It was only a few years ago that skincare overcame makeup as the beauty category to watch. Having seen its market value increase 60% in a decade,1 skincare was experiencing a significant boom. Brands were popping up in social feeds and on Sephora shelves at a record pace and consumer engagement with brands was at an all-time high.
When the pandemic hit, the beauty and personal care industry experienced the tsunami of market effects many others felt — a lot of which we will be dealing with for a generation. Retail stores went on lockdown, workers we working from home. Date nights were a distant memory and though cosmetic and fragrance brands did suffer, skincare remained resilient.
This tenacity was in part driven by a perfect storm of events: millennials increased their purchasing power, consumers were more educated and open to new trends, and the side effects of COVID have changed our ways of life, possibly forever.
It’s important to realize that by the end of 2019 (before social distancing would permeate our lexicon) the skincare segment was already hitting a 5% growth year-over-year, for years. Amounting to more than $6 billion a year in growth into 2020,2 industry analysts were muddled not about whether the boom would continue, but about for how long.
These gains were in large part thanks to a new generation of skincare brands that appealed to contemporary audiences, niche segments, and a new breed of consumers. Companies were, at last, addressing the honest differences in individual skin due to ethnicity, gender, or medical conditions. The industry as a whole was beginning to redefine what the term personal care was all about.
Melanie Bender, from the skincare brand Versed, told Vogue in 2019 that skincare had a personal connection that other categories didn’t.3 “Makeup is temporary and feels like something you put on for others, skincare is an investment in yourself,” she said.
The emerging brands that came about during this period tackled today’s consumer needs, leaned heavily on natural formulations, and appealed to untapped audiences looking for daily skin regimens. They were built on operational frameworks that favored large amounts of small-volume sales. So many brands emerged in fact, that in the prestige channel, the number of brands outside of the top 20 made up the largest share of market sales for the first time in history.4
When the pandemic’s effect began to influence our industry, a lot of product categories had already suffered crippling setbacks. Color cosmetics were down 37% in just the first half of the year5 and the main drivers of makeup — office work and date nights — were no longer what they used to be. Despite the turbulence, COVID was inflicting upon the world, skincare was able to find a silver lining.
There were two major contributors to skincare’s COVID boost: our collective increase in hand-washing, soap and sanitizers (and the lasting effect that was having on our skin), and the overnight trend of ‘me time’ and what we could do to pamper our souls at home. Overnight antibacterial soap was as valuable as toilet paper, and masstige cleansers filled in the gaps. Skincare treatments guaranteed to ‘bring the spa to you’ were in vogue.
The result was a boon to brands that had been clamoring to get noticed, hoping to be spotted in a field of global CPGs and instantly recognizable brand identities. It heightened our awareness around what it means to take care of oneself, particularly beyond the bounds of basic hygiene and germ control.
Contract manufacturing in turn surged, with thousands of brands — even those owned by the field of large, multinational CPGs — were desperate for more production capacity and safety stock. Trend-worthy products like CBD-based lotion, tinted moisturizer, and at-home hydrating face masks were given the spotlight to shine.
Overall, the pandemic ended up breathing more life into the skincare boom.
Brands that were growing at a faster pace than the category average — both before and after the start of the pandemic — were those that embraced digital channels for marketing and direct-to-consumer workflows. Millennials — now the United States’ largest living adult population — spend more time online (and do so with an aggregate annual income expected to surpass $4 trillion by 20306).
This results in a consumer market that is more diverse, more educated about the topic of skincare, more interested in what goes into a formulation, and more connected to influencers they trust and listen to. Today, 93% of consumers read product reviews before purchasing,7 and place a great deal of weight on virtual word-of-mouth.
Furthermore, every new brand that popped during this boom has been built digitally from the ground up. Not only do they have easy-to-use websites with integrated stores and subscription pricing, but also connect directly to their audiences through digital ads, social media, and email marketing.
Overall, these improvements to our business have contributed to a collective enhancement of the skincare industry. Our sales are more linked to user behavior, products are formulated to tackle the needs of today, and our supply chain workflows are designed for the future, not the past. We are feeding into an ethos of innovation driven by actual consumer feedback.
When the waves settle around COVID and markets fall back in line, skincare will likely be one that remains on top and continues to grow. Some of our old habits may reemerge and some safety choices will be here to stay, but it’s safe to say we’re no longer the customers we used to be.