Live Markets: Big Beauty faces growing threat from AI, smaller rivals
LIVE MARKETS-Big Beauty faces growing threat from AI, smaller rivals Adds blog post
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BIG BEAUTY FACES GROWING THREAT FROM AI, SMALLER RIVALS
Global beauty giants are losing ground to smaller rivals, as AI-led disruption and the rise of Korean brands reshape the sector and cheaper, lesser-known brands with targeted digital marketing lead growth, J.P. Morgan said.
Artificial intelligence comes into the equation, with AI-powered searches that could shift beauty shopping from "browse and choose" to AI-generated shortlists that would require brands to provide consistent product information, defensible claims, strong reviews and reliable pricing, strategists led by Celine Pannuti said.
Beauty demand remains robust. However, customers are increasingly prioritising product efficacy, novel technologies, and innovative ingredients, driving a structural shift in the industry, the bank said in a note on Monday.
Companies need portfolios aligned with rapid growth trends and business models built for agility, speed and technological innovation, it said.
Big names like Lancome, Olay, Estee Lauder and Neutrogena are among those losing share, while La Roche-Posay, CeraVe, independent labels and K-beauty brands have gained, J.P. Morgan said.
K-Beauty - Korean brands - boasts rapid innovation, effective viral marketing, and lower prices and now account for 8-10% of the global market. They're also capturing a third of industry growth, the bank said.
So-called skin care adjacencies, like aesthetic injectables, beauty devices, and supplements are growing in popularity, which could further fragment consumer spending and challenge the big legacy brands, J.P. Morgan said.
(Kanchana Chakravarty)
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