Beauty market restarts with ecommerce and subscription box

Despite the 5% slowdown in 2020, the Beauty & Personal Care market – which has reached a global value of 483.3 billion dollars – will leap up to 616 billion dollars by 2025 and the boost will be ecommerce and subscription box. The pandemic was undoubtedly influencing the decline of the last year but, given the future improvement of the health situation and the reduction of uncertainty on the global economic outlook, a strong recovery of the sector is expected with a CAGR of 5.0% (Statista, 2020 & Growth Capital extraction). Asia represents the most relevant market (38%), followed by Europe (24%) and the United States (18%). Looking at the details of the European countries, those with the largest beauty markets are Germany (€ 14.9 billion), UK (€ 12.9 billion) and France (€ 12.5 billion); Italy and Spain are worth about 50% of the German market, but still present interesting growth opportunities as they are penetrable without the need for large investments in marketing. The photo is taken by the “Beauty & Personal Care economy report” analysis carried out by Cross Border Growth Capital, advisor in Italy for capital increases and extraordinary finance operations for startups and SMEs. In particular, the most important segment, equal to 45% of the beauty sector is related to Personal Care products which, with a value of $ 215 billion in 2020, expects to reach $ 268.5 billion by 2025. Followed by the segment represented by Care products of Leather (27%) which is worth 169.2 billion dollars, and that of Cosmetics, which represents 18% of the global B & Pc market and shows the most promising future: growth with a CAGR of 6.4% is expected in the next 5 years and a size of 118.5 billion dollars by 2025. Finally, fragrances play a marginal role, with a market share of 10%. In general, it is a market strongly influenced by online: to date 51% of consumers worldwide regularly buy on the web (Statista, 2020) and, as can be expected, the outbreak of the pandemic in 2020 has further strengthened this trend. The spread of ecommerce therefore also concerns the B&PC sector: on average, brands and beauty retailers have recorded a 20-30% increase in their online sales compared to pre-Covid-19 levels, with even some cases of doubling in revenues coming from e-commerce (McKinsey, 2020). “The European beauty & personal care market is going through a phase of great vivacity driven by the strengthening of online penetration and the increase in the propensity to spend per capita”, explains Lorenzo Triboli , Associate of Cross Border Growth Capital. According to the manager, the players in the beauty world should therefore prioritize digital channels to capture and convert the attention of existing and potential customers considering that 34% of consumers are digital beauty shoppers, i.e. they regularly buy beauty products through retailers. online (Euromonitor, 2020). “The ecommerce segment will reach € 28 billion in sales in Europe in 2024, growing 5 times faster than the traditional channel. Germany, with an online channel weighting 31% of the total market, represents the largest market, evaluated. 4.6 billion euros. Italy and Spain – continues Triboli – are the countries, among those taken into consideration, less digital-oriented (respectively 15% and 22%) “. Triboli points out that “Italy in particular, with 1.3 billion euros in sales, is a smaller but very interesting country, since it has higher margins for the diffusion of online and boasts a CAGR expected for 2020-2024 higher than 10% “. And in a context of increasingly ‘digital’ beauty, a high potential segment is represented by subscription box models, which provide – in exchange for a monthly or quarterly advance payment – the recurring physical delivery of a beauty box with a selection of products, designed to offer an experience and added value compared to products sold individually at retail. Born in the USA about a decade ago, this phenomenon soon achieved success and also conquered the European market, registering, in the last 3 years, a CAGR of 28%. According to Cross Border Growth Capital, this trend will remain strong also in the future, thanks to the ability to better interpret the most successful trends: personalization, community engagement, sustainability and attention to product quality. According to the data, the beauty box market should in fact approach 875 million euros by 2024 in Europe, which would imply a CAGR of 27.3% over the next 4 years. Globally, FabFitFun and Ipsy are the most relevant players, while in Europe BirchBox emerges and in Italy, the leader in the subscription box market is Abiby which closed 2020 with + 170% turnover compared to 2019 and + 162% in terms of boxes delivered.