IADS Press Release: Cosmetics, Beauty & Wellness

While fragrances continue to flourish in department stores, the convergence of cosmetics, beauty, and makeup under the all-encompassing "wellness" umbrella—a concept that transcends traditional notions of "care"—is now indisputable.

In October, the IADS highlighted the emergence of a post-pandemic feel-good factor in 2021-22, sparking increased demand for wellness-related products. This concept has since permeated all product categories, reflecting evolving customer preferences and compelling department stores to reimagine their approach to "care" products. Concurrently, new market dynamics in fragrances—with major brands adopting direct-to-consumer strategies while offering luxury lines to rival niche brands—explain the category's vibrancy, even as department stores remain vigilant for emerging trends.

For IADS members, the Cosmetics & Beauty business saw an average growth from 9% to 10% of total business between 2022 and 2023, with notable variations across categories. Fragrances surged from 36% to 45% of the Cosmetics & Beauty business, haircare increased from 3% to 5%, makeup held steady at 19%, while skincare declined from 34% to 26%. These shifts weren't price-driven; the balance between price segments remained constant, with luxury products accounting for 50% of category business, premium products 20%, prestige products 11%, and entry-level items 19%. Instead, they indicated a market transformation:

• The wellness concept has infiltrated every category, becoming the primary reference point for cosmetics shopping, including haircare. This shift blurs boundaries between historically "care"-focused categories and prompts questions about the global interpretation of "wellness" in each market.
• While niche and specialist brands fuel the fragrance market's growth, the makeup category faces disruption from major fashion players and celebrity-backed brands, challenging the dominance of specialist brands.

From Care to Wellness
Today's consumers seek more than just products for skin, hair, and scalp; they desire a holistic experience in 'care'. Despite declining market share, department stores are revitalising the skincare segment through enhanced services to improve consumer interaction and deliver authentic wellness experiences. Tryano (Chalhoub Group) is exploring the implementation of beauty cabins staffed by skin diagnosis experts. To effectively promote these new services, a blend of time-tested marketing techniques (CRM targeting, social media, influencer partnerships) and modern approaches (offering skincare treatments as gifts with purchase) is essential, mainly to attract younger clientele. In this landscape, prestige niche brands like Barbara Sturm, Augustinus Bader, Dermalogica, La Mer, and Sisley gain traction as customers engage with product trials.
A genuine sense of wellness also demands a fresh assortment: IADS members continuously seek brands offering self-care, personalisation, and creativity, aligned with ethical and community-centric values, tailored to their market segments. For instance, Boyner focuses on haircare, suncare, and serum-infused products, while El Palacio de Hierro emphasises men's and dermo-cosmetics. 
IADS partner Nelly Rodi presented an exclusive selection of relevant brands in this context:

• Skincare: Ipsum Alii, Mimétique, Mtm Labo, Talm, Thisworks, and Megababe
• Haircare: Flora Lab, Fatboy, Crown Affair, Prose, and Pattern

Wellness is paving the way for new product uses and categories: In Turkey, Boyner observes a rise in renewable packaging products, while in Switzerland, Manor is tapping into the "beauty from within" trend by offering food supplements like Vital Protein collagen, which have become integral to customers' routines.
Fragrances: niche brands spearhead growth, raising questions on clustering
Niche fragrances lead the charge in department stores, with brands such as Creed, Maison Francis Kurkdjian, Amouage, Montale, Byredo, Le Labo, Armani Privé, YSL high-perfumery, Penhaligon's, and Parfums De Marly at the forefront. The market shows no signs of saturation, as Galeries Lafayette sees space being claimed by challenger brands like Parfums BDK, Matière Première, and Maison Crivelli. This diversity is crucial as department stores pursue new brands to differentiate themselves and boost foot traffic. NellyRodi presented its exclusive scouting of up-and-coming fragrance brands in this category: Perroy, Obvious, Vyrao, Borntostandout, and Dedcool.
Consequently, department stores must reconsider their fragrance department clustering strategies. Some are contemplating the creation of unisex, niche, prestige, and premium areas instead of traditional men's and women's sections. As customer preferences become more fluid, the conventional gender-based separation may be losing relevance in certain markets.
Makeup is stable with fashion newcomers
The category continues to grow in some department stores, maintaining a steady average market share, primarily due to lip and eye-related products. While established names like Chanel and Dior maintain their unchallenged dominance, other historical leaders such as MAC face increasing competition as the market welcomes new entrants:

• Fashion brand spin-offs: Rabanne, Prada, Gucci, Valentino, Loewe
• Celebrity-backed brands like Haus Labs by Lady Gaga and r.e.m.beauty by Ariana Grande

Next-generation brands are also emerging, as NellyRodi scouted: Obayaty, Fara Homidi, Good Weird, (M)anasi, and Florasis. Consequently, customers can anticipate significant changes in department store makeup floors in the coming seasons.
The Cosmetics, Beauty, & Wellness industry is undergoing dynamic shifts, propelled by the surging demand for niche fragrances and a consistent appeal for makeup, particularly in the lip category. Wellness now encompasses more than traditional beauty products as skin care evolves towards a more holistic, care-at-large approach that incorporates services and experiences. This transformation mirrors a broader consumer trend favouring personalised, inclusive, and ethically aligned products.
 

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Access the PDF press release, in French, here: