Better together? 2017’s hottest cosmetics industry trends Part II

Better together? 2017’s hottest cosmetics industry trends Part II

Will Shiseido better L’Oréal in the digital stakes? Can department stores weather the storm and who will be buying who on the M&A front? In the second part of our trend predictions report, we look at the year ahead from a retail, tech, packaging, finance and manufacturing perspective.

Retail: Click for consolidation

Of course, the big news we’re all expecting in 2017 is the Walgreens Boots Alliance-Rite Aid acquisition. And Pessina isn’t the only one who believes in consolidation; Starbucks’ Schultz predicts ‘sweeping consolidation’ for the year ahead across all product categories. Indeed, the beauty retail landscape is changing. We’ve seen the rise and rise of Sephora, the fall and fall of US department stores, and the meteoric growth of online sales. But this year, we predict more and more brands will be taking distribution back in to the fold – be that in the form of online sales or standalone stores. One thing is for certain – in the face of the Amazon effect, stores will have to be special to lure consumers off their sofas.

Technology: Virtual is a reality

Already hot news in 2016, 2017 will see virtual reality go mainstream appearing everywhere from apps to in-store experiences and packaging enhanced with AR features that can bring the product story to life. “Brands will find new ways to enhance experiential offerings, transparency and storytelling by showing, versus merely talking about, their business. Storytelling is crucial for encouraging consumer engagement and connection, with VR, AR and live streaming as tools for brands to communicate those stories in order to engage consumers’ senses and meet the desire for enhanced reality. An enhanced reality is one that can inspire citizens to exercise more intensely and give more generously, and it allows them to make purchases that fit their lives more precisely,” says Carli Gernot, Manager of Trends North America at Mintel.

Packaging: On the go

In an era where busy is practically a religion, products designed for use on the go have become ever more popular. Packaging will evolve to reflect this over the year, with individual packs designed to be transported and used out and about. Equally, products designed for different, and ever-more specific times of the day – think not just day and night cream but transitional make-up looks, or body care that doubles as a work-out intensifier or sleep aid – demand different and innovative packaging. Estée Lauder’s Double Wear Nude Cushion Stick is a prime example – its built-in applicator allows for touch-ups in your lunch hour. “Single-use, spray and stick formats offer portability and convenience for consumers who travel, commute or want the option to top up their freshness and make-up throughout the day,” explains Mintel’s Senior Beauty and Personal Care Innovation and Insights Analyst, Sharon Kwek. 

Finance: Local goes loco

Last year, India’s Patanjali was the most vocal of the local brands stealing a march on the multi-nationals. This year, expect to see more from homegrown brands everywhere, but particularly in China. Naturally, this could lead to some M&A activity as the global players fight for a share of this lucrative market. In 2016, we saw several South Korean brands snapped up by the likes of Lauder et al. This year, we predict a fight for the Chinese companies getting it right. 

Manufacturing: Less is more

As demand grows for sustainable products, manufacturers will need to keep apace and this year the spotlight will be on water efficiency big time. Equally, we’ll see an increasing number of partnerships formed between manufacturers in different regions. This will enable expansion without heavy investment in infrastructure as well as produce exciting new collaborations. Two heads are better… as the saying goes.