American culture is known for its heavy emphasis on physical appearance, therefore it makes sense that the demand for beauty care products is increasing. The use of smartphones coupled with greater internet penetration in rural areas has allowed online retail to extend its reach. Equally as important has been the rise of social media marketing and the creation of beauty trends like contouring, which have become huge financial opportunities for beauty retailers. Additionally, what was once an almost exclusively female-driven market has now expanded to satisfy the growing demand for male grooming products. The mass beauty care market in the U.S., which was valued at $21.09 billion in 2015, is expected to reach $23.97 billion by 2020, with a CAGR of 2.59%.
The beauty care market is divided into two segments: mass beauty care and premium beauty care. Mass beauty care, which makes up 61.77% of the market, is targeted to those in the lower and middle class income categories, whereas premium beauty care, which makes up 38.23%, targets the upper income class. However, with so many options and such a wide range of price points, the market is not so clear-cut. Further, with social media, magazines, and beauty influencers promoting both high and low end products, even consumers in the upper income category are now more likely to purchase a combination of both.
While initially dominated by large corporations, the mass beauty care market is now seeing a new kind of a player; one that is health and environmentally conscious and caters to specific consumer needs. Smaller, niche brands are making their way into the beauty care space by offering quality products that are free of things like dyes, parabens, sulfates, etc., addressing the concerns of consumers who are increasingly aware of ingredients and their impact. Big players like L’Oréal are realizing that in order to satisfy the increasing awareness of today’s consumers, they also need to provide these kinds of alternatives.
The market has also witnessed another interesting sales trend: the subscription model. Companies like Sephora offer boxes with deluxe samples of products for a small subscription fee. Not only do the subscriptions themselves produce a financial benefit, but those who purchase the boxes are more likely purchase full size versions in-store or online, thus driving sales.