Spotlight: The importance of the consumer in beauty & wellness

The future of beauty and wellness brands is not just in following trends but in creating lasting, meaningful connections with consumers driven by effective and sustainable products.

The beauty and wellness industry stands out in today’s challenging landscape for its global appeal and ability not just to survive but even thrive across economic cycles. Trends can vary across geographies but in beauty it can be consistent across continents and offers pockets of growth that are less susceptible to becoming mere fads.

“People care a lot about efficacy, responsible business around supply chains and sustainability, as well as a strong differentiated brand proposition,” points out Tom Pemberton, Partner and Head of Consumer at Inflexion.  It means over the past few years this industry has seen significant shifts driven by changes in consumer behaviour, digital transformation, and the post-pandemic wellness boom.

Shifting consumer behaviours

The pandemic brought about some substantial changes in consumer habits. With more time spent at home then and now (often staring at oneself on a video call), people became more self-aware and began investing more in skincare, haircare and overall wellness. Social media is playing a crucial role in this transformation, with platforms such as Instagram and TikTok helping make consumers more knowledgeable about products, ingredients, and supply chains and enabling them to learn about items before they enter a store.

"The beauty spend boom has coincided with the post-pandemic wellness boom, making it a strong and exciting industry," says Tom. He explains the beauty industry’s resilience is evident as spending on beauty products tends to be cut relatively late when consumers reconsider their budgets.

Cost-of-living crisis

Beauty and wellness brands are not all created equally. While beauty spending tends to be resilient, the cost-of-living crisis influences consumer priorities, with middle-market brands most vulnerable. While high-end products tend to fare well, those with a mid-level proposition and lacking strong differentiation may struggle as consumers perceive them as commodities and shift custom. "At the ultra-high end, there can be strong resilience, but there might be a trade down from ultra-high to premium," explains Tom. For this reason, brands in the premium segment can capture consumers trading down from ultra-luxury options. There is also scope for laddering in beauty and wellness, whereby consumers come in at a certain price point and eventually move up the product hierarchy as they better understand their own needs and how brands can best cater to them.

Digital transformation and omnichannel strategies

Digital transformation was already well underway before COVID-19, but the pandemic accelerated this shift. “Every beauty brand now needs a robust digital and social media presence to resonate with consumers,” Tom stresses. "You need to be good at digital but also be omnichannel and unified across them. To really be successfully, you need to tell a great brand and product story online through your owned site and social, but also be consistent in how you retail and e-tail," he notes.

A strong digital presence is crucial as consumers increasingly research and learn about products online. Social media platforms are powerful tools for building customer followings if used cleverly, but a cohesive brand experience is of paramount importance and requires consistency across all channels, with a seamless retail experience supporting online sales.

Direct-to-consumer (D2C) strategies

The omnichannel approach for beauty means brands need to be on Tik Tok and Instagram as well as third party online retail platforms. They are important for introducing brands to a wider audience, but their propensity for discounting can impact margins. For this reason, managing discounts effectively has become crucial, and brands have become better at controlling this over the past 12-18 months.

The holy grail is driving customers to shop directly with the brand as it not only allows businesses to steer the entire customer experience, but also offers rich data and insights into customers themselves. "It’s about getting products into the right hands, and targeted sampling can reach your desired demographic,” Tom explains, illustrating the benefits of data. “This can help you reach new customers and so can help not only with customer acquisition but also retention," he says. “After all, you understand your product better than anyone else, and getting to know your customers well can reap huge rewards.”

Methods include a strong loyalty scheme, exclusive products, and a highly engaged CRM system that personalises offers to the right people at the right time.

“Brands that can effectively leverage digital platforms, maintain strong omnichannel strategies, and offer unique value propositions will continue to thrive. As the industry grows, understanding these dynamics will be crucial for brands looking to capture and sustain consumer interest,” Tom says.