Insight Flash: Consumer Edge data reveals Direct-to-Consumer Beauty Sales Slow Down in the US and Europe
CE global transaction data shows that direct-to-consumer beauty sales growth continued to decelerate in 2024Q2 across both the US and Europe. Perhaps reflecting increased caution around discretionary spending for budget-constrained consumers or share gains for big-box retailers offering better bargains on key products compared to pure-play beauty merchants. However, performance varied by sub-category within the beauty space. On-trend brands in clean and custom skin care emerged as high growth bright spots in the US. Meanwhile, beauty seller brands offering one-stop-shop convenience like Space NK and Sephora outperformed in the UK.
Delving deeper, CE data also uncovered the US brands most levered to the increasingly important Gen Z/Alpha demographic with influencer led Rhode Skin and custom skincare seller Curology emerging as favorites among younger shoppers – and highlighted brands that have made progress in attracting increasingly appearance-conscious male shoppers across the pond, such as Kiehl’s and The Fragrance Shop.
Spend growth continues downward trajectory in the US and Europe
CE data shows that Beauty Products industry spend growth in both the US and Europe has fallen from its lofty post-COVID heights over the past few years, with year-on-year change in spend declining throughout 2023 and even entering negative territory in the US in the first half of 2024.
Lower growth may reflect moderating demand following the pandemic-era boom and surge in consumer products inflation, as well as potential channel shift toward big retailers like Walmart, CVS, and Target (for which beauty spend is not captured in the chart below) who have made a concerted effort to bolster their beauty and personal care offerings for consumers seeking better bargains, according to commentary in recent earnings reports.
Despite the overall dip, diverging trends across categories within the products space mean that certain areas are still experiencing robust growth.
Clean Skincare and Seller Brands Outperform Amid Broader Deceleration
Across both the US and UK, clean skincare and custom beauty products are among the fastest growing beauty brands. The growing brands in these categories may imply that subtle beauty trends like the “clean girl aesthetic” or “quiet luxury” haven’t gone out of fashion. In addition, CE data shows that subscription-based and curated custom products are driving growth.
In the US, the anti-aging skincare brand Agency, which uses dermatologist recommendations, has sustained rapid growth year-on-year (>600%). The other top brands, Hailey Bieber’s Rhode Skin and the mature skin-focused Laura Geller brands, imply that a focus on healthy skin is for all ages.
In the UK, beauty sellers lead the brands in the beauty product sub-industry. The seller brands, like NOTINO, allbeauty.com, Sephora, and Space NK, likely appeal to consumers as a one-stop-shop convenient shopping experience. At these brands, customers can purchase all types of beauty products from skincare and fragrances to makeup and beauty tools.
Across both the US and UK, standouts include brands that utilize AI and other research to create custom products and routines for their consumers. US brands, like Agency, Spoiled Child, Scentbird, IL MAKIAGE and Prose, and UK brands Dermatica, BEAUTY PIE, and IL MAKIAGE, likely attract customers for the ease and personalization they provide. Many of these brands utilize subscription-based services to further help consumers navigate the beauty industry.
Young US Shoppers Favor Clean Skincare and Custom Brands
Generation Z is rapidly becoming one of the most important target cohorts for beauty brands as they age into the workforce and exert their growing purchasing power. Image-conscious, values-driven, and keen on personalization, these younger shoppers gravitate towards innovative brands that resonate with their unique preferences.
CE’s US demographic data bears this out, showing that the brands most levered to the 18-24 shopper cohort include influencer-led Rhode Skin, custom skincare seller Curology, digitally-native Glossier, and ethical cosmetics brand Lush. Male-focused brands like Manscaped and Dr. Squatch have also succeeded in attracting younger consumers with social-media-heavy marketing campaigns and unique brand identities.
UK Skincare and Fragrance Brands Win Over More Male Customers
In recent years, the beauty and personal care market has undergone a significant shift as men have increasingly engaged in self-care beyond basic grooming and hygiene routines. Seeking to capitalize on this trend, some traditionally female-focused beauty brands have launched gender-neutral products and even male-targeted lines tailored to men’s unique needs and preferences.
Using CE’s UK cohort data, we examine which large UK beauty brands have made the most significant inroads in attracting male customers in the past few years. The chart below, showing DTC brands with <50% male customer mix that have experienced material changes in the percentage of total spend coming from male shoppers from 2021-2024, reveals that:
- Gender-neutral skincare brands Kiehl’s and Deciem grew their male customer mix by 6% and 5% respectively, likely reflecting mens’ growing interest in solutions for common issues like blemishes and aging.
- Fragrance sellers The Fragrance Shop and Fragrance Direct (+9% and +4% respectively) have benefited from male shoppers’ increased focus on grooming and appearance, with both brands now deriving upwards of 40% of their sales in our panel from male customers.
Some brands have seen a decline in male customer share, notably industry stalwarts like Sephora and L’Oreal – possibly indicating a doubling-down on their core female customer demographic, or a decline in beauty-related gifting purchases by men.
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About the Authors
Matthew Volpe is an Insights Analyst for the CEIC. Follow him on LinkedIn.
