CEW’s Year in Review and 2018 Trend Forecast Revealed!

With an audience of nearly 700 gathered at the Roosevelt Hotel in New York City, CEW’s much-anticipated Year in Review featured beauty executives from Mintel, Nielsen and the NPD Group who discussed the beauty industry’s performance in 2017 and presented a forecast for 2018 and beyond based on major trends. Topping the list of trends that impacted businesses the most were naturalness, personalization, purpose, and digital technology.

Au Naturale
Speaking about naturalness, Sarah Jindal, senior innovation and insight analyst of beauty and personal care for Mintel, stated that 50 percent of UK consumers look for products made with natural ingredients and that items touting their safety and purity scored higher with consumers than those that did not. In response, many businesses are now locally sourcing ingredients to minimize environmental impact. Jordan Rost, Nielsen’s consumer insights vice president, also discussed the growth of natural products, including the sharp rise in demand for paraben-free and avocado oil-based products. In total, 2017 marked a 3.1 percent increase in the sales of natural products in the U.S. personal care market, equaling $1.3 billion. Additionally, prestige beauty sales have grown across the globe.

The NPD Group’s executive director and beauty industry analyst, Larissa Jensen, revealed that, while the top five cosmetics companies accounted for 60 percent of total sales across the beauty industry, small businesses grew as well. Moreover, the “natural” market continues to expand, “with a 50 percent dollar growth in natural fragrances since 2014.” Jensen also explained that ingredient stories and descriptions bolstered the makeup industry in 2017, highlighting the need for brand transparency.

Personalization
Jindal also addressed personalization, stating that the most authentic way to connect to customers is through personal connection. Customers, Jindal argued, want to buy from brands that stand for something and that align with their personal interests and passions. Additionally, customers value transparent companies with hands-on founders, companies that celebrate failures by addressing them head on. Additionally, Jindal said that brands “need to stop targeting consumers by age, skin color or body type. Consumers demand product they define themselves by.” Rost added that “over the last five years, the number of unique facial cosmetic colors available on shelves has grown 22 percent, outpacing the general pace of new product development in facial cosmetics by seven times.” Rost also mentioned that brands must focus on becoming relevant and authentic to consumers on an individual level.

Digital technology is yet another way for brands to offer a more personalized touch to customers. Smashbox’s new Modiface app, which follows users’ eye movements to see which products they are most interested in, is currently going through trials and testing, but Smashbox says that they saw a “27 percent increase in consumer purchases in two months due to the technology.” Interactive online video tutorials and advanced in-store shopper insight technology are also undergoing beta testing. Americans spent $12 billion on beauty and personal care products online in 2017, and—interestingly—the top 20 cosmetics brands occupy a significantly smaller share of the digital marketplace than they do for physical, brick-and-mortar retail.

Brick and Mortar Accounts for 37 Percent of Cosmetics Sales
Jensen added that, while social media influences 66 percent of beauty purchases (with Instagram influencing an astounding 75 percent of user purchase decisions), brick-and-mortar is far from dead and accounts for 37 percent of makeup sales. However, Amazon beauty sales rose 43 percent in 2017.