetic marketing and education has turned
to digital platforms, as opposed to traditional
beauty counters.
• Global ingredient and marketing trends are opening
the door for the new wave of cosmetic leaders.

Changing Face
of Cosmetics
Global Trends Push Personal Care Back to Basics

Karen Yarussi-King
Global Regulatory Associates, Inc.,
Raleigh, N.C. USA

Vol. 133, No. 3 | March 2018

O ver the last few years, the cosmetic
industry has undergone a massive
makeover—a global transformation with
each region of the world contributing
in different ways. The biggest driver has
been from outside the industry, namely
the Internet and smart phones. The Internet in particular has made the
world smaller and more accessible, but it also has been the source of

Reproduction in English or any other language of

all or part of this article is strictly prohibited.
© 2018 Allured Business Media.
Cosmetics & Toiletries® | DE1

CT1803_Mrkt_DE_Yarussi_fcx.indd 9 2/21/18 2:22 PM

 Changing Face of Cosmetics
In today’s cosmetic market, technology is
driving us to go back to the basics and
find solutions in nature.
both positive and negative changes, depending
on where you work within the industry. The
continued harmonization of the global cosmetic
industry facilitated by technology will be the
real stimulus for future innovation.
The Way We Buy Cosmetics
For years, consumers went to the depart-
ment stores to have a beauty advisor analyze
their skin or to receive a makeover. It was a
personalized face-to-face service that drove
women to stroll through the dozens of beauty
counters until enticed to sit down, be pampered
and buy product. Competition in department
stores was fierce, as there was not much differ-
ence between the color cosmetic, fragrance and
skin care product offerings, so customer loyalty
was key. In response, beauty brands used
gifts with purchase, beauty advisor-customer
relationships and seasonal palettes to market
their products.
In the late 1990s, specialty retailers, led
by Sephora, appeared in malls with a new
one-stop, self-serve, try-before-you-buy model
dedicated to selling only cosmetics, fragrances
and skin care but with the addition of toiletries,
hair care and later, beauty tools. Initially, only
Generation X and Millennials, with limited
time and money, embraced this new model
while many baby boomers continued to shop
at department stores. Specialty retailers had
an allure: the ability to play with and compare
hundreds of products in a no-pressure atmo-
sphere, since the beauty advisors were not paid
by any one brand. As a result, smaller, “hipper”
brands launched and found success in specialty
retailers without the costs associated with
paying for beauty advisors or counters, as in the
department store model.
The rise of additional specialty retailers
such as Ulta and e-commerce drove specialty
retailers to find more creative ways to market
DE2 | www.CosmeticsandToiletries.com Vol. 133, No. 3 | March 2018
CT1803_Mrkt_DE_Yarussi_fcx.indd 10
cosmetics. To drive consumers to their stores,
Sephora used technology to personalize the
purchasing experience while Ulta offered hair
salons to modernize the old department store
sales model because consumers still wanted
to see, smell and feel the products. However,
once consumers found products they liked, they
could purchase more of those products on the
Internet or with mobile apps. At the same time,
TV retailers such as QVC and HSN offered an
automated replenishment option, providing
convenience while ensuring sales for brands.
Around 2010, subscription services such
as Birchbox and Ipsy changed the purchasing
landscape again, and probably forever. Sub-
scription services targeted those consumers
that wanted to try products without having to
go to the mall. This opened the door to direct-
to-consumer marketing of products, a less
expensive route of entry for new brands. This
became another launchpad for indie brands to
enter the market and the almost-certain demise
of brick and mortar shopping.
Ironically, the much-desired, personalized
shopping experience appears to have been
replaced by the impersonal nature of the
Internet and smartphone apps as the future of
how we are buying cosmetics. Now, consumers
can buy products from all over the world with
just one click, and without any human contact.
In place of traditional marketing, consumer
e-commerce behavior is being monitored. The
information collected is allowing many brands
to look for ways to both customize product
offerings and personalize the online shopping
experience. This area will continue to grow in
the future with increased global competition,
creating a new cosmetic landscape with a level
playing field where traditional brands will need
to either acquire indie brands or find alternative
ways to remain relevant. The infusion of smart
digital technology will be key.
2/21/18 2:22 PM
 Predicted Winners: Indie/Direct-to-Con-
sumer Brands
Predicted Losers: Brick and Mortar Brands
What We Want In Cosmetics
Before the Internet, consumers learned
about the benefits of ingredients and product
performance from beauty advisors—who were
educated by the brands themselves. Beauty
advisors were seen by consumers as the experts,
and became a key marketing tool for brands
to dictate trends to the consumers and define
what they saw as consumer needs. As a result,
consumers’ beliefs were synonymous, the
messaging was simple and not many questioned
the beauty advisor’s guidance in the absence of
online education and resources.
Around the same time the Internet and
specialty retailers became popular, concern for
the environment and personal health coincided
with changing social and economic priorities,
which shifted consumer purchasing attitudes.
There was a growing beauty counterculture:
a desire for products made from natural or
organic ingredients, sustainable packaging and
cruelty-free products from companies who
believed in environmental stewardship.
This counterculture was driven by consumer
Vol. 133, No. 3 | March 2018 Cosmetics & Toiletries®
CT1803_Mrkt_DE_Yarussi_fcx.indd 11
demand in Europe, but was held in check by
the power of the major brands in the United
States via beauty advisors—thus, the primary
education tool for this group was the Internet.
Natural beauty consumers were able to find
information online from third party organiza-
tions, European consumers and natural/organic
brands. Several of the world’s natural/organic
certification organizations are based in the EU
and they have essentially defined this space for
the industry.
Via the Internet, natural/organic brands
and certification bodies are gaining respect
and influence while continuing to educate the
consumer on raw materials, as well as environ-
mental and ethical issues. As evidence, free-from
claims, novel/exotic alternatives to traditional
cosmetic ingredients and new natural ingredi-
ent claims are now the crux of most marketing
stories. In response, even brands previously
opposed to this movement are adding cruelty-
free to their packaging or highlighting the
natural component in their formula.
This marketing trend is so popular that
the EU is now regulating these claims, and we
will likely see this from other governments.
We may also see governments weigh in on the
natural versus synthetic debate as it relates to
| DE3
2/21/18 2:22 PM
 Changing Face of Cosmetics
product safety. As an extreme example, arsenic,
while natural, is clearly not safe; therefore, the
safety profiles of many natural ingredients are
being studied. Conversely, phenoxyethanol is
synthetic and, after many studies, is considered
to be safe. Even natural essential oils cannot
escape scrutiny, as seen in the regulation of
fragrance allergens.
Anti-pollution products will no doubt be the
next big thing as people struggle globally with
the impact of various types of environmental
pollution on their health. Intuitive beauty
brands will focus on targeted product offerings
that counteract the impact of specific, regional
pollutants in response to customization and
natural trends. Traditional ingredients from
places such as China, Africa and India are
showing up in products as consumers embrace
natural, old world remedies for eczema, rosa-
cea, acne and other skin conditions exasperated
by pollution. Scientific studies on natural ingre-
dients are providing breakthroughs in product
performance for natural-based products.
If there was any doubt that this trend is here
DE4 | www.CosmeticsandToiletries.com Vol. 133, No. 3 | March 2018
CT1803_Mrkt_DE_Yarussi_fcx.indd 12
to stay, Kline & Company has reported that the
global natural personal care market was worth
$30 billion in 2013 and has grown at a double-
digit pace since 2008. By 2018, the natural
personal care market is expected to grow to $46
billion globally. The demand for halal-certified
products is likely to follow suit.
Predicted Winners: Natural Brands
Predicted Losers: Brands that do not
embrace global trends
Types of Products We Want
Back in the department store days, if you
were under 30 years old, beauty advisors
recommended a three-step skin care routine
consisting of cleanser, toner and moisturizer to
slow down the signs of aging, followed by basic
makeup. If you were over 30 years old, the skin
care routine was more focused on moistur-
izing to minimize the appearance of aging, and
included a multi-step makeup routine to hide
facial imperfections.
The Internet brought us new global beauty
trends that made us think differently about skin
2/21/18 2:22 PM
 care and redefined our perception of beauty
as seen through the eyes of people around the
world. Asia, led by Japan and Korea, has been
particularly influential in the last 10 years.
Whitening/brightening skin care, BB and CC
creams, sheet masks, multi-step skin care, tradi-
tional Asian-based ingredients and essences are
now global product categories.
Whitening products and spot treatments—in
combination with an increased awareness of
the link between tanning and skin cancer—
spawned self-tanners in all product forms. BB
and CC creams gave birth to both the natural
beauty and multifunctional product trends.
They replaced foundations, sunscreens and
moisturizes by rolling them into a single,
easy-to-use product that provided more natural
looking skin in addition to sun protection.
Sheet masks hit western countries at about
the same time as the economic downturn and
reignited the home spa market. Sheet masks
gained popularity based on the belief that
they help to drive actives deeper into the skin.
Korean women introduced the world to their
multiple step skin care regimen. This also pro-
vided industry with new and innovative delivery
forms: micellar cleansers, oil cleansers, serums,
Vol. 133, No. 3 | March 2018 Cosmetics & Toiletries®
CT1803_Mrkt_DE_Yarussi_fcx.indd 13
essences, night masks and highly concentrated
treatments containing exotic Asian ingredients
such as snail slime, bee venom, green tea, pearl
and starfish extracts are being sold in many
western markets.
In support of the global healthier living
trend, science-based natural ingredients will
likely continue to drive skin care innovations.
Ayurvedic-based ingredients are starting to
make an appearance on the international scene.
India and the Middle East are expected to make
their mark on global skin care trends over the
next year, largely supporting the demand for
halal products. Indie brands are re-focusing on
prevention for all ages, as today’s older genera-
tions are younger-minded and increasingly
aware of the impact of pollution on skin.
Biotechnology-infused skin care will likely
focus on correction but will be a hard sell due
to regulatory restrictions on claims. Therefore,
finding ways to market products with innova-
tive new ingredients in an already crowded
space may need to depend on an older market
embracing technology or becoming beauty
influencers, sampling and online education.
Lastly, natural alternatives to over-the-counter
(OTC) drug actives are on the rise, and again
| DE5
2/21/18 2:22 PM
 Changing Face of Cosmetics
the trick is government recognition of these
actives to make relevant claims.
Color cosmetics have perhaps been impacted
the most by social media and the no-makeup,
natural beauty craze. Twitter, Facebook, Snapchat
and Instagram have given rise to highlighters,
illuminators, makeup primers and contouring
products. Amateur makeup artists and beauty
influencers are abundant on YouTube, teaching
us new ways to use these products to take the
perfect selfie—essentially 21st century beauty
advisors. They are also redefining classic looks
with a more modern twist. The cosmetic indus-
try has always had celebrity endorsements, but
this trend has turned YouTube video stars around
the world into mainstream celebrities hired by
brands to help design and promote their prod-
ucts. One of the most important recent beauty
innovations in color was the advent of gel nail
polish, a response to consumer needs.
Multicultural beauty is predicted to be the
source of future growth in this category. Cus-
tomization will help to drive consumers of all
Empowering
Beauty Innovation
Discover crucial R&D insights with peer
reviewed scientific knowledge, trends,
and news from the trusted voice of the
beauty and cosmetic industry.
Subscribe for FREE now!
www.CosmeticsandToiletries.com/EMPOWER
DE6 | www.CosmeticsandToiletries.com Vol. 133, No. 3 | March 2018
CT1803_Mrkt_DE_Yarussi_fcx.indd 14
ethnicities to brands that allow for color prod-
ucts to be personalized to match a wider variety
of skin tones. Another area for growth will be
efficacious all- or mostly-natural color cosmetics.
South America has brought an awareness to
a gap in hair care offerings that is being filled
by indie brands in other parts of the world.
Hair care innovations will also be the result of
science-based ingredients with innovative styling
tools and new product categories. The United
States is most certainly a leader in this space.
Predicted Winners: Indie brands
Predicted Losers: Brands that do not
embrace global trends
Where to Go From Here?
One thing is certain: the electronically savvy
beauty brand owners will be the driving force
behind the future of our industry. Industry
growth will be driven by innovations resulting
from the marriage of science-based natural
ingredients with novel concepts produced by
nimble indie brands responding to consumer-
defined needs. We will again see the competition
of old but on the Internet instead of in the
department stores, and with multiple points
of difference.
Unlike the past, it will not be the brands
that are the first to use hyaluronic acid or alpha
hydroxy acids, it will be the company that
provides the whole package—flexible purchasing
methods, social media education and promotion,
natural and effective products, personalized and
customized shopping experiences and ethical
business practices. Only those brands that listen
to consumers and embrace these 21st century
business practices will succeed.
The number of indie brands being incubated
by venture capital firms and groomed to be sold
to Fortune 500 companies is further evidence
that this is where industry is headed. For the first
time, traditional department store brands are
at a disadvantage. They can no longer dictate to
the consumer and even if they buy indie brands,
they too must transform and embrace the 21st
century business model.
The dichotomy of today’s cosmetic market is
that technology is driving us to go back to basics
and find solutions in nature.
2/21/18 2:22 PM
Copyright of Cosmetics & Toiletries is the property of Allured Publishing Corporation and its
content may not be copied or emailed to multiple sites or posted to a listserv without the
copyright holder's express written permission. However, users may print, download, or email
articles for individual use.