TikTok influencers like Evelyn Unruh seen here at her vanity table at home in Olathe, Kansas are changing the industry. (Arin Yoon for The Washington Post via Getty Images)
The Washington Post via Getty Images
The beauty industry is undergoing big, fast, technological changes. That’s the takeaway from data presented by Anna Mayo, Vice President of NielsenIQ at a Revieve brand event last week.
Brands that don’t adapt risk becoming invisible.
Digital Is A Beauty Rocketship
In 2020, about one-third of beauty sales were online and today it’s almost half and still rising. Online sales are growing about nine times faster than in-store sales at about 20% year-over-year.
What has facilitated the change isn’t just consumers moving their in-store purchases online. It’s an entire ecosystem that facilitates purchases without actually touching or trying the product.
It starts with influencers who, according to Mayo, are “the number one marketing driver in all of beauty.” They are the friend you need to make a reliable recommendation. Now consumers are much more comfortable buying products they haven’t tested or smelled or event felt in stores because they are relying on influencers and the ever-popular “get ready with me” videos.
Tiktok Shop, which is about two years old, is leading the trend fueled in large part by impulse purchases made in under 30 seconds.
Data indicate that because Tiktok is new and because it’s Chinese-owned, it’s not trusted by all consumers and that has been a boon to Amazon. Many consumers find products on Tiktok and buy them on Amazon.
But that isn’t all that’s helping Amazon, it’s ideal for replenishment and that has made it the number one beauty retailer and also the fastest growing.
The combination of influencers, Tiktok and Amazon has created an entirely new way to shop that’s fully online in a category where most people could not have imagined buying a new product without physically trying it.
AI Is Changing Beauty Searches
Beauty is complex. Decoding ingredients, efficacy, skin types, hair textures, routines and brand claims is hard. Mayo says that Google searches for beauty are trending down and there are some estimates that as much of 17% of beauty-related searches are moving to ChatGPT and other AI chatbots.
The questions being asked are different than on Google searches. Instead of “best serum for dry skin,” it’s more like “Give me a three-step skincare routine for under $80 to deal with dry skin.” The searches can be much more personalized and that brings consumers to a purchase much faster and easier.
The consumer’s state of mind around AI is complex. Consumers like that it can improve health and education and make shopping more personalized. 34% of consumers are likely to purchase a product they’ve only seen through augmented or virtual reality. But there are still concerns: Consumers’ biggest fears are that AI will eliminate jobs and spread misinformation.
A lot depends on age. NielsenIQ data says Gen Z and Millennial consumers are much more likely to engage AI than Gen X and Boomers, typical for adoption trends in new technology.
Beauty Is Still Very Attractive To Other Retailers Too
Mayo of NielsenIQ says the average grocery classification is growing by about 3%, flat with inflation. But beauty is the exception, growing at about 10%. So other retailers are trying everything to keep up:
- Ulta is expanding in wellness
- Sephora is recruiting more buyers and leveraging its partnership with Kohl’s
- Costco is building its online assortment of prestige and K-beauty lines for its high-income members
- Walmart is moving upmarket to attract households earning over $75,000
But Amazon and Tiktok keep growing and are now also attracting lower-income shoppers.
Mayo says beauty is the “affordable treat” so consumers may trade down, buy dupes or switch brands but they are not walking away from spending on beauty.
The category itself keeps growing too. It now includes wellness products that assist with better sleep, stress relief and skin health and that makes it more essential in consumers’ minds.
What Brands Need To Do
The shift to online is not going to change, it’s going to continue. To deal with that, brands have to think about their consumer in new ways.
– Treat beauty as a digital-first category. Almost half of beauty is already online and the other half is moving online about nine times faster than it’s growing in stores. It’s inevitable.
– Build AI efforts to help clarify and educate and not just to promote. Shoppers are overwhelmed by shade selection, regimen building, ingredient literacy and the balance between price and value. Content that aids them to understand will help a brand to punch through the noise.
– Design a dual pathway. Especially for brands trying to attract Gen X and Boomer customers who prefer legacy search, straightforward content and human connection.
But all brands need to be aware that no matter what their users are doing now, the trend towards digitization and online purchasing is here to stay and whatever the percent of sales is online in 2025, it’s only going to be greater in 2026 and beyond.