Name a major luxury brand that doesn’t have a skincare or beauty line. Stella McCartney has a refillable skincare line. Hermès launched a cosmetics line three years ago. Valentino introduced cosmetics to its offering last year. These days, if you’re a luxury brand of a certain size and you’re not launching beauty products, you’re already late to the game.
This is made all the more urgent by the fact that the most prominent players in luxury are making equally big moves to solidify their offerings in beauty. Earlier this year, when LVMH announced that it had appointed Stephane Rinderknech as the new chairman and CEO of its beauty division, it marked a new chapter for the industry, marked by significant announcement after significant announcement that luxury beauty is where brands are paying big bucks to play.
The move followed Kering’s announcement in February that it was building a new area of beauty expertise within its group to ensure its brands could fulfill its potential in this category, hiring Raffaella Cornaggia, a seasoned industry executive, to lead the new division. And also comes as Estee Lauder acquired Tom Ford for $2.8 billion last year in its biggest deal to date.
Clearly, the landscape for luxury beauty has never been more competitive. And it comes as little surprise why. Data analysed by DLG shows that interest in luxury skincare has grown by 57 percent over the past four years, and Google search volumes for the terms “luxury skincare” and “luxury beauty” has increased by 50 percent and 22 percent year on year, respectively.
Global beauty retail sales are expected to reach an estimated $580 billion by 2027, according to The State of Fashion: Beauty, a new report from The Business of Fashion (BoF) and McKinsey and Company. Skincare, beauty’s largest category expected to grow from $190 billion to $260 billion between 2022 and 2027, driven by innovation and shoppers seeking out products focused on science-based efficacy.
This aligns with DLG’s data, which found the top six luxury beauty brands in most demand were: Estée Lauder (2.6 million average monthly searches), Lancome (2.4M), La Mer (726.2K), Guerlain (555.9K), SK-II (470.9K), and La Prairie (217.9K).
“Beauty is a really robust industry, and investors are much more aware of that,” said Chanella Buck, Founder of OnBeauté, an independent beauty platform that aggregates industry-written reviews and Luxury Society Columnist. “Even if there was a global crisis, it’s an industry that is pretty solid and accessible.”
“Consumers are still spending,” Buck added. “They're just spending on self-care and self-indulgence more than on clothing and accessories.”
“The beauty industry is saturated and highly competitive, but consumers are always eager for change and discovering new brands, particularly in the beauty sector,” said Céline Ceccaldi and Coralie Berrocal, co-founders of skincare brand Atopea, which launched earlier this year in Switzerland. “They have a clear idea of what they want and are shifting their focus from quantity to quality.”
Indeed, when times are tight, as witnessed not only with the global COVID-19 pandemic when luxury consumers reigned in their spending a bit more but also at present when the threat of global economic uncertainty still looms large, luxury can still be accessed through a facial oil, a high-performing serum or a spritz of fragrance.
But brands should be aware that luxury consumers are a very educated bunch. You cannot just slap a brand logo on it and expect customers to buy it.
When consumers search for beauty products, they know exactly what they want, says Emeline Roussel, Search and Performance Marketing Executive at DLG, whose data analysis found that the top five ingredients in terms of search volume are Retinol, Vitamin C, Tretinoin, Hyaluronic Acid and Salicylic Acid.
“This trend aligns with the most searched-for skin concerns, which are Acne and Anti-Aging,” said Roussel. “Retinol is the most sought-after ingredient, with nearly twice as many searches as the second most searched ingredient, Vitamin C. Its popularity has significantly grown over the past four years, with an increase of 2.2 million searches per month between 2019 and 2023.”
“Tretinoin and Niacinamide are also rising ingredients, with a combined increase of 1.1 million searches per month over the past four years,” noted Roussel. “This suggests that these ingredients are gaining recognition among consumers for their skincare benefits helped by platforms like TikTok, which has played an important role in democratising ingredients-led skincare products.”
“The modern beauty consumer is evolving into a beauty expert who thoroughly researches and evaluates products before making a purchase,” said Ceccaldi and Berrocal.
“There is a growing preference for niche sustainable brands that have a strong brand identity,” they added. “Consumers are more concerned about the overall brand experience rather than just the individual products. They want to be part of a beauty community that shares similar values, where their opinions are heard, and where they have a deep understanding of what they desire or don't desire for their skin.”
It is this kind of educated specificity that luxury brands must understand when entering into the beauty arena, and even then, they must ensure that what they do, fits in with what their brand represents.
“It has to got to align with their brand identity,” said Buck. “A lot depends on the research and development when it comes to the product. For example, Tom Ford launched his fragrance first. Then I believe afterward he moved onto make-up and then skincare last because it takes specific research and development teams to develop each category.”
Indeed, for Ceccaldi and Berrocal, who have full-time jobs in social media and marketing, it took approximately three years to develop and launch their first product, the Press Reset face oil, which debuted in January.
“We wanted to have a clear product roadmap in mind and a strong visual identity before introducing our brand. In the cosmetics industry, the development of a new product typically requires a minimum of 9 to 12 months, which includes formulating and conducting various tests,” they said.
“Since our first product is Ecocert COSMOS ORGANIC certified, we had to comply with their requirements throughout the entire process, from selecting the raw materials to finalising the packaging. This additional compliance added time to the development of our new product,” they added.
And even when skincare products have been developed and added to a brand’s offering, there are other factors that luxury companies must also consider when it comes to beauty consumers.
“When it comes to luxury, they really want it all,” said Buck. “Yes, they want the packaging but they want refillable packaging, they want the formulations to be clean, they want it to be sustainable. And, of course, they want the products to work.”
“Consumers are willing to pay for the science behind luxury skincare products,” said Roussel, noting brands like Augustinus Bader, Noble Panacea, La Mer and La Prairie. “These brands invest heavily in research and development to create cutting-edge products that claim to deliver superior results, making them attractive to consumers who are looking for the latest and most advanced skincare technologies.”
“With the advent of TikTok and the surge of the skincare industry on the platform, numerous brands and products have witnessed exponential growth due to user-generated content and (skin) influencers,” said Roussel. “Even luxury skincare brands cannot ignore this trend and should leverage it to raise awareness, target new audiences, and build their reputation.”
With the beauty market being so saturated, luxury brands must also consider how they differentiate themselves from the competition.
“It's essential to differentiate yourself from the competition,” said Ceccaldi and Berrocal, who are in the process of developing their second product, a serum, aiming to launch it to their offering before the summer.
“It's not only about the product itself but also about the story and values you infuse into the brand,” they added. “Marketing is an investment that boosts brand visibility, and we know we will need to invest consistently over time to achieve our goals.”
For Buck, it’s about the customer service that brands can offer. “That's part of the experience of beauty,” she said. “So maybe for the cooler fun brands it will be headsets and diagnostic tools, but for the more luxurious brands, it’s going to be how customer service is elevated to your needs and how bespoke it is and that's the beauty of beauty.”