Driven by a desire for increased customization and a greater focus on ingredients and on technological innovation, the beauty and personal care marketplace has seen an explosion of new products come to market in recent years, and with it have come a host of new challenges.
L.E.K. Consulting has deep experience in the beauty and personal care industry, partnering with companies across the entire value chain in order to help our clients achieve their strategic goals. Our clients in this space include CPGs, skincare, color cosmetics, fragrance and haircare companies, and beauty service providers, both established and independent or niche. We also have worked with specialty ingredient suppliers/distributors, packaging manufacturers and contract manufacturers that serve this space.
We are the market leader in growth strategy, and our core capabilities in this sector include working with clients on M&A strategy, acquisition screens, diligence, pricing strategy, consumer activation and corporate strategy. We use advanced analytic techniques to gather fact-based insights and recommend actionable strategies that drive impactful results for our clients, allowing them to be more efficient and profitable.
Key questions and challenges
Our experienced professionals have an extensive understanding of key business challenges in today’s beauty and personal care marketplace, and we encourage our clients to consider these key questions:
- How are customer needs and product trends evolving in today’s marketplace? What are the implications for how we grow our business?
- How do we capitalize on key customer trends toward premiumization, hyper-customization and increasing ingredient consciousness? What impact might organic and cruelty-free trends have on cost structures?
- How do we optimize our channel portfolio given shifts in online and subscription services? How will the shift toward specialty retailers affect our sales?
- With the continued growth and emergence of independent beauty brands, how should multinationals respond?
- What is the impact of brand consolidation/acquisition by multinationals on the beauty and personal care value chain?
- How do we optimize our pricing and promotional strategies to maximize value? How can we capture value as consumers continue moving upmarket?
- Are there adjacent products and categories that represent growth opportunities for our brand or company? Where do interesting M&A opportunities exist, and what real assets can we acquire?
Illuminating a Path to Beauty
The health-conscious consumer has gone mainstream and recent trends in food for natural ingredients, more transparent labeling and convenience are now converging on beauty. Studying recent food trends can provide insight into successful strategies for meeting new customer preferences and requirements.
How Innovation is Coming to Haircare
The hair care industry is evolving in similar ways as the skin care segment, becoming one of research and evidence-based claims. Consumers are checking labels and evaluating the appearance of their hair and scalp in the context of their whole health.
A Beautiful Concern: Sustainability Takes Hold in Beauty and Personal Care
Our survey shows that most consumers would pay 35-40% more for a sustainable version of their regular beauty and personal care products. The trend’s growth indicates that sustainability is becoming table stakes for BPC brands and is tied into an emerging minimalist mindset.
Examples of our work
To learn more about how we help clients create value in the beauty and personal care sector, please refer to these insights and case examples:
- L.E.K. partnered with a large multinational consumer products company to evaluate a joint venture proposition with a beauty device brand. The team evaluated the market opportunity for a range of beauty devices in the skin rejuvenation, hair removal and dental spaces, including market size and growth, channel strategy, competitive positioning, and growth opportunities. We assessed the size of each applicable market and evaluated the market dynamics at play, ultimately defining the growth opportunity by channel and recommending a structure for the joint venture. This led to an acquisition by a global personal care company.
- A leading direct seller of beauty, personal care and nutrition products had historically lacked the technology for proper data capture on its consultants and end customers. Additionally, new customer engagement programs and product lines had drastically changed business operations and, consequently, data structure and productivity metrics. After implementing a new data management system, the client asked L.E.K. to use advanced analytics to provide insight into its consultant/customer base and pinpoint growth opportunities. This resulted in hundreds of millions of dollars of identified growth potential, as well as a deep understanding of the business and the tools/templates required to measure performance going forward. Read more.
- An emerging nail care brand with a novel technology was anticipating product launch later in the year. The client engaged L.E.K. to help estimate the size of the market opportunity in the U.S., the level of adoption that could be expected and the range of sales that implied. Additionally, we identified the international markets that were most logical for expansion and the size of the respective opportunities.
- L.E.K. evaluated a skincare company’s brand perception and later assisted with the rebranding of an existing product line. We utilized customer focus groups and quantitative survey responses to define target consumer segments and go-forward branding and marketing messages, by geographic market. This research helped the client understand its overall and product-specific brand positioning. As a result, the client chose a targeted brand message that had demonstrated customer appeal, focusing the brand on a younger audience and emphasizing key ingredient benefits.
- A leading skincare brand was facing lagging sales in the U.S. despite overall market growth. The client engaged L.E.K. to conduct a thorough review of the brand’s positioning within the market and the company’s sales and marketing strategies. We identified underserved areas of the market and created tactical initiatives for the company to realize value. We optimized the client’s U.S. sales and marketing strategy, including targeted distribution channels, pricing, and sales force organization. The focus on implementation provided the client with a clear path forward for future long-term growth.