Ragtrader publisher Assia Benmedjdoub explores the growth of the beauty and skincare category among fashion retailers. This piece is an exclusive excerpt from latest downloadable report, The Beauty Report, which you can download for free here.
In February 2021, Rihanna’s Fenty clothing line was ceased after less than two years of operation.
In announcing the pause in ready-towear collections, Fenty backer LVMH cited any relaunch would be “pending better conditions” as the fully-fledged fashion line struggled to shift $700 satin shirt dresses and $300 hoodies amid a global pandemic.
The announcement marked a sharp turn from the launch of Fenty Beauty just a few years earlier, which saw sales valued at $72 million in the first month alone.
In fact, according to exclusive data compiled for this report by SEMRush, the appetite for the celebrity’s beauty venture remains unabated.
SEMRush analysed online keyword searches across more than 900 brands such as Mecca, Sephora and Priceline to determine trends in the Australian market.
Most notably in the findings, it was Rihanna’s Fenty Skin that had a meteoric rise in searches when the majority of the nation entered into lockdown.
The cruelty-free, vegan skincare range increased by 6400% year on year for June, according to the online measurement firm.
It’s enough to make any business expand its product offering - and in the case of fashion retailers, they are.
In October 2020, The Iconic launched its new beauty destination with 80 brands across skincare, makeup, haircare, body, grooming and fragrance categories.
While the venture had been on the cards for some time, The Iconic chief growth officer Melissa Drennan said the COVID-19 outbreak accelerated a number of in-house initiatives.
"With the onset of the global pandemic, and as Australia and New Zealand’s leading fashion and sports destination, we knew we had a responsibility to the industry, so our team went to work immediately to meet the evolving retail climate head on by prioritising initiatives that would benefit us all."
This included fast tracking future growth categories, with beauty and wellness cited as a strategic advantage.
"Key drivers for us across this launch included tapping the ANZ booming online beauty and wellness sector, naturally complementing our best in market fashion assortment and delivering a category update that has been requested by many customers.
"It allowed us to create a connected shopping experience," Drennan said.
The product assortment includes price competitive skincare brands such as The Ordinary, which starts at $9.80, to premium brands such as Giorgio Armani, which retails up to $540.
Beauty and Wellness is now a permanent fixture of the site, alongside fashion, kids and sports categories.
According to GlobalData retail analyst Suresh Sunkara, the outlook for brands expanding into the space is encouraging.
Cosmetics and toiletries sales in Australia reached A$8.4 billion (US$5.7 billion) in 2020 and are estimated to grow to A$10.9 billion (US$7.4 billion) by 2025 at a compound annual growth rate (CAGR) of 5.6%.
Australian cosmetics and toiletries sales accounted for a value share of 1.2% and 3.1%, respectively, in the global and Asia Pacific markets in 2020.
Sunkara said while GlobalData sector sales showed a decline at a rate of 9.1% in 2020 over 2019, this was attributed to curbs on public gatherings and social events, which suppressed demand for beauty and grooming products.
"The Australian economy faced multiple lockdowns due to the resurgence of COVID-19 from July 2020," he said.
"Social isolation and complete lockdown measures affected the sales of beauty products, as shoppers stayed at home.
"However, based on the relative performance of countries on multiple metrics, Australia is one of the high potential countries in the region, primarily due to its large market size, projected growth rates, and per capita growth levels.
"Growth in beauty products will be driven by rising disposable income leading to increased demand for more personalised products.
Australia was ranked 17th out of 136 nations in the GCRI Q2 2020.
The country’s risk score is 29.7 out of 100 and is in the very low risk nations band, this shows some signs of relief to the country’s coronavirus situation, thus reflected in the revival of social activities and the consequent increase in the cosmetics and toiletries sales."
It is perhaps these factors which led global fashion giant Zara to select Australia as part of its Zara Beauty global launch on May 12, 2021.
The venture rolled out across Australia, New Zealand, Europe, the US, Canada, Mexico, China, South Korea and Japan with the Middle East following suit in June.
The launch included virtual ‘try on’ features at Zara.com as well as dedicated beauty areas in selected stores, with Australian pricing varying from $12.95 for nail polish to $35.95 for face palettes.
Under the direction of British makeup artist Diane Kendal, over 130 colours across eye, lip, face and nail products were selected for the debut range.
For a cross-border venture of this scale, Kendal said reimagining staple items was a key consideration.
"When Zara approached me to lead the creative direction of Zara Beauty, I saw an opportunity to make something that everyone would want to use," she said of the project, which spent 18 months in development.
"Zara has always reached such a diverse audience, and I wanted to bring that same big vision to beauty with a collection that is clean, refillable and accessible to all.
"I am really proud of what we have created: an expansive array of consciously unique formulas for eyes, lips, face, and nails.
"To have this breadth of colour and sense of playfulness, while also being clean and using highquality ingredients, is something that hasn´t really existed before."
SurfStitch is another recent entrant into the beauty space, with the launch of its own dedicated ‘Body’ section.
Featuring almost 800 different SKUs at launch, it included men’s and women’s ranges with a focus on organic and environmentally-friendly lines.
SurfStitch head of buying and design Gabrielle Bate said while the market is saturated, there is demand for new and diverse brands.
"We see large opportunities to collaborate with brands around specific products and categories, we are also building out our private label with our own beauty accessories to complement the existing ranges on site."
The launch offering included local and international brands such as Aveda, Burly, Butt Naked Body, Cedar and Stone, Cosmedix, Darphin, Dope Skin Co, Handsome Skincare, Jurlique, L’Occitane, Lux Aestiva, Origins, Perricone MD, Philosophy, Salt by Hendrix, Salt & Stone, Saya Skin, SkinCeuticals and The Tonik.
In analysing new customer acquisition, GlobalData predicts eCommerce platforms will be well placed to capture the next stage of growth.
According to Sunkara, the online channel is forecast to grow at a CAGR of 14.2% over 2020–25.
"Indeed, GlobalData forecasts that 27.7% of cosmetics and toiletries sales in Australia will be made via eCommerce in 2025," he said.
"The increasing need for convenience and safety among consumers remaining at home following the COVID-19 outbreak has led to a surge in online shopping.
"The online purchase frequency of cosmetics and toiletries increased among those who were already shopping for these products online, along with a significant increase in the proportion of new consumers who started shopping for the category online, due to the diversity of product choices and time-saving aspects."
For department stores, the mix of bricks-and-mortar beauty concessions as well as eCommerce channels is proving lucrative.
Myer GM of Beauty Annabel Talbot said there have been a number of developments in the past year alone.
"This year, we were thrilled to have opened stunning new YSL counters in Perth, Melbourne and Karrinyup, new Gucci Counters in Melbourne and Chadstone, and the incredible new Dior and Maison Christian Dior counter in Melbourne, cementing Myer’s position as Australia’s cosmetic market leader and giving our customers a world class experience that they can only get at Myer.
"We have also recently launched our new Karrinyup Beauty Hall, including new Chanel and YSL counters, allowing us to showcase our portfolio of brands in a modern, fresh and bright new layout.
"Our customers love our extensive beauty range, with top performers including iconic brands such as: Chanel, Dior, Aesop, Estee Lauder and Lancome.
"Not to mention the stable of new brands within our Beauty Emporiums such as local brands: Kissed Earth, Ere Perez, KORA Organics and Alpha-H."
As for what’s next, Sunkara said digital growth will be key.
The sales of cosmetics and toiletries through eCommerce in Australia has seen a considerable growth of 25.4% in 2020 due to a change in purchasing habits caused by the COVID-19 crisis.
"Internet and mobile phone penetrations in Australia are high, at 91.9% and 115.0% respectively in 2020, which made it easier for consumers to access eCommerce platforms and shop for beauty products and essential toiletries online.
"This behavior will continue even when restrictions are eased as shoppers have become used to using the online channel."