Young online shoppers belonging to the Gen Z and millennial generations are actively seeking discounts in the beauty industry, according to recent data.
In the face of inflation, the beauty industry continues to thrive, with millennials leading the charge in global e-commerce, according to a report released by ESW in March. One retail giant, Ulta, attributes its increased sales to the introduction of new beauty brands, product innovations, and price increases.
However, ESW's research suggests that to appeal to younger demographics, beauty brands must adopt a different approach to overcome price sensitivity. This involves building trust and emotional resonance through product efficacy, safety, experience, and authenticity.
Firstly, developing credible, gentle, and chemical-free products tailored to young skin is crucial. This means avoiding endocrine disruptors, parabens, and sulfates, aligning with young consumers' demand for safety and wellness rather than just aesthetics.
Secondly, leveraging influencer campaigns that emphasise authenticity and playfulness, particularly on platforms like Instagram Reels, resonates with Gen Z's appetite for genuine connection and self-expression.
Thirdly, prioritising product development and R&D as marketing tools, showcasing real results through educational content, builds consumer confidence and credibility around product efficacy.
Fourthly, offering trial experiences such as entry-level SKUs, travel-size kits, samples, and subscription mini-trials enables young consumers to try before committing, creating a "non-return effect" where experiencing quality reduces sensitivity to price.
Lastly, aligning with social values and inclusivity fosters emotional connections, community, and brand loyalty that go beyond price considerations.
Ulta's net sales rose 18.2% year over year to $3.2 billion, as stated in its Q4 earnings report. Interestingly, the United Arab Emirates, Switzerland, Spain, and India also have a significant number of consumers purchasing beauty products from online retailers outside their home country.
Furthermore, a quarter of those respondents would pay full price for limited edition products. Fragrances valued at over $150 saw their sales rise 16% year over year. Twenty-three percent of Gen Z and 24% of millennial shoppers made beauty purchases across international borders within the last year.
The beauty industry has reframed itself around scarcity, exclusive drops, and limited inventory. However, nearly 40% of beauty consumers who spend $2,500 online annually are bargain hunters. Twenty-one percent of brand "super fans" are willing to pay full price if they're one of the first people to have a product.
In conclusion, the approach that ESW’s research points to for overcoming price sensitivity among younger buyers involves building trust and emotional resonance through product efficacy, safety, experience, and authenticity, rather than competing primarily on price. This reflects a holistic understanding of younger consumers’ priorities, valuing transparency, education, wellness, and cultural relevance.
- To attract younger consumers in the beauty industry, brands are encouraged to develop credible, gentle, and chemical-free products that prioritize safety and wellness.
- Utilizing influencer campaigns on platforms like Instagram Reels that emphasize authenticity and playfulness is effective in resonating with Gen Z's desire for genuine connections and self-expression.
- Demonstrating product efficacy through educational content and showcasing real results can help build consumer confidence and enhance brand credibility.
- Offering trial experiences such as entry-level SKUs, travel-size kits, samples, and subscription mini-trials can help reduce young consumers' price sensitivity as they get an opportunity to try out the quality before committing to full-size purchases.
- Aligning with social values and fostering emotional connections and inclusion can help grow brand communities and loyalty, transcending price considerations in the beauty-buying decisions of Gen Z and millennial shoppers.
