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The beauty industry - which includes skin care, color cosmetics, hair care, fragrance and personal care - had a tough year in 2020: global sales of color cosmetics fell 33 percent, while overall retail sales in the beauty category declined 15 percent. But the industry has been resilient in the past, and experts predict a return to growth in 2022. In this episode of the McKinsey Consumer & Retail podcast, McKinsey partners Sophie Marchessault and Emma Spagnuolo share their outlook for the industry. (Megan Lesko Pacchia and Kristi Weaver contributed to the research cited in this episode). An edited transcript of their conversation with Executive Editor Monica Toriello is below. Subscribe to the podcast.
I say that because people often hear "beauty industry," which is our topic today, and they think, "Oh, this is going to be all about products for women." So, for our male listeners, I want to say to you, that's not true. On today's show, we're going to discuss some of the key trends in the beauty industry, and one of them is the growth of unisex and men's products.
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Let's meet two of our beauty experts. sophie Marchessou is a partner in McKinsey's Paris office. She has been with McKinsey for over 12 years, with about 8 of those years living in New Jersey. She moved back to Paris at the end of 2019, and Sophie now leads McKinsey's work with global beauty companies. Emma Spagnuolo is a McKinsey partner and lives in New Jersey. Emma leads our work in the beauty industry in North America. She began her career at U.S. retailers Abercrombie & Fitch and Bloomingdale's, and she joined McKinsey about six years ago.
Let's start with a very simple question. How has your own beauty routine changed in the last year and a half?
My habits are following what we're seeing in global trends. My cosmetic consumption has definitely decreased. Partly because I can't try the fun stuff in stores and there are fewer occasions to wear makeup. On the other hand, I've definitely increased my spending on skin care, body care and hair care products, as well as what we call DIY products, because getting my nails done or my hair cut at the salon is out of the question. But my spending is rapidly shifting back to my normal pre-pandemic levels.
I'm crazy about color cosmetics because that's what I was excited about during the pandemic. Even though I had to buy online, I tried new things and experimented at home. However, I did follow the trend and I created a skin and hair care routine for myself that I never had in the past. So, for example, if I used to be a "purely colored makeup, barely even a moisturizer" person, now I have a serum, a moisturizer, a sunscreen, and then a more comprehensive concealer on top before I start my makeup. So I'm going against the trend as well as going with it. But I'm probably the favorite customer of brands and retailers right now.
If this were a different type of show, I would ask the brands of every product you just mentioned. But this is not that type of show. We're going to talk about the business side of things. I'm curious to hear your predictions for post-pop beauty. Some experts are predicting a Roaring 20s: people spending a lot of money again and "peacocking." They are predicting a beauty boom and a rapid resurgence of colored cosmetics, based both on the Chinese model and on the feeling that people want to dress up, wear makeup and go out again. Did you foresee a boom in the beauty industry?
You talked about a 15% decline in the industry, which is certainly dramatic for many of the players. But if you look at it from that perspective and compare it to other consumer categories, it's doing much better.
I also believe that the outlook is a little bit different from region to region. We're very bullish on color cosmetics in the next few years and think it's going to be much more exciting. But we're seeing it recover very quickly in China and we're seeing it accelerate rapidly in the U.S. as things are getting back to normal. But we're a little bit pessimistic about how long it will take to get back to normal in Europe and what the growth rate will be. Some of this also just reflects the trend of the market warming up. It's a geographically differentiated situation.
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