The global beauty industry is projected to reach retail sales of approximately $580 billion by 2027, according to a report titled “State of Fashion Beauty” by McKinsey and The Business of Fashion.
This estimate is based on a global survey that captures shopping behaviours, market intelligence, and insights from industry executives and experts.
Despite the challenges posed by consumer and economic struggles, the beauty market is expected to demonstrate its resilience, as it has done in recent years.
McKinsey estimates that the industry will achieve retail sales of over $580 billion by 2027, growing at a rate of 6% per year.
- “McKinsey estimates that by 2027, the global beauty industry will record over $580 billion of retail sales, growing at 6% per year.
- “How the industry reaches that figure depends on brands’ and retailers’ ability to navigate the dynamics that this edition of The State of Fashion explores: new geographic hotspots; the burgeoning luxury opportunity; the route for emerging brands to scale; the evolving landscape for mergers and acquisitions; the steady rise of wellness related beauty; and the complexities of the Gen-Z
The report highlights various factors that will influence the industry’s growth. These include the emergence of new geographic hotspots, the expanding luxury opportunity, the scaling potential for emerging brands, the evolving landscape of mergers and acquisitions, the rise of wellness-related beauty, and the complexities of targeting Gen Z consumers.
Celebrities, particularly A-list figures like Rihanna (Fenty Beauty) and Kim Kardashian (SKKN BY KIM), have made significant investments in the beauty industry. This trend, coupled with the industry’s allure, is likely to contribute to its growth.
McKinsey states in its report,
- “It’s now an industry that everyone from top-tier financiers to A-list celebrities wants to be a part of, with good reason.”
The report emphasizes that successful beauty players will be those who understand their unique value propositions and their communities, while constantly embracing rapid innovation and product cycles.
- One key driver of the beauty industry’s projected growth is Generation Z. This generation, comprising individuals born between 1997 and 2010, holds significant influence due to their use of social media to voice opinions, influence older generations, and challenge conventional notions of beauty.
- Additionally, the shift towards well-being has changed the profile of influencers in the industry, with recommendations from doctors and dermatologists becoming highly influential.
Consumer behaviours related to hair, skin, and body care are also shifting.
The report reveals that consumers are interested in incorporating new products into their regular beauty routines.
- McKinsey’s global consumer survey found that more than half of the respondents use three or more brands for skin care, hair care, and fragrance.
- Additionally, around 40% of consumers expressed loyalty to trusted brands, while 69% indicated a willingness to try new products at least every six months.
- The diversification within categories, such as specialized products for different hair types and scalp treatments, presents new growth avenues.
As the beauty industry continues to evolve, understanding the preferences and behaviours of consumers, particularly Gen Z, and embracing innovation will be key to sustained success and growth.