The U.S. beauty industry is ready for a change. Innovation in this field has slowed down but will speed up quickly. According to Circana, for the four weeks ending August 31, 2024, hair care, fragrance, and skincare did well. These prestige beauty categories were popular during the back-to-school shopping season.
Creativity in product design, functionality, and marketing entices consumers to spend beyond just their immediate needs. Despite this, a recent Mintel report highlights that beauty is currently in an innovation slump. Here’s why that’s happening and why it’s likely to change soon.
Innovative products are crucial for attracting new customers, creating fresh uses, justifying premium pricing, and keeping brands relevant. Brands that embrace innovation are significantly more likely to see sales growth. Innovation can take many forms, including:
However, NIQ warns that even the best ideas can fail if they aren’t backed by strong product performance and adequate support, with a third of new beauty launches not surviving their first year.
While beauty has seen rapid growth in product launches, some industry experts believe the pace has led to an excess. Sandrine Lecointe, from French brand Oane, voiced concerns about the “frenzy” of new beauty products, echoing wider frustrations about the sheer volume of launches.
Publications like Glamour have criticized the industry for overproducing and not offering truly innovative products, with many launches seen as unnecessary or uninspired.
Sustainability concerns also play into this critique, as the industry generates an estimated 120 billion units of cosmetic packaging annually, much of which is not recyclable. Yet despite this surge in product output, there has been a noticeable slowdown in genuine innovation.
Mintel reports that beauty and personal care brands are launching fewer new products. In early 2024, only 35% of global consumer goods launches were seen as truly innovative.
This is the lowest rate since Mintel began tracking in 1996, and it’s even lower in North America, at just 29%. This slowdown predates the pandemic, with innovation steadily declining since 2007.
Consumers, particularly in the wake of COVID, have also become more value-focused, prioritizing affordable products that meet basic needs over exploring new, experimental items.
Yet, beauty remains a resilient category. Even with tighter budgets, 80% of consumers say they will keep or increase their beauty spending. This shows that beauty products are still very popular.
While consumer interest in beauty is strong, several challenges have hindered innovation. Inflation has led price-conscious shoppers to choose more affordable alternatives, especially in mass-market beauty.
Raw material costs are increasing. There are also concerns about product safety, particularly in Europe. These issues have made it more difficult to launch new products.
In regions like France, consumers are demanding more scientific validation for beauty product claims, creating another barrier to quick innovation.
The beauty industry’s innovation lag may be short-lived, thanks to emerging technologies like artificial intelligence (AI). Mintel says AI will change product development, marketing, and customer insights. This will give small and new brands a better chance to compete.
AI tools can speed up innovation cycles. This helps brands develop and launch products much faster, going from years to months. This new era of “fast beauty” will feature constant, real-time innovation. Brands will compete for market share.
As AI continues to evolve, the beauty industry may soon enter a period of rapid innovation, transforming the current slowdown into a surge of new ideas and products.
