This article originally appeared in Retail World August 2024.
As Australia navigates the complexities of the post-pandemic landscape, marked by persistent high inflation and economic challenges, the beauty and personal care market remains robust. Despite its resilience, consumer spending patterns have been notably affected by cost-of-living pressures, leading beauty shoppers to adopt more discerning and strategic purchasing behaviours, with value-driven decisions becoming crucial. As price remains a key factor in perceived value, consumers are becoming more discerning, evaluating a product's overall user experience to assess its worth. Brands and retailers are striving to effectively communicate this value proposition to secure a competitive advantage.
Australasia leads in per capita consumer spending on Pursuit of Value
41% of Australian consumers consistently prioritise value for money as the top feature in skin care products in 2023
Source: Euromonitor Voice of the Consumer: Beauty Survey, fielded June to July 2023
As price remains a key factor in perceived value, consumers are becoming more discerning, evaluating a product's overall user experience to assess its worth. Brands and retailers are striving to effectively communicate this value proposition to secure a competitive advantage.
Popularity of SPF products highlights growing preference for multifunctional products
As consumers grapple with higher costs of living, they are looking to purchase fewer, but more functional products suitable for daily use. This trend is particularly evident with the continued popularity of multifunctional SPF products.
23% of Australian consumers now prioritise sun protection, including sun barriers and SPF, as a key feature in skin care products in 2023, an increase from 17% in 2021
Source: Euromonitor Voice of the Consumer: Beauty Survey, fielded June to July 2023
The skinification trend has further driven innovation in sun care, with products increasingly incorporating skin care ingredients. Notable local brands like Naked Sundays and Ultra Violette are leading this shift with their "skinscreen" concept, offering SPF products that provide both sun protection and skin care benefits. Additionally, Australian online beauty retailer Adore Beauty has expanded its SPF offerings with a new collection under its AB Lab label, further enhancing the market presence of SPF products.
Growing interest in luxe-for-less solutions boosts demand for dupe products
While consumers are not reducing their spending on beauty products, they are actively seeking out more affordable alternatives. This trend has driven the rise of brands that offer products mirroring premium offerings at lower price points. MCoBeauty leads this trend in Australia with significant growth, offering products perceived as dupes of high-end brands. Popular items like MCoBeauty Flawless Glow, reminiscent of Charlotte Tilbury's Flawless collection, and Xtend Lash Mascara, similar to Kevyn Aucoin's The Volume Mascara, have garnered strong positive feedback and become favourites among Australian shoppers. Similarly, Kmart's private label OXX Cosmetics is capitalising on this trend by offering beauty dupes inspired by high-end brands like Glow Recipe and Sol de Janeiro. These dupes have made a significant impact in the Australian market by offering affordable alternatives while ensuring their quality and user experience rival that of premium products.
Budget beauty lines are moving into grocery stores and hypermarkets
Budget beauty lines are swiftly expanding into unconventional retail settings such as grocery stores and hypermarkets. This transformation is reshaping Australia's beauty industry landscape, traditionally dominated by beauty specialists like Mecca and Sephora, as well as online marketplaces like Adore Beauty, which have historically held significant market shares.
According to Euromonitor's Passport Innovation system data as of May 2024, Woolworths emerges as the leading retailer in terms of product launches between January 2023 and May 2024. During this period, science-led skin care budget brand Nobody's Nobody was launched in Woolworths. Additionally, brands like Everyday by Frank Body and MCoBeauty have become staples in Coles and Woolworths, representing a growing cohort of viral skin care brands available through grocery retailers. Moreover, cult favourite THB Skincare, renowned for its expertise in acne treatment, made its offline debut in stores like Priceline and expanded its footprint through collaborations with Coles in 2023. This strategic partnership between budget-friendly beauty brands and major supermarkets not only broadens the brands’ accessibility to a wider audience but also positions the supermarkets as convenient hubs for comprehensive self-care solutions catering to diverse consumer needs.
Looking forward, the Australian beauty and personal care market will continue to face economic challenges, prompting consumers to scrutinise the value and effectiveness of their purchases. Brands that clearly communicate product efficacy and value and cultivate authentic connections through tailored experiences are positioned for success in this competitive landscape.
Read our articles, Private Label Meets Consumer Needs for Budget-Friendly Beauty and Inflationary Pressures Encourage Beauty Consumers to Seek Alternatives, for more analysis on how the ongoing cost of living pressures are shaping consumer purchasing behaviour in the beauty market.
Download our country report, Beauty and Personal Care in Australia, for in-depth trend descriptions, case studies and strategic recommendations.