Between 2020 and 2030, Millennials (those born between 1981 and 1996) will represent the largest share (40%) of the global workforce. As a generation, they have driven a seismic shift in cultural values, putting big issues like sustainability and the environment at the top of the agenda. And, it is not only the favoured trends of this sizeable consumer base that are being recognised by beauty and personal care brands but their growing spending power.
The changing pace of millennial spending
Millennial spending was predicted to grow at a slightly higher rate than other age groups (2.6% versus an average of 2.5%) in 2020. However, the impact of the coronavirus has caused millennials to change their spending habits more than any other generation. Over half (54%) of millennials said the coronavirus has impacted their purchase decisions, according to a First Insight survey.
What does this mean for the future of the beauty industry and its most lucrative consumer group? Speaking to Cosmetics Design, Carrie Mellage, Vice President of Kline & Company’s Consumer Products practice, said: “The cosmetics market will undoubtedly suffer in 2020 and in years to come.”
“But we expect it to recover within three to five years as it has in all past recessions. Compared to other industries, the beauty market is fairly recession-proof, and its products continue to be desired by consumers – both for meeting basic needs as well as indulgence.”
The e-commerce explosion
Despite reduced spending, the new social distancing economy has led many consumers to embrace online shopping, with categories including skincare, haircare and bath and body products appearing to benefit from an increase in self-care and pampering trends.
Speaking on the in-cosmetics Asia ‘Meet the Speaker’ online series, Jude Chao, Beauty Blogger, Author and Founder of Love Jude said: “In terms of consumer behaviour, quarantine and lockdown and the anxious energy of 2020 globally has caused some consumers to turn more towards cosmetics, and especially skincare as a method of self-care as something they can do, a ritual they can do to take care of themselves and try to stay calm in these times.”
In fact, according to Euromonitor, beauty and personal care products are in high demand online, with e-commerce prices and out-of-stock levels increasing as more shoppers shift from brick and mortar retailers due to COVID-19. Millennials here are leading the way, with 60% of consumers in Asia Pacific reporting an increase in online shopping. Product categories including deodorants and cosmetics are among the everyday items in most demand in Southeast Asia, with cosmetics and haircare leading the pack in Japan.
As brands respond to these in-demand product categories, the attributes sought by millennial consumers are unlikely to change. According to the AlixPartners Global Health and Wellness Study, all-natural and ‘pronounceable’ ingredients, sustainable sources, detailed and transparent labelling and free-from products rank as the most important qualities in beauty and personal care products for this age group.
A clean approach to beauty
Among the trends identified by AlixPartners, the clean beauty movement and appeal of products using all-natural and ‘pronounceable’ ingredients has been accelerated by the coronavirus pandemic. Consumers are seeking out beauty brands and products are natural, ethical and contribute to their overall sense of wellbeing – whether that is reducing stress levels, aiding sleep, or combating the risk of ‘maskne’.
Research by Ecovia Intelligence revealed that this interest has seen ingredients with antibacterial and antiviral qualities in great demand, from aloe vera and eucalyptus oil to tea tree, propolis and lemon myrtle. In Indonesia, the Agriculture Ministry is actively using eucalyptus oil to help prevent the transmission of the coronavirus. It has developed ointments, balms, inhalers, and diffusers.
In addition to natural ingredients, millennials are more concerned about the transparency and traceability of the products they use. 70% of millennials want to know where the ingredients used in their favourite products originate, compared to 54% of Generation X (those born between1965-1980). Furthermore, 60% of millennials stated concern about the manufacturing process, with 40% fostering concerns about logistics.
For brands to capture the attention of discerning millennial consumers in the ‘new normal’, they need to authentically respond to these demands to stand out and retain loyalty in an increasingly tough and competitive market. Many brands are already responding by incorporating stricter environmental standards, greater transparency, and more natural ingredients.
Bridging the millennial gap
A continued focus on source and quality is tied to millennials’ interest in the underlying story behind the brands and products they love. For millennials, having grown up with the internet and the emergence of social media, they are not shy about using technology and in fact, often want to learn about products through content, rather than traditional marketing.
Jude Chao added: “Young people these days have a wealth of word-of-mouth, consumer-to-consumer feedback on brands, on trends and a lot more power through social media and their own personal platforms to drive trends themselves.
“It’s one of the reasons that K-Beauty became popular in the US too – it was very grassroots, through blogs, social media and regular consumers sharing what they were discovering and spreading the word. It is definitely something that has changed the landscape. There is also an increased pressure on young people these days to perfect their appearance, and that comes from the social pressure of social media and the internet and exposure to heavily edited and highly manipulated photos of people who are supposed to be regular people. There is a lot to be discussed about whether that is healthy or not, but the fact remains it is a driver to more intense skincare than what we had when we were younger.”
The explosion of K-Beauty, as referenced by Jude, was largely driven by ‘clever digital marketing strategies’ on social media that gained the interest of Western beauty influencers, bloggers and journalists. Speaking to BBC News, Mintel’s global beauty analyst Andrew McDougall, revealed that consumers’ interests were piqued by colourful packaging, as well as reviews and demonstrations on Instagram and YouTube.
“It’s consumers who are more informed and do their own research, and it’s influencers who put them on the K-beauty path in the first place,” says McDougall.
K-Beauty brands including Innisfree, Skinfood and Mamonde have not only embraced the ideas of “going green” and “loving nature” – key to the millennial generation – but have employed cohesive and consistent marketing strategies that deliver an ‘instagramable’ appeal. Innisfree, for example, uses multiple Instagram profiles to appeal to distinctive characteristics and demographics in each audience. Meanwhile, Skinfood uses product development based on food philosophies to draw on the ‘clean living’ movement into the beauty arena.
Responding to the millennial market
The natural and organic beauty market was already on a path for significant growth, with forecasts anticipating an increase of approximately $22 billion in annual sales by 2023 – an implied CAGR of more than 12%. Today, with clean beauty being in even greater demand, there is a significant opportunity for brands who can respond to these ingredient and product trends to capture the attention of millennial consumers.
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