What are the Opportunities in the Cosmetics Industry this Year?
- Chaileedo Press
- Jan 19, 2023
- 5 min read
New concepts such as micro-ecological skin care, sustainable fashion, and edible makeup and food have been recognized by more than 40% of consumers in the past two years.
As the difficult year of 2022 comes to an end, the anticipated year of 2023 has kicked off. Between farewell and rebirth, beauty industry people who have been suppressed for too long are starting to wave their fists in the air and ready to do something big. And how to snatch back the lost 3 years of business opportunities in 2023 has become a real problem for the industry.
Recently, Chaileedo released the "China’s Beauty Consumer Trends Report (First Quarter of 2023)" (here and after referred to as the "Trends Report") through insight into consumers' beauty consumption behavior in the past three months, refining and summarizing nine major trends, in order to refer to the future development of the beauty market and help the industry create a better 2023.
After skin care, oral cleaning care is sought after
In the past 2022, the epidemic caused less travel, restricted consumption scenarios and delayed express delivery capacity, which hit the cosmetics retail market even harder. According to the latest data released by the Domestic Bureau of Statistics, from January to November 2022, the total retail sales of the cosmetics category were 365.2 billion yuan, a decline of 3.1% year-on-year.
Correspondingly, some consumer habits have quietly changed. The Trend Report shows that the purchasing habits of over 37% of consumers have shifted to short-term or single purchases of large quantities of beauty products for emergencies, and hoarding has become a new habit for many consumers.
As a result, online high-priced beauty consumption and unit prices both increased significantly in the fourth quarter of 2022. Take Douyin as an example, the Top 5 goods of Douyin beauty sales in November are all famous brand sets, and the average minimum price is close to 2,600 yuan. During the Double 11 period, sales of products in the price segment above 1,000 yuan in Douyin accounted for 25% of the total sales of this category.
Taking advantage of this trend, major beauty brands launched "Collection Highlights Set", "Must Buy Gift Box" and other promotional and limited preferential products in the form of star CP sets, new and old mixing, and quickly achieved sales conversion.
However, the hoarding behavior also to a certain extent prepays consumers' beauty investment. According to the Trend Report, over 37% of consumers believe that their beauty spending will decrease in the first quarter of 2023 due to the Double 11 and Double 12 promotions, the Chinese New Year holiday, and logistics disruptions, and nearly 40% believe that beauty spending in the first quarter of 2023 will be the same as the previous quarter.
Nevertheless, the Trends Report also shows that 23% of consumers still believe that they will increase their beauty consumption investment in the first quarter of 2023, and there is still considerable upside space in the market for the next quarter. In addition to the most popular skin care categories, the Trends Report shows that nearly 12% of consumers will increase spending on oral cleaning and care in the first quarter of 2023, and about 1 in 10 say they will increase spending on body cleansing and care, shampoo and hair care and development.
Custom cosmetics become an opportunity track
From the brand side, the Trend Report shows that in the fourth quarter of 2022, among the top 10 beauty brands that consumers often buy, only four domestic brands: CHANDO, Proya, Winona and INOHERB. Nearly 20% of consumers choose L'Oreal, and more than 14% choose Estee Lauder, which is much higher than that of other brands.
At the same time, consumers still prefer international brands beauty. The Trend Report shows that more than half of consumers plan to buy beauty products from famous international brands in the first quarter of 2023; more than 1/4 of consumers plan to buy beauty products from famous domestic brands; and less than 14% of consumers plan to buy beauty products from new and strong domestic brands.
So, in this consumer background, what are the opportunities for domestic brands to overtake on a bend in 2023?
According to the Trend Report, new concepts such as micro-ecological skin care, sustainable fashion, and edible makeup and food have been recognized by more than 40% of consumers in the past two years. This means that by cutting into these emerging tracks and covering unmet consumer needs, domestic brands can prioritize the minds of such consumers, thus occupying the head of the blue ocean track consumer market, and at the same time giving the brand a positioning that impresses consumers.
It is worth mentioning that custom cosmetics, beauty devices and oral care have become new industry hotspots and growth points. The Trend Report shows that 65% of consumers are willing to pay a premium when buying custom cosmetics, with nearly 40% of consumers willing to buy custom cosmetics when the price is 20% higher than similar products.
In fact, major beauty groups clearly see the opportunity for customized cosmetics and are scrambling to lay out custom directions. For example, L'Oreal Group launched the YSL Electric Wave Wearing Fragrance Room, Henkel launched the first B2B2C ultra-personalized professional hair care brand SalonLab&Me, COSMAX opened the Acne Skin Essence customization activities, and cdf Haikou International Duty Free City also joined hands with more than 800 international and domestic famous brands to provide exclusive customization services for consumers.
According to the Trend Report, "Basic skin care products are currently the first choice of consumers in the field of customized cosmetics, with consumer preference accounting for over 40%. Scalp care products follow closely behind, with nearly 20% of consumers interested in such customized cosmetics."
Anti-aging category continues to rise in popularity
Of course, custom cosmetics are still a track of opportunity to be developed, with mature markets being the main consumer target. Among these, the anti-aging category has seen the fastest increase in buzz, especially among young anti-aging consumers, who have huge market potential.
The Trend Report shows that 56.02% of consumers use anti-aging skincare products 3 times a week or more, of which 35.64% use anti-aging skincare products daily, making anti-aging a part of consumers' daily skincare routine. Another example of CS channel sales from January to November 2022, 9 of the Top 20 hot selling skincare items have anti-aging effects such as firming and wrinkle reduction.
In addition, the anti-aging group shows a clear trend of youthfulness. The Trend Report survey found that the percentage of consumers aged 26-30 who are concerned about skin aging is as high as 90.58%, and the main demand of more than half of consumers is to strengthen the skin's muscle base to resist primary aging.
Because of this, in the fourth quarter of 2022, many cosmetic companies launched new anti-aging products based on existing ones, such as L'Oreal Paris launched a new Black Gold Essence, HBN launched Super A-alcohol night cream, COSMAX won the Prime Minister's Award of the Korean Technology Award Department for "Anti-Aging Cosmetics Using Piezoelectricity", all of which are seizing the opportunity of the race track.
The brand digs the anti-aging track also to some extent feeds the upstream industry, many popular anti-aging ingredients are sought after by companies. According to previous statistics, since the implementation of the new regulations, 45 new cosmetic ingredients have been filed, including 10 new ingredients for antioxidants and 4 for anti-wrinkle agents.
Overall, the beauty market in 2023 is still full of opportunities. For beauty companies, on the one hand, to seize the popular track, or even go ahead of consumers to meet the diversified market demand; on the other hand, in the marketing end, need to reach more consumers, so as to establish a deeper emotional link with consumers; at the same time, in addition to continue to dig deep in the growth potential of E-commerce, but also to pay attention to the offline glow of new opportunities, so as to expand the product radiation. Only in this way, everything is possible.
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