"Loyalty is always going to be more profitable in the long run because then you can also expand the relationship in other ways," said our analyst Sky Canaves on a recent episode of "Reimagining Retail." "It also helps fuel the word of mouth and user reviews on other channels like social media that then get other people into the brand or product."

Beauty has proven resilient even as consumers become more intentional with spending, prompting retailers from Old Navy to CVS to expand their beauty strategies. But social platforms like TikTok and YouTube have rewired the path from discovery to purchase, reshaping how consumers find, research, and buy beauty products. For brands trying to build lasting relationships, that shift brings both opportunities and challenges.

Here's how the beauty landscape is evolving and what it means for brands and retailers.

Word of mouth has evolved, not disappeared

Beauty discovery still leans heavily on recommendations, but "word of mouth" now reaches far beyond family and friends.

Social commerce now drives discovery at rates nearly equivalent to physical store browsing, according to the podcast discussion. The content fueling these discoveries comes primarily from short-form video on platforms like TikTok, where recommendations from peers (or what the industry calls micro and nano creators) carry significant weight.

"These are people just like them who even if they're getting a free product, it doesn't seem like they're just shilling for a brand," Canaves said about these smaller creators.

What it means: When consumers are asked directly whether influencer recommendations drive purchases, many say no. But when asked about content types that influence buying decisions, how-to videos and social media users demonstrating products rank highly. The disconnect suggests consumers don't view relatable creators as traditional "influencers," even though they're being influenced by their content.

Loyalty is weakening as price comparison becomes standard

US beauty shoppers are trading up and down at the same time. Nearly half purchased a luxury beauty product in the last 12 months, according to EMARKETER's beauty consumer survey, yet most also purchase dupes or lower-cost alternatives at least occasionally.

In the UK, approximately two-thirds of beauty buyers regularly compare prices before repurchasing products, and a similar proportion buy dupes or store-brand alternatives, said Carina Lamb, analyst at EMARKETER. Many discover these alternatives on TikTok.

Even traditionally high-loyalty categories like fragrance are seeing shifts. Younger consumers layer fragrances, buy multiple scents, and experiment. That's a stark contrast to previous generations, who found one signature scent and kept it for life.

Brands must deliver value that outlasts a single purchase. Mini sizes lower the barrier to trial, gift-with-purchase offers create surprise-and-delight moments, and loyalty programs can reward purchases regardless of channel. E.l.f. Cosmetics, for example, lets customers scan receipts from any retailer to earn loyalty points.

TikTok Shop blurs all the lines

TikTok Shop has quickly won over beauty brands, and it does more than sell: It's a discovery platform, validation tool, and storefront at once.

Beauty brands were among the first to understand TikTok's power in reaching younger audiences and creating social conversations, and brands like e.l.f. and Rhode by Hailey Bieber have succeeded on the platform. Now, beauty brands work with creators on an affiliate basis, seeding products and generating reviews directly within the shopping environment.

Multi-brand retailers Sephora and Ulta have both established presences on TikTok Shop, an unusual move for retailers selling on a competitor marketplace. To avoid conflicts with brand distribution agreements, they must curate selections carefully and create TikTok-exclusive drops.

TikTok Shop drives sales across multiple channels, not just direct purchases on the platform. TikTok's analytical tools show how Shop activity flows to direct-to-consumer channels, and savvy brands create incentives for customer engagement regardless of purchase location.

AI excels at research, not yet at discovery

AI's role in beauty shopping currently centers on mid-funnel activities rather than initial discovery.

In the UK, about one-third of beauty buyers use general-purpose AI tools to explore products, Lamb said. Yet only 3.7% of surveyed consumers said AI assistants or chatbots brought beauty products to their attention, a figure that rises to approximately 10% among those using AI for research purposes.

In the US, most AI use for beauty involves research, consideration, price comparisons, and similar tasks. Interest in using AI for shopping skews toward millennials, who appear more comfortable using the technology for a range of needs.

Brands must ensure their product data, descriptions, and technical specifications are optimized for AI systems to parse and recommend. As large language models provide curated shortlists rather than endless options, being included in those recommendations becomes critical. Inclusion depends on having clean, accessible product information.

Every retailer needs a beauty strategy

Beauty's resilience makes it attractive across retail categories, but success requires strategic fit with existing customer bases.

CVS is expanding into off-price beauty to offer prestige products at accessible price points. Supermarkets and grocery stores are improving beauty assortments. Fashion and lifestyle retailers like Old Navy are launching beauty lines after successful pilots. The category is also expanding into adjacent wellness products, creating overlap between traditional beauty retailers and other categories.

"I think it makes sense for a lot of retailers in the fashion, lifestyle, wellness space or where you have customers who are buying those products or coming into your stores," Canaves said.

Retailers should pursue beauty strategies where they have relevant customer overlap and shape their approach to fit that existing relationship. Off-price beauty works for CVS's customer base, while Old Navy's body care and fragrance line extends its fashion positioning.

Listen to the full episode.