The Business of Fashion has released The State of Fashion: Beauty Report.

Key insights

• The beauty industry will slow to 5% annual growth over the next five years.
• Fragrance will be the strongest-performing category, growing 6% annually, while the use of aesthetic injectables continues to rise globally.
• Famous founders can no longer be relied upon for long-term success, with only 13% of consumers citing them as a key reason for purchase.

The five industry themes that will set the beauty agenda:

The Fragmenting Consumer

• Shifting macro dynamics, wealth patterns and migration are reshaping shopper profiles across both mature and emerging markets.
• To stay competitive, companies must prepare for disruption and anticipate changes across generations and cultures. Each market will have layered nuances - hyperlocalisation is needed to meet consumer needs.

True Value

• Accessibly priced beauty brands have proven they can challenge pricier counterparts on efficacy, innovation and virality, raising consumer expectations across the market.
• As consumers grow more selective and cost-conscious, brands must demonstrate a clear and ownable value proposition, regardless of price.

Beyond the Founder

• Over the last decade, an avalanche of brands with public-facing founders emerged. Communities were often built around their personal aesthetic, lifestyle or social presence. But while a prominent founder can propel growth, their appeal alone is insufficient for long-term success.
• With many branding niches now overcrowded, quality and originality will be key.

Marketing’s Balancing Act

• Brands must rebuild their creative marketing muscle and take chances in a crowded market.
• As growth marketing becomes even more expensive thanks to the oversaturation of channels, leaders will need to strike a smarter balance between brand and performance marketing.

Channels at a Crossroads

• Online marketplaces continue to gain share, putting pressure on speciality and mass retailers looking to expand their beauty aisles.
• As assortments begin to assimilate and channels increasingly blur, the bar for differentiation will rise, especially in physical stores, where most beauty discovery still happens.

For the full report, visit businessoffashion.com.