Beauty is Flourishing from Sephora and Ulta to Bloomingdale’s and Youtube

From sculpting kits, highlighting, lowlighting, brow shaping and contouring, in today’s beauty landscape, the options are limitless. The projected year over year growth of the industry has proven that beauty is one of the most successful categories in retail, with Target, Sephora and Ulta leading the charge. The U.S. beauty industry pulled in over $46.2 billion in 2015 and is projected to rise to $51.8 billion by 2020. According to another recent report by Indix, the global skin care market will be worth an estimated $121 billion by the end of 2016.

Millennial women comprise the highest concentration of spenders on make-up and skincare, purchasing more than 10 products a year, often double or triple that amount. According to a recent report from the NPD Group, “prestige beauty” saw a seven percent increase in sales in 2015, made possible in part, by the rise in both celebrity and social media influencers who promote make-up tips like “contouring” and “shading” on their personal platforms. And with Sephora and Allure Magazine jumping on the bandwagon of popular monthly subscription boxes like Birchbox and Glossybox with their own versions hand-selected by beauty editors, there’s never been more brand competition in the marketplace.

LVMH-owned Sephora reported an eight percent increase in revenue in 2014, followed by the launch of 100 new stores globally in 2015. They also launched the Sephora Innovation Lab, a digital think tank designed to groom leaders, as well as a mobile augmented-reality app, “virtual beauty makeover.” Ulta, meanwhile, reported double digit earnings growth in all three operations segments in 2015: retail stores, salon services and e-commerce. Why the strong success? In the same way that stores like TJ Maxx and Nordstrom Rack have proliferated with record sales growth in recent years, consumer analytics firm Tabs Group, reports that customers approach beauty buying as a treasure hunt, where they can see and test multiple brands, products and tools all in one place. They have brand loyalty to mascara from Smashbox, for example, but prefer foundation from Laura Mercier.

One remarkable growth factor is the emergence of all-in-one toolkits for shading and contouring. In a recent Washington Post analysis, Bluemercury (recently acquired by Macy’s for $210 million) co-founder Barry Beck stated that 55% of the company’s top-selling items were ones that didn’t exist five years ago. The retailer is planning expansion to 150 locations over the next two years, competing with rivals Sephora and other department stores. With the launch of new and refined color palettes and gift sets, department store gifts with purchase, dual-use brushes and foundation tools, and samples with every purchase, it’s easy to see why shoppers flock to beauty counters from Sephora to Barneys for a quick way to look and feel good. Even drugstore cosmetics, hair and skincare products have upped the ante with better display, lighting and higher-end active ingredients and anti-aging properties.

Now, clothing retailers are capitalizing on the effect with Forever 21 and Express branded nail polish, blush and lip gloss lining the checkout aisles where a captive audience can grab one or two more items before they swipe their card. And with increasingly sophisticated packaging and labeling, emerging beauty labels touting all natural ingredients are springing up all over Etsy, Instagram, YouTube and independent beauty boutiques around the country.

As social media has shaped consumer behavior and delivered countless introductions to new and familiar brands, the meteoric rise of “beauty tube” stars have developed a new platform for product marketing like never before. Youtube star

So what’s happening to some of the tried and true department store brands? Despite the seemingly high price of a Chanel lipstick or a YSL mascara, high-end lines are still solid, offering consumers a chance to own what they consider to be a luxurious brand for a smaller amount than the cost of a Chanel handbag or Dior shoes. Another big growth sector within the industry is natural and organic product lines. In a recent Nielsen survey, 53% of respondents felt “all-natural” was imperative in their choice of product and brand. With an increasing awareness of and distrust for chemical-laden products, animal testing and poor manufacturing, consumers are choosing all natural and “cruelty-free” products and brands at a 24% higher rate than in the years prior to 2012.

BeautyCon, an industry show created by a collective of social media influencers, draws thousands of people to its interactive extravaganzas in New York, Dallas, London and Los Angeles, including vloggers, celebrities, brand ambassadors and renown make-up artists who are first on the scene for new product launches, industry trends and make-up techniques. But you won’t see the likes of Chanel, Dior or Estee Lauder in attendance. The brands leading the charge in the Gen Y and Z set are what were once tertiary boutique brands like Benefit, Bare Minerals, Urban Decay and now IT Cosmetics and Soap & Glory, even if some of these are owned by larger beauty conglomerates. Estee Lauder is known for being the flagship department store brand among an aging set, so in order to target the next generation, they hired Kendall Jenner as their new spokesmodel, hoping to tap into her nearly 45 million Instagram followers. Likewise, they are looking to copy the success of their own smaller brands like Bobbi Brown, Smashbox and MAC for marketing influencer inspiration.

If there’s one thing consumers respond to with brands from Fresh and Origins to Aveda and Benefit, it’s their commitment toward charitable campaigns on behalf of the community and the environment. Packaging has become more streamlined and eco-friendly, while products are implementing fewer chemical and more natural pigments. Likewise, the Personal Care Products Council Foundation, in conjunction with the American Cancer Society and the Professional Beauty Association’s Look Good Feel Better campaign partners licensed aestheticians and hairstylists with hospital cancer units around the country delivering make-up, hair and wig tutorials for women battling cancer. The MAC Aids Fund donates 100% of every Viva Glam lip purchase to alleviating poverty and HIV/AIDS support groups around the globe, and has raised over $270 million for the cause since 1994. Philosophy donates one percent of every product to community-based mental health organizations through their “Hope and Grace Initiative,” and Lush’s Charity Pot program has donated over $10 million dollars to more than 850 grassroots organizations around the world supporting humanitarian, human and animal rights causes. Shopping for beauty and getting a return on investment through a charitable donation is something everyone can get behind. And with original YouTube channels launching every day, and fresh product lines being developed by brands both independent and multinational, it’s never been a more diverse and collaborative environment for a new lipstick or eye palette to find its following.