Data is key asset for beauty industry to master AI this year, says Sia Partners
11 Jan 2024 --- Sia Partners presents the top 2023 cosmetic trends expected to carry over this year. The consulting firm points out that, following the early-2020s economic downturn, the cosmetics industry regained its leadership position last year.
It says the EU spearheads growth, while the Asia-Pacific region maintains its dominance with over a third of the global cosmetics market share.
Sia Partners’ managing director, Thomas Graffagnino, tells Personal Care Insights that 2023 forms the basis of cosmetics company strategic plans, “so the trends should remain for the coming year. Moreover, we believe they reflect a consumer need that should last for the coming years.”
What can the industry learn from 2023?
Key trends marked by Sia Partners include:
Unique and personalized client experiences and products
Web3-powered beauty tech
End-to-end sustainability
Beauty as a purpose
Graffagnino comments on what the industry can learn from last year: “Data is a key turning point or asset that needs to be mastered for all players. That’s the only way for them to master and apply AI to every business domain.”
“Supply chain resilience is also a must in the current geopolitical environment. Every cosmetic company has to strengthen its supply chain to face global risks and threats,” he adds.
NYX’s launch of Gorjs, the first DAO dedicated to the beauty world.Furthermore, he believes that beauty technology and AI will likely increase this year, especially with the rise of GenAI, which will spread for corporate use in the cosmetic industry. GenAI creates something new out of previous examples.
For instance, Haut.AI unveiled SkinGPT, making it the “first” to incorporate GenAI technology for modeling skin conditions last year.
“Sustainability with new national and worldwide scores and labels will emerge across the industry to promote the environmental impact of the products,” continues Graffagnino.
Hyper-personalization for client satisfaction
The consulting firm notes companies leveraging “extensive” customer data to create products based on individual preferences.
According to Sia Partners, the beauty industry has experienced a paradigm shift with the rise of the hyper-personalization trend. As a result, this has enabled brands to build customer relationships, “emphasizing efficiency, speed and high-quality service.”
It mentions, for example, Coty’s Chloé’s fragrance collection Atelier des Fleurs, which provides customers with a fragrance creation experience in a Parisian-inspired pop-up boutique. Coty’s commitment to adapting to customer needs is further seen by face-to-face assistance from beauty advisors and a digital Bouquet Finder for solo shoppers.
Furthermore, L’Oréal and Verily kickstarted the “largest” investigation into diverse factors impacting skin and hair. The multi-year study will help researchers better understand the impacts of biological, clinical and environmental factors.
The trend of hyper-personalization extends into the digital realm with virtual try-on technology. Users can digitally preview and experiment with products through an augmented reality system, mirroring the in-store experience.
Recently, Google launched AR beauty tools enabling shoppers to try hair colors and foundations virtually on mobile browsers, while brands can promote their products with AR beauty advertisements.
Revieve finds that 22% of consumers are drawn to virtual shopping and immersive encounters, and retailers have responded to this by expanding their digital presence. Meanwhile, 81% of retailers plan to enhance their online presence this year.
Shiseido launched 150 limited edition NFTs to celebrate its 150th anniversary.
Sia Partners spotlights Chanel’s Lipscanner application and NYX Cosmetics’ Virtual Try-On feature to showcase how technology enables users to try on products virtually.
Web 3.0 Innovations
Sia Partners sees more significant players investing in Web3, the next-generation of the web, to upgrade customer experiences. For instance, L’Oréal’s BOLD venture capital fund invested in Digital Village, a metaverse-as-a-service platform and NFT marketplace for brands, creators and communities.
Also, Shiseido launched 150 limited edition NFTs to celebrate its 150th anniversary in collaboration with Cult, an agency for Web3 services. At the same time, Shiseido’s Nars debuted in the Roblox metaverse, featuring mini-games, video content and customizable avatars.
Sia Partners highlights DAO (decentralized autonomous organization) as an emerging “essential component” of Web 3 that can foster collaboration within the beauty community. It mentions NYX’s launch of Gorjs, the first DAO dedicated to the beauty world, inviting a community of Web3 designers, 3D artists and beauty product manufacturers to shape the future of digital beauty.
Holistic sustainability
Sia Partners says CSR remains essential for driving innovation in product composition and packaging. Consumer expectations for sustainable cosmetics drive trends in packaging, formulations and responsible sourcing.
Coty’s Gucci fragrance in “global first” bottled carbon emissions.Trends include using environmentally sustainable materials, empty product take-back programs for recycling, refillable products and eco-designed solid products. Other trends are using natural and vegan ingredients, labels for green formulations and ingredient transparency.
Notable initiatives include Chanel’s refillable lipstick, Shiseido’s ¥1 billion (US$7.1 million) investment in Chitose Group for cosmetics based on micro-algae, and Gucci Beauty’s fragrance made with alcohol derived from carbon gas emissions.
Redefining beauty: Holistic and inclusive
The concept of beauty is going through transformative shifts by encompassing holistic well-being and embracing inclusivity, observes Sia Partners.
According to Innova Market Insights, supplements with skin health claims had an annual growth of 31% (Global, CAGR 2018 to 2022). Capsules (27%) led the product launches, but most innovations were in gummy format, with an annual growth of 64%. Biotin was the top ingredient for these supplements targeting beauty purposes (35%).
Brands like Aime Skincare, D-Lab Nutricosmetics, The Nue Co, and D+ cater to this growing market, says the consulting firm.
Moreover, greater inclusivity is breaking away from conventional gender norms. For instance, Dior’s Capture Totale serum and Chanel’s “Boy” men’s makeup franchise mark a shift toward universal formulations. Innovations like Hapta by L’Oréal cater to individuals with reduced mobility.
In related news, LookFantastic analyzed internal product data and the most searched-for products on TikTok and Google to reveal which brands and trends were at the top of 2023 and what to expect in 2024.
By Venya Patel
