Most Popular in:
By: Ilana Allegro, Maira Arnaudo, Natalie Ivezaj, Kelle Jacob and Ildiko Juhasz
Posted: June 11, 2012
The 2012 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 Innovation Through Diversity in the Beauty Industry event and reception, sponsored by L’Oréal USA, at FIT’s Katie Murphy Amphitheater in May. The following white paper accompanied the presentation from Ilana Allegro, Maira Arnaudo, Natalie Ivezaj, Kelle Jacob and Ildiko Juhasz.
According to Geoffrey G. Jones, Harvard professor and author of the book Beauty Imagined, the human desire to attract others reflects basic biological motivations. In fact, every human society from at least the ancient Egyptians onwards has used beauty products and artifacts to enhance attractiveness. Across the globe beauty ideals and aspirations vary. However, regardless of culture, economic or social status, all women seek to achieve the universal beauty truths of a youthful glow, clear skin, healthy hair and healthy skin tone. Harnessing the diversity and richness of the rituals and ingredients used to pursue these truths provides us with an opportunity to prompt genuine innovation in the beauty industry to meet the needs of the diverse global consumer.
The US Consumer
Since the 1970s, the US beauty industry recognized the opportunity to develop products for the unique concerns of a changing consumer base. Over the last few decades, the needs of the minority consumer have evolved while at the same time their purchasing power continues to grow exponentially. Within the next five years in the United States, the Lesbian Gay Bisexual Transgender buying power will reach $790 billion. Likewise, Asian Americans will reach $1 trillion; African American spending will total $1.3 trillion. Hispanics will have the highest buying power of $1.7 trillion. In May of 2012, the US Census Bureau announced that more than half of children under age two in the US are ethnic minorities. This significant shift in demographics means the beauty marketplace will become more complex and fragmented. It will be nearly impossible to predict how consumers will define themselves, and the traditional ‘check the box’ options of African American, Caucasian, Hispanic may no longer apply.
Over the next ten years consumer spending in all emerging markets is expected to grow three times faster than that of developed nations, reaching a total of $6 trillion by 2020. Clearly, the BRIC markets have been recognized as one of the key growth drivers in the global beauty market. With the rise of the spending power of the BRIC consumers, the beauty industry has moved quickly to respond to the diverse needs of these consumers. According to Kline, by 2020, China is expected to surpass Japan and rank number two in global beauty sales, followed by Brazil in third place. Russia is expected to become the number one market in Europe, and India is expected to rank third in Asia. But new players are quickly arriving on the scene. Just like the BRIC, countries like Mexico, Indonesia, South Korea and Turkey (the ‘MIST’) have high growth, large populations and a rapidly growing middle class. According to PriceWaterhouseCoopers, each country in the MIST is forecast to place among the top 15 in annual real growth in GDP between now and 2050. Is the beauty industry prepared to meet the diverse needs of these diverse consumers?
Urbanization Redefines Diversity
Employment and economic opportunity are key factors that drive urbanization, attracting people from rural to urban areas. As emerging markets continue to grow, large urban centers will continue to attract people from all walks of life and are thus redefining diversity. Between 2011 and 2050, the world population is expected to increase by 2.3 million people, reaching 9.3 billion, of which approximately 5.1 billion will be middle class. Statistics also show that nearly 180,000 people move into cities each day, and 70% of the entire world’s population will live in cities by the year 2050. So while traditional global cities such as New York, London and Paris are already sharing the spotlight with Beijing, Mumbai and Istanbul, cities such as Belem, Chongquing and Guadalajara are ready to exert their influence. Consumers in urban environments are very diverse, ranging from ‘Citysumers’ who are ever more demanding, open-minded, economically up and coming and savvy to the Bottom of the Urban Pyramid (BOUP) dwellers. The BOUP don’t have middle-class salaries to spend but still demand innovation tailored to their unique circumstances, from health issues to lack of space to the need for durability. As both of these groups are drawn together through urbanization, their diversity of their needs and preferences can provide a valuable and rich source of inspiration for product innovation for the beauty industry.