Daisy Holroyd

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profit

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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.

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people

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One of a firms most intangible assets will always be its customers, the relationship between brand and consumer is something that should be valued and managed. This relationship between the stakeholders in the fashion industry has a significant impact in the success of a brand; financially speaking, when a customer is appreciated by said brand, their lifetime value will increase as loyalty builds (Gupta 2001). The people pillar focuses on how a brand can nurture this relationship for mutual benefit. 

Generation Z is the second youngest generation and currently holds the fashion and beauty industry in a compromising position as their values and demands begin to contradict each other. Gen Z, unlike previous generations have demonstrated extreme trend chasing habits which are supported by fast fashion retailers, furthermore, online shopping has digitalised retail and provided a level of ease that is now somewhat expected by Gen Z (McKinsey 2023). However, we must also consider that Gen Z consistently advocates for sustainability and transparency within the cosmetics industry, demand for products with a low environmental impact and organic certifications that guarantee the reliability of the formulations has become massively differentiating (Fortunati 2020).

Many companies pay particular attention to the sensitivity of their buyers toward environmentally friendly and biodegradable products, without neglecting quality (Fortunati 2020). This is imperative when a cosmetics brand is looking to attract Gen Z consumers. Similarly, it is important for brands to respond in a socially sustainable way. 

Consumers tend to be drawn toward brands with similar ethos’, as racial equality becomes more valued by modern politically aware individuals, successful brands are proving to be those who cater to many different ethnicities. Fenty Beauty has set a standard in the beauty industry, where as a brand it does not only passively preach the message of equality, but also actively, by launching at its very inception with a 40-tone shade range, previously unheard of for an opening launch of a brand (Barrett 2022). 

In the modern age, a brands multiplatform social media engagement goes hand in hand with their product innovation. Today’s generations are surrounded by advertising in their digital and physical world so to be successful a brand must invest in a pre-existing consumer activity to create a sense of community. As important as a brands message is, the mode in which you communicate with consumers or your audience is often more important than the message itself (Barrett 2022). 

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planet

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It is a common fallacy to believe that global environmental concerns are new phenomena, however many of the anxieties that threatened early environmentalists are still with us. Such environmentalist reactions to human induced ecological changes are more than three centuries long, however we must consider that the environmental crisis has developed to a far more threatening scale (Grove 2003). Consumer habits are beginning to reflect the provision of green information by fashion retailers in order to improve their awareness in the importance of sustainability (Shen et al 2013). It is imperative that all stakeholders within the fashion industry understand that moving towards long term sustainability requires improvement across the entire fashion cycle, rather than a few isolated parts (Fletcher and Grose, 2012). The planet pillar aims to recognise the environmental impact of the fashion industry and encapsulate the drive for change that is becoming more apparent. 

Circular economy promotes the responsible and cyclical use of resources possibly contributing to sustainable development; circular economy strategies aim to preserve functions, products, components, materials or embodied energy (Moraga et al, 2019). In recent years, the circular economy model has been adopted by the fashion and cosmetics industry and the linear model is being slowly phased out. The linear economy has been highly successful in generating material wealth in the industrial nations but has come at the cost of common neglect of recycling, reusing and putting much emphasis on waste (Sariatli, 2017). A circular economy is regenerative by nature, in terms of fashion this means that materials must flow within the system and waste must be collected and appreciated as a valuable material (Niinimaki, 2017). Patrick McDowell encompassed the values of a circular economy by prolonging the value of waste fabrics from luxury brands such as Burberry and creating new garments. 

The cosmetics industry is closely related to the fashion industry and has been strongly affected by the paradigm shift towards more ecologically focused morals in consumerism. Demand for products with a low environmental impact and organic certifications that guarantee the reliability of the formulations has become massively differentiating; many companies pay particular attention to the sensitivity of their buyers toward environmentally friendly and biodegradable products, without neglecting quality (Fortunati 2020). Rates of recycling within the beauty industry is staggeringly low, with only 14% of packaging actually making it to a recycling plant and only 9% actually being recycled (British Beauty Council). Cosmetic brands are beginning to modify and revaluate their packaging design process to minimise their contribution to the environmental crisis. Lush UK has developed a cork pot packaging design which perfectly contributes to a circular business model. The pots are biodegradable and fully compostable, making them carbon positive (Lush 2023). As brands work to reduce and replace materials which contribute to the climate crisis, we can see the cosmetics industry become more regenerative. As the materials used in cosmetic production diversify to minimise risk and pressures to single ecosystems, we can see positive movements towards sustainability. 

The United Nations published an agenda for 17 sustainable development goals (SDGs) in 2015 as an urgent call for action by all countries in a global partnership (SDGs UN, 2023). Among the 17 STGs, the cosmetics industry applies itself to many in terms of environmental sustainability, however we also see progression within social sustainability. The 13th SDG aims to achieve gender equality, brands such as Chanel show commitment to non-discrimination through the Chanel foundation and the Chanel Image Cultural Platform (Fortunati, 2020). By adapting global strategies into local realities, large beauty brands are able to empower women and girls to become high achieving and driven people who are free to shape their own future (Foundation Chanel 2023).

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A Favourite Cosmetics Brand

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My favourite cosmetics brand would have to be Huda Beauty. Huda Beauty was founded by Huda Kattan, an Iraqi-American beauty blogger in 2013; the brand has shown an exceptional ability to grow with trends and the progression of the internet with its marketing and products. Huda Beauty has become a well-known name amongst the beauty community and in 2018 Kayali, a sister fragrance brand was launched. My favourite cosmetic product to use is the Kayali Vanilla 28 perfume, its long lasting and not too overwhelming or sweet as a fragrance.

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