Gen Z shoppers make room for beauty, coffee, and travel despite low savings

Smaller luxuries help brands court Gen Alpha without diluting their cachet.

Lower delinquencies reflect tighter budgets, and retailers looking to capture discretionary spending feel the pinch

Consumers’ value focus hasn’t diminished spending, Ulta says.

The acquisition could create a more formidable competitor to L’Oréal, but complicate Estée Lauder’s turnaround.

E.l.f.’s Rhode acquisition is driving outsize growth as Estée fights to stay relevant.

L’Oréal is doubling its stake in cosmetic injectables company Galderma to 20%, the company said, as it looks to expand in the fast-growing aesthetics market and support growth amid global headwinds. While some competitors retrench, L’Oréal is pursuing acquisitions in categories like fragrance and haircare with the strongest growth potential. L'Oréal's moves reflect the shifts in consumer beauty spending. Resilient demand for self-care, wellness, and premium products is fueling growth in fragrances and haircare, while K-beauty is gaining traction as consumers search for affordable and effective skincare products.

Our exclusive research reveals what factors are influencing the path to purchase for personal care and beauty products.

The volatile macroeconomic environment is causing most shoppers to be more cautious with their spending, but it’s also driving a subset to spend more in search of comfort. Roughly 2 in 5 shoppers (38%) say that the current stress of economic uncertainty is making them spend more, according to a June LendingTree survey. Consumers may be choosing to spend more of their money on essentials, but that doesn’t mean they can’t be swayed to spend a little extra on the occasional indulgence—particularly if there’s an element of novelty, or if the purchase offers a sense of emotional comfort. While the Labubu craze is likely to fizzle out as quickly as it started, shoppers will remain as eager as ever to splurge on small luxuries that bring them satisfaction.

Consumers are reluctant to curb beauty spending: Many are turning to the category for solace amid uncertainty, or see it as an essential purchase.

K-beauty demand is soaring: South Korea outpaced France as the top source of US cosmetics imports in 2024.

Ulta lost beauty market share for the first time in 2024: The retailer is relying on a new marketplace, enhanced omnichannel experiences, and international expansion to recover sales.

This deck provides critical data to help retailers benchmark their own ecommerce sales against the wider market.

UK retail sales rose unexpectedly in September, thanks to the new iPhone and Oasis: Back-to-school shopping and entertainment spending boosted demand for non-essential items, although poor weather and consumer caution dented supermarket sales.

The lipstick effect may not be fading after all: Despite Ulta’s slowdown warning, L’Oréal’s North American sales rose 12.3% in Q1, and Sephora’s business has been “pretty strong.”

Gen Alpha’s obsession with skincare is driving beauty sales: Younger shoppers are gravitating toward premium brands and spending more time browsing the aisles at Sephora.

The beauty and cosmetics sector brought in $94.36 billion in consumer spending last year, claiming the title of the fastest-growing retail category in the US, per our The US Beauty Consumer report. With most consumers planning to boost their beauty budgets in 2024, the sector’s defiance against cautious spending habits is set to continue, driven by the enduring “lipstick effect,” the rise of dupes and Chinese-associated ecommerce giants, and more.

Dupe culture powered e.l.f. Beauty to a 76% YoY sales increase last quarter: Gen Z’s favorite drugstore brand is reaping the rewards as consumers look for budget-friendly ways to stay on top of beauty trends.

Gen Z teens cut spending in response to inflation: Shoppers in this cohort are shopping more often at off-price and ecommerce retailers to save money, although the beauty category is as resilient as ever.

Fewer than a third of US shoppers turn to department stores’ websites (31%) or brick-and-mortar locations (24%) when conducting beauty research, according to a May survey conducted by PowerReviews. In contrast, 71% turn to a specialty retailer’s website when researching new products.