The role of the analyst in any industry is to monitor how that industry is evolving and track the movement of some of its most major players.
Larissa Jensen’s industry of focus is beauty, and she has spent nearly 15 years following everything from the rise of social media and consumer empowerment, to the explosion of digitally native brands and what she calls “the Kardashian effect.”
“It’s not about up or down, it’s about why,” said Jensen. “Ultimately, understanding why something happens provides the insight into what drives the market forward.”
Now, as executive director and beauty industry analyst at The NPD Group, Jensen has become the go-to resource for all prestige beauty insights and trends.
In this week’s episode of The Glossy Beauty Podcast, beauty editor Priya Rao sits down with Jensen to discuss some of the latest trends, like CBD and adaptogens, the rise of extreme transparency and the current drivers of the fragrance market. Edited highlights are below.
The market shift towards consumers
“If I had to think about the common thread that’s driving the biggest change since I started in 2005, it would be the impact of technology. The ability to purchase online, social media — I don’t think any of that is a surprise to anybody. But why did it change our industry? It put the power into the consumers’ hands. In the past, consumers’ options to purchase beauty were very limited, and when I say limited, it’s because the products and brands in the stores around them were really the only places where they could purchase beauty. Most of the time, it was big brands and big retailers pushing their biggest, most profitable categories. The beauty ideal, product trends, formulas — they were all brand-driven. Technology and social changed all of that. For example, Kim Kardashian starts contouring and posting it all over Instagram, and consumers can’t get enough of it. They begin to buy up the few contour products that are on the market, and all of a sudden, every brand has a contour kit. The industry flipped. Brands are now reacting to consumer demand.”
The influence of extreme transparency
“Transparency is so important today, and it’s not easy to do. The way things are, it’s almost like navigating a minefield, and this is where authenticity is critical in communicating anything about your brand. Any of the values you want to put out there — inclusivity, gender fluidity, sustainability — you need to make sure that when you go back and look at who you are, is this part of your purpose or your DNA? If you don’t do that, and it comes across as inauthentic, you’re going to have a consumer that’s going to call you out on that and show it to the world. I found research that said half of consumers will automatically unfollow a brand that does something they don’t like, and close to 30% are going to block or boycott the brand entirely, so that creates these really high stakes. You add fuel to the fire when you think about the social media pages that are exposing the ugly underbelly of the industry. When you think about some of these pages, we call it ‘extreme transparency’ because it really pushes the boundaries between truth and TMI — but consumers are eager to drink the tea that’s being served to them. So using Estée Laundry as an example, less than six months ago, this Instagram page had 5,000 followers. Today, that number is over 60,000, and if it continues to grow at that rate, you’re going to see over a million followers by the end of the year. So obviously the consumer interest is there, and by having this exposure to what’s happening in the industry, we’re seeing a lot of really big impacts.”
How ‘flankers’ are driving fragrance sales
“Designer fragrances are fueled by flankers. A flanker is an industry term that is used to describe a brand extension. For example, Chanel Chance has the flankers of Chance Eau Fraîche and Chance Eau Tendre. What we’ve found is that these flankers are actually driving gains. The non-flankers or original brands make up a larger share of the sales, they’re about 75% of the market, but they’re flat. Flankers, which make up the remaining 25%, grew by double digits, 20%, last year, so they’re really driving the market. You can see this just by looking at the top launches alone. The top launch is 2018 was Acqua di Giò Absolu Homme, and the No. 2 launch was Coco Mademoiselle Intense. These are both flankers.”