Decoding Beauty Trends: Insights from Top Retailers

The beauty industry has always been a reflection of evolving preferences and emerging trends in product innovation. Recent insights from eMarketer shed light on how this industry not only survives—but thrives—in challenging times due to headstrong, loyal and social customers. In this post, we analyze consumer spending and preferences for leading specialty beauty retailers such as Ulta, Sephora, and Bath & Body Works, to get a deeper understanding of what—and who—is driving the beauty boom.

Younger generations set the trends

It’s no surprise the allure of the beauty industry is strongest among younger, trend-driven generations—namely Millennials and Gen Z. According to Attain’s real-time commerce data, beauty and cosmetic buyers are 1.1x more likely to belong to the Gen Z generation compared to others. The influence of younger generations is palpable across key retailers.

In the last year, both Sephora and Ulta experienced an upswing in average transaction amounts among Millennials and Gen Z. Sephora stands out with Millennials spending an average of $70 per transaction and Gen Z following closely at $66—an impressive 2% increase across both generations, YoY. At Ulta, the average transaction amount for Gen Z also saw an uptick (+1% YoY), reaching $54 per transaction. Amid challenging economic circumstances, this growth serves as a testament to customer loyalty. Today, more than half of Ulta shoppers (55%) refrain from buying beauty items from Sephora, while 16% exclusively favor Sephora for their beauty shopping needs.

In-store shopping drives higher transaction amounts

Despite Gen Z’s increasing transaction amounts, buying power remains with Millennials. Among the top specialty beauty stores, Millennials lead with an average spend of $52 per transaction, slightly surpassing Gen Z’s average of $50. There’s also a preference for in-store shopping, with 80% of Millennial buyers and 84% of Gen Z buyers favoring the shopping experience in person. However, the digital realm is gaining momentum, with online sales experiencing growth.

A balance emerges as both generations spend more per transaction in-store than online. A possible explanation for higher in-store transactions could be the level of engagement during the shopping journey. Unlike online shopping, where browsing may be more focused, in-person experiences offer customers the chance to physically interact with products, sampling them firsthand and consequently creating a stronger inclination to make a purchase. Yet, the frequency of online purchases outpaces in-store transactions—indicative of different shopping patterns. The online shopping experience allows customers to make quick purchases and often take advantage of exclusive deals and discounts, which indicates they may be making more frequent, smaller purchases when they browse.

Beauty products are deemed ‘essential’

With economic challenges, it might be expected that consumers would modify their beauty routines and reduce their spending on costly products. However, 41% of consumers cite the essential nature of beauty products in their routines as their motivation for purchasing during economic challenges. Consumer confidence remains steadfast, with 76% intending to maintain or increase spending within the beauty and cosmetics category this year.

Social media drives product discovery

The digital era introduced an exciting dimension: social media’s role in product discovery. Nearly half (46%) of buyers turn to platforms like Facebook, TikTok, and Instagram for inspiration.

When it comes to discovering new beauty products, 33% claim Facebook as their primary source, followed closely by TikTok at 30%. Gen Z is 1.5x more likely to seek new products from TikTok, while Millennials are 1.1x more likely to discover products through Instagram.

The beauty industry thrives on generational dynamics, adapting to changing preferences, and harnessing the influence of social media. Millennial and Gen Z spending patterns, combined with the industry’s ability to provide both in-store and online allure, position the beauty sector as a resilient force in an ever-evolving market.

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