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NEW YORK — It is time for the beauty industry to reset.
After three years of robust growth, the honeymoon isn’t over, but it’s not as lusty as it was for the past few years.
Sales in most segments are cooling off except for fragrances. That news isn’t necessarily discouraging for mass market retailers, as some believe consumers will sway to mass brands rather than abandon beauty.
U.S. prestige beauty industry dollar sales grew by 7%, year over year, to reach $33.9 billion in 2024, according to Circana. Mass market beauty sales experienced a year-over-year dollar increase of 3%. In comparison, prestige sales notched 14% gains in 2023, and mass dollars gained 6%.
Larissa Jensen, Circana’s senior vice president of beauty and industry advisor, is quick to point out that the industry is still one of the most robust in retailing. “The year can be characterized as disruption and stabilization,” she said. Sales performance evened out after years of double-digit growth in prestige, and there have been a lot of disruptors in retail.” The latter includes store closings as well as the growth of online.
The growth of fragrance is especially welcomed news in the mass arena. Drug stores once were the go-to spot for scents, but the business had lagged for the past decade. In 2024, it was the fastest-growing category based on dollar sales.
“Gen Z is showing the most increase in consumption, driven by their usage habits of curating a ‘fragrance wardrobe’ rather than one signature scent, and looking for a scent to complement various moods,” said Anna Mayo, Nielsen’s vice president of beauty vertical.
Dupes, versions of pricey scents, are having a day in mass, propelled by influencers touting their similarities to the real thing. Examples include Maesa’s Fine’ry and Dossier.
“Fine’ry was born with a mission to democratize fragrance. We feel the best fragrances in the world shouldn’t be reserved for only those who can pay hundreds of dollars to buy a fragrance,” said Maesa’s chief executive officer, Piyush Jain.
The Dossier Impressions portfolio at Walmart includes Ambery Saffron, a version of Baccarat Rouge that more than 700,000 people have purchased.
There is an upside to the dupe culture, said Jensen, because sometimes people start with the dupe and then trade up.
Mass retailers retain their hold on the hair category, but prestige continues to expand to grab more share. Sephora, for example, has expanded its hair care brands and moved the category to a more prominent position in newer store designs.
To counteract that, retailers are offering exclusive brands such as the new Kristen Ess+ and Blake Brown at Target. Recently, Ulta Beauty added Beyonce’s Cécred to its mix in about 1,400 doors.
Based on the strength of hair care in mass stores, BosleyMD is expanding into mass doors with its medical-grade line. Branching out beyond profession, the brand is now in Ulta Beauty and Walmart, expanding into Target with a new product called Revive+Hair Densifying Serum.
All hair segments grew, with styling and treatment categories seeing double-digit increases in 2024. The scalp care trend continued to gain traction, growing at twice the rate of the overall category.
One of the most significant changes in beauty is the slowdown in skin care. It was the softest-growing category in the prestige market, with a “modest” gain in mass. There are myriad explanations for the downturn, including the fact that consumers already have enough products in their stash and the reduction in the number of items used in skin care regimens. The days of 10-step and 12-step routines are gone. Jensen parsed out some bright spots in skin — body care and lip treatments, for example.
That said, mass skin care sales are still robust in mass, with consumers putting them on par, especially dermatologist-recommended brands, with premium options.
Within skin care, the category will get a boost from a new unbranded campaign that several retailers are joining forces to support. Retailers, including CVS, Walgreens and Ulta Beauty, are joining forces to support an effort called Sun Responsibly.
Damien Favre, president of L’Oréal Dermatological Beauty, L’Oréal USA, emphasized how the campaign aligns with the division’s mission to pioneer sustainable and life-changing dermatological solutions for all. “But this campaign goes beyond innovative product development,” he said. “LDB is championing collaboration between dermatologists and retailers to ensure expert skin health guidance to address this public health concern and contribute to skin cancer prevention.”
Gina Daley, assistant vice president of integrated health at L’Oréal Dermatological Beauty, added, “The U.S. health care system spends $8.9 billion per year treating skin cancer. Recognizing the limited accessibility to dermatologists and their expertise, we need supplemental channels to promote the importance of daily sun protection.” The creative was previewed at the American Academy of Dermatology Annual Meeting in Orlando, Fla., in early March.
The campaign spans social media and retail stores and is receiving support from the Skin Cancer Foundation. “By leveraging media, social platforms and a strong presence in doctors’ offices, aim to maximize the reach of the Sun Responsibly message,” said Daley. The goal is to inspire brands beyond CeraVe and LaRoche-Posay to join the movement, as well.
Michelle LeBlanc, vice president of merchandising for beauty, personal care and Hispanic Center of Excellence at CVS Health, said the campaign dovetails with its efforts, such as removing products with an SPF below 15 to eliminating parabens, phthalates and the most prevalent formaldehyde-releasing preservatives from CVS Store Brand product lines. “It’s a powerful yet simple message: Sun Responsibly. Just two words that help encourage everyday sun protection and foster lifelong sun safety habits,” she said.
The makeup category hit upon sharp declines in 2024 as consumers opted for natural looks, traded up to prestige or merely worked through the products they had at home. There were a few areas of hope, such as lip, which, according to Jensen, is driven by hybrid products that include skin care benefits.
Jensen parsed out the top mass brands across categories from 2024. The top mass fragrance launch was Pink from Ariana Grande’s Love Notes Collection. The top mass brand was Rouge Eau de Parfum from Fine’ry. Fine’ry has almost single-handedly revived consumer interest in mass fragrances along with Dossier. Both are dupes of premium options.
It sold $4.5 million and went viral on TikTok, where it was touted as a dupe for a top coveted luxury scent.
The No. 1 mass brand makeup launch was e.l.f. Power Grip Dewy Setting Spray,
with $23 million in sales. “This primer was also the top makeup launch item overall, infused with 5% aloe, hyaluronic acid and other skin-loving ingredients. This setting spray meets consumers’ desires for makeup products with skin care benefits,” said Jensen.
The No. 1 mass brand skin care launch was Secret’s Whole-body deodorant, Peach and Vanilla Blossom with $2.2 million in sales as part of the Launch Secret.
Categories set to emerge include red-light devices for acne and aging. Retailers noted that the technology isn’t just for faces anymore. AI is also moving to the forefront, primarily to assist in creating formulas and providing personalization.
In the future, wellness will be a key factor in sales, along with how physical stores can compete with Amazon and TikTok Shop, which are already the eighth-largest beauty merchants. Attracting Generation Z is mission critical. Currently that cohort is leading the growth in TikTok Shop.
Leslie Ann Hall, founder and CEO of Iced Media, knows a lot about TikTok Shop, the new way people are shopping, “The future of search is social,” Hall said. “There are 3 billion searches on TikTok daily.”
She added that 80% of sales on TikTok come from shoppable short videos, and the rest are generated from product tab sales and live shopping.
Tara James Taylor of Nielsen added that the social commerce craze brings impulsivity to beauty. She cautioned, however, that tariffs could bring a 10% to 20% price hike.
There are other economic factors that could impede beauty’s growth, but most experts are cautiously optimistic.
“So, as we look ahead to that future, what story will 2025 tell us? Beauty is in a constant state of disruption, from consumer behavior to retail shops, from brands and products breaking new ground and changing the landscape to wellness dynamics that have now become ingrained into beauty spend,” said Jensen.
“The beauty industry’s resilience continues to shine as consumers turn to beauty to not only look good but also feel good,” said Jensen. Beauty is linked to consumers’ wellness routines, and taking advantage of the opportunity can deliver a healthy future for the industry, she added.
