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Accessible Beauty

By: Jessica Dudley (group leader), Heather Cunningham (co-leader), Natalia Espejo, Jennifer Lacenera and Dudley Williams
Posted: June 4, 2014

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Editor’s note: The 2014 graduates of the cosmetics and fragrance marketing and management master's degree program at the Fashion Institute of Technology (FIT) in New York presented their Capstone presentations at “The Changing Face of the Beauty Consumer,” event, sponsored by Unilever U.S., at FIT’s Morris W. and Fannie B. Haft Auditorium on Wednesday, June 4, 2014. This year, students presented on a theme that dives into the challenges shaping the way beauty companies operate from economics to gender to ethnicity.

The following white paper, “Accessible Beauty,” accompanied the presentation from group leader Jessica Dudley (L’Oréal) and co-leader Heather Cunningham (Shiseido Group USA), as well as Natalia Espejo (Unilever), Jennifer Lacenera (IT Cosmetics) and Dudley Williams (L’Oréal).

“I certainly am interested in accessibility, clarity, and immediacy.”
—Paul Muldoon (Poet)

“I believe in accessibility. I believe in honesty and a culture that supports that. And you can’t have that if you’re not open to receiving feedback.”
—Mindy Grossman (Chairman and CEO, HSN)

Introduction

On the last day of the 44th World Economic Forum Annual Meeting, leading financial experts offered a “cautiously optimistic” outlook on the global economy. One expert, Laurence Fink, Chairman and Chief Executive Officer, Blackrock, USA said, “The U.S. economy is going to be fine;” however he warned that the world will exist in a state of significant volatility, adding, “This doesn’t mean we will end up in a bad place. But there will be a lot of disruptions” (World Economic Forum, 2014). These disruptions stem from a variety of global changes that will come together to create a new global landscape in 2030.

With experts from the National Intelligence Council, Standard Chartered Bank, and the World Economic Forum predicting significant economic changes by 2030, how will the average U.S. consumer’s consumption habits evolve? Furthermore, how can the beauty industry prepare for these changes and remain relevant to the 2030 consumer? This paper will introduce a new consumer group and consumption equation created through the research and analysis of economic and demographic global trends. Analysis of consumer preferences and consumption patterns reinforce tactical recommendations for the beauty industry to take in order to best prepare for the 2030 marketplace.

2030 Global Landscape

Global Economy: Research published by Standard Chartered Bank predicts the global economy will double by 2030 with Real Gross Domestic Product (GDP) increasing from $69 trillion (USD)1 in 2013 to an estimated $129 trillion; however, the role of today’s developed economies, including the U.S., will have changed. World growth will primarily be driven by the emerging markets, which are estimated to contribute 70% of total increases.

New regional and bilateral trade agreements, coupled with the effects of globalization and the Internet will quadruple world trade to $75 trillion from $17.8 trillion in 2012. Trade between emerging markets will account for 40% of the total growth, up from just 18% in 2012. By 2030 the National Intelligence Council estimates that continental Asia will surpass North America and Europe combined in terms of GDP, population size, military spending, and technological investment. With an estimated GDP of $38.5 trillion, the U.S. economy will fall behind China, where GDP is expected to reach $58.8 trillion (Standard Chartered Bank, 2013; National Intelligence Council, 2012).

Despite the changing role of the developed markets in 2030, the U.S. will continue to play a vital part in the global economy. With private sector balance sheets largely fixed—indicating economic stability—Standard Chartered names the U.S. as the developed country with the strongest momentum going into the next decade. Furthermore, it is doubtful that any individual emerging market, even China, will attempt to usurp U.S. global leadership as emerging market perspectives are focused on reshaping regional structures (Standard Chartered Bank, 2013; National Intelligence Council, 2012).

Global Middle Class: With the number of impoverished individuals worldwide2 expected to fall below 500 million by 2030, a decline of 50% from 2014, per capita income levels are expected to rise by as much as 170% in China and India as they experience catch up growth (National Intelligence Council, 2012; Standard Chartered Bank, 2013). A 2011 report issued by Ernst & Young Global Limited (EY) supports this claim, estimating new middle class consumer growth of 3 billion people by 2030, representing a growth in demand from $21 trillion in 2011 to $56 trillion (EY, 2011). Maria Pinelli, Global Vice-Chair Strategic Growth Markets for EY explains: “There is a huge potential for middle class consumerism in rapid-growth economies.”

Meanwhile, today, the American middle class has already lost its distinction as the most affluent middle class segment in the world, becoming victims of rising income inequality. For the past decade, U.S. GDP growth has been driven by the top 10% of earners, with median middle class income remaining flat (+0.3%) since 2000, compared with 20% growth in Britain and Canada in the same time period (Leonhardt & Quealy, 2014). This disparity has prompted President Obama to proclaim, “Inequality is the defining challenge of our time.” If this pattern persists, living standards will continue to converge between the U.S. and today’s emerging markets.

Individual Empowerment and Global Connectivity: In 2013, more than 70% of the world’s population owned at least one mobile device and it is forecasted that by the end of 2014, in Sub-Saharan Africa, Southeast Asia, South Asia, and the Middle East, more people will have mobile network access than electricity at home (National Intelligence Council, 2012). Technological advancement and greater access to social media empowers individuals in ways previously unavailable. For example, according to the 2030 Global Trends report issued by the National Intelligence Council, Muslim women have recently adopted social media as a way of connecting with each other in “safe spaces” to discuss issues such as women’s rights, gender equality, and the role of women within Islamic Law. They predict that as technology advances so will connectivity, giving individuals a stronger voice through the power of informal networks, creating a shift in power away from today’s hegemonic authorities.

An increase in global migration due to aging Western populations will also strengthen global connectivity. In 2013, only two countries, Japan and Germany, had a median age over 45. By 2030, this number will increase to over 20 developed countries, triggering migration from younger economies to fill entry and lower level jobs. In America, the percentage of young people will continue to grow through 2030; however, their percentage of the total population will decline from 14.0% in 2012 to 12.8%, creating the same need for international migration (National Intelligence Council, 2012).