PROFIT
PROFIT.
Profit is of paramount importance in the fashion and cosmetic industry, serving as a foundational pillar. This pillar recognizes the need to generate value, demonstrate growth, and reward those responsible for the business’s success.
The cosmetic industry has witnessed substantial growth in recent decades, achieving a global market revenue of $427 billion in 2022. This industry’s widespread appeal is evident in the projected annual growth rate of 6%, which is expected to lead to an estimated market value of approximately $580 billion in retail sales by 2027, as reported by McKinsey & Company in 2023.
Figure 3a indicates that the largest segment in the market is Skincare, with a significant market volume exceeding $200 billion in 2023. The skincare market is also predicted to see a year-to-year growth of 6% in total revenue sources between 2022 and 2027 (McKinsey & Company, 2023).
Figure 3b, Notably shows with $91 billion in income in 2023, the US stands out as the top revenue generator in the world. In terms of revenue per person, 2023 will see an average of US$81.42 made (Statista, 2023). The table below reflects how much China and North America dominate the beauty industry, the countries managed to attain $151 billion in 2022.
Various factors can contribute to a company’s profit loss or a decline in a brand’s fortunes. Kapferer (2012) and Thomas and Kholi (2009) have identified nine such factors, which are outlined in Figure 3c (Mitterfellner, 2023).
Given the current cost of living crisis and rising inflation, many companies are facing economic instability. The beauty industry is becoming increasingly competitive and fast-changing, driven by consumer interest in celebrity-endorsed brands and trendy indie skincare and cosmetics lines, often with significant TikTok followings (Breuer, 2022). To remain competitive, it’s essential to establish a strong online presence, invest in e-commerce capabilities, and ensure a seamless online shopping experience. Leveraging digital marketing and social media is vital to connect with a broader audience.
The role of a creative director is demanding, involving the creation of a feasible creative vision while managing a large team of employees. Striking a balance between business acumen and creative insights is crucial in this position. Karl Lardberg, for example, successfully managed this role for over 50 years by reimagining the brand and what it represented for the owners and consumers as a whole (Mitterfellner, 2023).
References
Breuer, S. (2022). The Impact of Economic Instability on Beauty. [online] beautymatter.com. Available at: https://beautymatter.com/articles/the-impact-of-economic-instability-on-beauty.
Mckinsey & Company (2023). The beauty market in 2023: A special State of Fashion report | McKinsey. [online] www.mckinsey.com. Available at: https://www.mckinsey.com/industries/retail/our-insights/the-beauty-market-in-2023-a-special-state-of-fashion-report.
Mitterfellner, O (2023) Chapter 6 – Decline and Resuscitation of Luxury Fashion Brands.
Statista (2023). Beauty & Personal Care – Worldwide | Statista Market Forecast. [online] Statista. Available at: https://www.statista.com/outlook/cmo/beauty-personal-care/worldwide.