Profit of the cosmetic industry
The fashion industry currently contributes to 2% of the world’s GDP amounting to approximately 3 trillion dollars in economic gain (Akram et al, 2022). Cosmetic Industry, a subset of the fashion industry, is responsible for approximately 1.1% of the world’s GDP (Mintel market sizes, 2023). This contribution has increased over the past 10 years and has reached about 1.2% in recent years (Figure 1). It is evident that the cosmetic market has lucrative opportunities beneficial for both the producers and consumers. According to data collected by Mintel, in 2023 coloured cosmetics are the largest contributors providing 26% of the market share and the lowest contributors are body care with only 9% of the market share (Mintel market sizes, 2023) (Figure 2).
Regardless of such a massive contribution to the economy, the total market value of the industry has declined in the last few years. This can be attributed to the global pandemic and the recession that followed. The pandemic posed an uncertain economic situation where owning cosmetics products, specifically coloured cosmetics, became less of a priority. Therefore, brands started producing higher quantities of ‘cosmetic needs’ like hair and skin care products to maintain profits. (McKinsey & Company, 2020). According to data collected by Mintel, the contribution of the body care sector in cosmetics increased by 4.5% in 2020 (Mintel market sizes, 2023). This includes the rise of brands like ‘Keys soulcare’ that focus on skincare and cleanliness. The brand partnered with dermatologists to create a soothing skincare line that received media attention from outlets like Allure and Refinery 29 (Keys soulcare, n.d.). Thus, the brand maintained its profit and production throughout uncertain economic times. Furthermore, to make their brand stand out, companies like Charlotte Tilbury started providing online consultations and virtual try-on sessions for a luxury experience. Therefore, a brand could invest in having exclusive luxury products and services available for its customers (Nazir, 2021).
Considering these parameters, brands find it difficult to maintain the commercial value of products with unlimited creativity. Consequently, it is important for a creative director to maintain a balance between creativity and profitability of the products. A hair care brand ‘Function of Beauty’ managed this by creating a digital platform where consumers can purchase products tailored to their hair and skin type (Function of Beauty, 2023). Here, the creative directors ensured that the interactive platform and new personalized formulations provided a creative, experimental outlet for the employees. The spectacle and uniqueness of the product make the shopping experience stand out to the customers thereby increasing the sales. Thus, the company could bridge the gap between the creative and commercial aspects of the brand. With ample competition in the industry and uncertain economic situations, it is crucial for companies to employ similar strategies to ensure that the brand stays profitable.
Reference list
Akram S.V., Malik P.K., Singh, R., Gehlot A., Juyal A., Ghafoor K. Z., Shrestha S., “Implementation of Digitalized Technologies for Fashion Industry 4.0: Opportunities and Challenges”, Scientific Programming, 2022, Article ID 7523246, https://doi.org/10.1155/2022/7523246
Function of beauty (2023) About us, Available at: https://www.functionofbeauty.com/about-us (Accessed: 20 October 2023)
Keys soulcare (n.d.) About us Available at: https://www.keyssoulcare.com/en_GB/about.html# (Accessed at: 20 October 2023)
McKinsey & Company (2020) How COVID-19 is changing the world of beauty? May 2020 Available at: https://www.citethemrightonline.com/sourcetype?docid=b-9781350927964&tocid=b-9781350927964-19 Accessed: 20 October 2023
Mintel market sizes (2023) Colour Cosmetics- Available at: https://marketsizes-mintel-com.arts.idm.oclc.org/query/201756285/performance/market (Accessed: 19 October 2023)
Nazir, S (2021) How the beauty retail market can survive Covid-19. Available at: https://www.retailgazette.co.uk/blog/2021/02/how-the-beauty-retail-market-can-survive-covid-19/ (Accessed: 20 October 2023)