Last year, it was electric-colored eyeshadow and bright berry lips. This year, it’s thick black eyeliner and metallic gold highlighters. When it comes to cosmetics, style seems to evolve as fast as the seasons change, making it difficult for retailers to determine a fleeting fad from a solid staple in the beauty industry at large.
In fact, trends steer the beauty industry more than nearly any other fast-moving consumer goods (FMCG) sector, according to New York-based research firm Nielsen. For retailers, whose top priority is to provide the products their customers want and need, the key is to identify ties between the current micro-trends and overarching consumer demands to ensure confidence in the beauty products they stock. By examining consumers’ steady shifts in food preferences—which are increasingly veering toward products with natural, free-from and transparency claims—retailers can expect the same shifts to be applicable in the cosmetics category.
What Defines Natural?
From meat and produce to packaged snacks and beverages, the word “natural” has become a mainstay across the grocery industry, and cosmetics are no exception. However, the market saturation of products with natural claims has caused consumer confusion—and perhaps some skepticism—around what that claim really means, resulting in sales declines.
According to Nielsen’s recent Future of Beauty Report, growth based simply on natural product claims is starting to slow. Sales of the overall cosmetics category declined about 1% over the last year, and sales of natural cosmetics underperformed the category as a whole, declining 1.2%. However, the trend toward natural remains: Products featuring natural claims represented 3.1% of the U.S. personal care market, generating $1.3 billion in annual sales in 2017, an increase from 2.1% of the market in 2013, per the report.
Today, health has become inclusive of what consumers put both in and on their bodies, and the definition of natural can vary from shopper to shopper, according to Jordan Rost, VP of consumer insights for Nielsen. “Cosmetics aisles are crowded,” he says. “Brands can no longer simply claim to be natural. They have to prove it with the simplest products, with only the right ingredients.”
Today’s transparency-minded shoppers seek specific and functional beauty products, and consumers are increasingly defining natural beauty by the ingredients that are not found in those products. According to Nielsen’s report, 53% of FMCG consumers say the absence of undesirable ingredients, such as parabens, is more important than the inclusion of beneficial ones. In fact, sales of cosmetics free from parabens have grown 2.3%, says Rost, while sales of those that are both free from parabens and have natural claims are growing 12%.
Walmart Delves Into Natural Beauty
In line with consumer demand for natural and transparent cosmetics, Walmart Inc. recently introduced Found, a new line of naturally inspired beauty products exclusive to its stores. Developed in partnership with branding agency HatchBeauty, based in Durham, N.C., the 130-product line features skincare and color cosmetics made with added extracts, botanicals and nourishing oils, which are 90% to 99% naturally derived.
“Every item within Found highlights a ‘miracle’ ingredient used in ancient beauty rituals,” said Melanie Patrick, senior buying manager for cosmetics at Bentonville, Ark.-based Walmart, in a company blog post. The line’s illuminating drops, for example, are made with passionfruit oil to seal in moisture and nourish the skin. “We’ve brought these ingredients to life to give customers an alternative featuring natural ingredients that can deliver the same results as traditional, high-end beauty products.”
To highlight the line’s absence of undesirable ingredients, Walmart launched a “Not Found List,” featuring ingredients the products do not include, such as parabens and phthalates. The Found line is also never tested on animals, says Patrick, and offers natural and transparent beauty products at the retailer’s notoriously low prices.
Cross-Merchandising With Familiar Products
Retailers can appease health-conscious consumers and increase beauty sales by offering cosmetics with natural and free-from claims, such as eye and lip products, which are particularly poised for growth: 55% and 87% of eye and lip cosmetics, respectively, are paraben-free, per Nielsen data.
“We add natural and organic skincare and beauty items when they first hit the market,” says Denise Braby, director of home, health, beauty, floral and nonfoods at 17-store Harmons Grocery, based in West Valley City, Utah. “People care more than ever about the ingredients of what they’re putting on their skin.”
To draw new consumers to the cosmetics aisle, retailers can cross-merchandise these products alongside food items with similar and familiar ingredients that align with their healthy lifestyles. “Many trend ingredients across beauty and personal care are starting as food ingredients and making their way into cosmetics, skincare and beyond,” says Rost. “More natural, healthier superfood options like avocado oil, legumes and quinoa are growing sales across beauty products as well.”
Beautifying the Beauty Department
However, in today’s digital-focused climate, simply offering and cross-merchandising the right products is not enough to drive foot traffic in the cosmetics aisle, where consumers can easily purchase the same items online. While many retailers tend to merchandise cosmetics in the pharmacy section, it’s those that offer definitive, engaging in-store beauty presentations and expertise that have positioned themselves ahead of the competition.
“In any beauty shopping occasion, the trend now is information and experience,” says Joann Marks, founder and CEO of beauty marketing agency Cosmetic Promotions, based in Orlando, Fla. The company works with retailers to provide customized experiential marketing tools for the introduction, sampling and training of beauty products to retail employees and their customers. “Grocery chains such as HEB now have beauty consultants in their stores,” she says. “They understand that beauty needs a designated person helping the customers.”
For retailers unable to provide staff experts in their cosmetic aisles, Marks suggests educating shoppers through in-store events. “In the past, grocery chain beauty departments were more of a convenience factor, but now smart chains are adding events if they can’t have dedicated staff in the department,” she says.
Cosmetic Promotions is also working with Hy-Vee and Kroger, among other retailers, to place professional makeup artists in stores for grand-opening events. Harmons, on the other hand, utilizes monthly PDQ displays to highlight the latest beauty trends and items, including a rotation of seasonal and local products. “A new focus for us this year is to bring in a brand or line for a season and then change to a new one,” Braby says. “This will help keep the freshness in our departments and always give the customer some new surprise and delight to look forward to.”
Incorporating Digital Channels
While engaging in-store experiences and displays are vital for brick-and-mortar foot traffic, retailers also have the opportunity to incorporate digital channels with their beauty departments. Walmart, for instance, reportedly plans to launch a stand-alone cosmetics brand via a homegrown website in an attempt to attract upscale shoppers, according to a recent article by The Washington Post.
“Beauty brands and retailers have provided some of the best-in-class examples of true omnichannel excellence,” says Rost. “It’s perhaps no surprise, then, that beauty products are some of the first consumer goods products to see significant shifts in sales to online channels.”
Over the last year, nearly a third of all beauty sales—over $12 billion—have occurred through digital platforms, according to Nielsen, up from 24% a year ago. This marks the biggest shift among major FMCG categories. And for retailers that lack the resources to enhance their in-store departments and provide beauty consultant staff members, online channels provide the opportunity to instead offer those experiences—such as makeup tips, trends and video tutorials—right at consumers’ fingertips.