profit

⋅

The value of the global cosmetics market was calculated to be $507.8bn in 2018 and projected to be $758.4bn by 2025 (Petruzzi, 2023), the profit pillar aims to understand what brands must do to maintain a suitable profit margin and be successful in such a competitive industry. 

The cosmetics industry is an umbrella term for stores that primarily retail cosmetics, perfumes, toiletries and personal grooming products (Maamoun, 2022). Millennial women are the largest market base for this industry; however, a new development of improved, reimagined and reformulated products has led to a growing investment by Generation Z and male consumers. Beauty specialist stores such as Ulta and Sephora make up the second fastest growing U.S retail category in the past five years, after off-price retailers (Maamoun, 2022).

According to Mintel, as of 2022, the sectors of the cosmetics industry with the highest retail market value include the colour cosmetics, facial care and fragrances. Projections for all markets seem to show that many will maintain a relatively stable value; with the exception of the colour cosmetics and fragrances market, which are expected to have a faster growth in retail market value. The colour cosmetics market had an estimated £1.7058bn market value in 2022 and is projected to have a £1.9072 market value by 2027. 

Remaining competitive in uncertain economic times is critical to the survival of a brand, based on the features of the pandemic times and the impacts to the cosmetics industry, there are suggestions that have been made to aid the success of the industry based on Porter’s five forces. To start, a brand must improve the performance of the cost-profit structure to defend against threats from new market players. A brand must also design new products and use new ingredients to prevent the threats of substitutes (Jiang, 2021).

Many modern brands are utilizing the impact of beauty influencers to bridge the gap between creativity and commerce; ‘influencers’ are also referred to as cultural intermediaries, they translate cultural and social capital into economic capital (Stevenson, 2023). Brands such as Made by Mitchell have taken to social media app, TikTok, to present ‘challenges’ to their consumer base, in which they encourage their followers to use their products to create artistic looks (TikTok, Madebymitchell, 2023), bringing together the creative and commercial sides to a beauty brand.

References

Liked Liked
No Comments