India’s beauty industry is rapidly expanding, with projections showing it will reach $34 billion by 2028. This growth is fueled by rising disposable incomes, increased consumer aspirations, and the influence of social media and e-commerce. As Indian consumers become more sophisticated, there’s a growing demand for premium beauty products and personalized experiences driven by global beauty trends. 

E-commerce is set to become the fastest-growing platform, with a 25% CAGR expected by 2028. Online shopping is making global beauty products accessible to consumers in smaller cities, allowing them to follow the latest trends that were once limited to metros.

Growing Preference for High-Quality, Premium Beauty Products

The trend of premiumization is transforming the beauty industry, with consumers showing an increasing preference for high-quality beauty products. By 2028, the premium beauty market is expected to be valued at US$ 3-3.2 billion. This shift is being driven by consumers who seek superior products with premium ingredients that promise better results and efficacy.

The rise in dual-income households and the growing spending power of consumers, especially Gen Z and Millennials, are major contributors to this trend. For many, premium beauty products are seen as status symbols, providing emotional gratification, pride, and a sense of accomplishment. Brands that deliver premium experiences, whether through innovative product formulations or luxurious retail environments, will continue to thrive.

Stepification of Beauty Routines

Consumers’ relationship with beauty has evolved significantly over time. Beauty is no longer reserved for special occasions but has become an integral part of daily life, especially among younger consumers. The report emphasizes the concept of “stepification,” where multi-step routines have become the norm in skincare, haircare, and makeup. Consumers are now using more products, in different formats, to achieve desired results.

This trend is particularly pronounced among Gen Z and Millennials, who are eager to experiment with new products and incorporate multiple steps into their routines. The focus on sophisticated beauty regimens is pushing consumers to demand higher quality and more specialized products. As a result, brands need to cater to this growing consumer segment by offering diverse formats and steps in their product lines.

New Audiences: Gen Z, Millennials, and Tier 2+ Cities 

India’s beauty consumers are rapidly evolving, with Gen Z and Millennials driving the bulk of growth in the market. These digitally-savvy, younger consumers are not only embracing beauty with enthusiasm but are also dictating the direction of the market. Their preferences for inclusivity, authenticity, and transparency are shaping how brands develop and market their products.

In addition to metro cities, Tier 2 and Tier 3 cities are becoming increasingly important growth centers. The report notes that consumers from these regions are catching up with their metro counterparts in terms of beauty consumption, with aspirations to access both global and local brands. Social media and digital platforms have been instrumental in bridging the gap between metro and non-metro consumers, creating new opportunities for brands to expand their reach.

Expanding Marketing Ecosystem: Influencers and Digital Content

The influence of social media and digital content continues to be a key driver in the beauty industry. Platforms like Instagram, YouTube, and TikTok are shaping consumer choices, with influencer marketing emerging as a powerful tool for brands. The report highlights that influencer marketing spend has surged, with even legacy brands now allocating around 40% of their digital marketing budgets to influencer collaborations.

As consumers become more niche in their preferences, micro-influencers and beauty experts are gaining traction. These creators provide personalized recommendations and educational content, which resonates with a highly engaged audience. Brands that harness the power of digital creators and focus on authentic, relatable content will benefit from greater consumer trust and loyalty.

Homegrown Brands: Innovation and Scale

India’s beauty landscape is also witnessing the rise of homegrown brands that are disrupting the market with innovative products tailored to local consumers. The report highlights the success stories of homegrown brands that have not only secured significant funding but also introduced unique product offerings that cater to India’s diverse consumer base.

These brands have championed product differentiation through innovations in formats and ingredients. Many are also leveraging partnerships with larger incumbents to scale rapidly. For example, Dot & Key and Dr. Sheth’s have experienced exponential growth after being acquired by major players like Nykaa and Honasa Consumer. Homegrown brands that focus on product innovation, along with omnichannel strategies, are well-positioned to continue their upward trajectory.

Ingredient is Hero: Transparent and Functional Products

Today’s beauty consumers are more informed and demand transparency about the ingredients used in their products. The report underscores the rise of ingredient-driven beauty, with consumers seeking products that offer functional benefits and address specific skin or hair concerns.

Ingredients like salicylic acid, niacinamide, and rosemary oil are gaining popularity, with many of them becoming viral on social media due to their efficacy. The concept of “skinification” is also expanding, with skincare ingredients now being incorporated into haircare, body care, and makeup products. Consumers are no longer satisfied with just the superficial benefits of beauty products; they want results that improve skin and hair health over time. Brands that prioritize ingredient transparency and education will continue to gain traction.

Microtrends: Small Shifts, Seismic Impact

Microtrends, often short-lived yet powerful, are reshaping the beauty landscape. These trends, typically lasting 3-6 months, gain popularity through social media and pop culture, especially among Gen Z. The report notes the rise of microtrends such as graphic eyeliners, lip stains, and tinted moisturizers, all of which have become must-have products thanks to their visibility on platforms like Instagram and TikTok.

Brands that are agile enough to capitalize on these microtrends can see significant gains. By offering limited-edition or trend-specific products, brands can tap into the growing demand for novelty and uniqueness among beauty consumers. The ability to quickly respond to these trends through agile manufacturing and marketing strategies will be crucial for brands looking to stay ahead of the curve.

Tech in Beauty: AI, Personalization, and Virtual Try-Ons

Technology is revolutionizing the beauty industry, with AI-driven personalization and virtual try-ons leading the way. The report highlights how beauty brands are using AI to deliver personalized recommendations and search experiences for consumers. AI-powered tools can analyze a customer’s skin type or preferences to suggest the most suitable products, providing a highly tailored shopping experience.

Additionally, virtual try-on technology, powered by augmented reality (AR), is enhancing the online beauty shopping experience. Consumers can now test products like lipsticks or foundations virtually before making a purchase, bringing the in-store trial experience to e-commerce platforms. This blend of AI and AR is not only improving customer satisfaction but also helping brands optimize their inventory and product development processes.

Conclusion

The Nykaa Beauty Summit Report 2024 offers an in-depth look at the trends that are shaping the future of India’s beauty and personal care industry. From the premiumization of products and the rise of multi-step routines to the influence of social media and cutting-edge technology, the industry is undergoing rapid transformation. Brands that align themselves with these trends and innovate in response to changing consumer preferences will be best positioned for success in this thriving market.

Discover the latest insights into India’s dynamic beauty and personal care (BPC) market, as analyzed in the Nykaa Beauty Summit Report 2024. This collaboration between Nykaa and Redseer Strategy Consultants provides in-depth analysis and forecasts on how the BPC industry is evolving, driven by technological advancements, consumer preferences, and premiumization trends.