Beauty, the new engine of growth for luxury fashion brands. #Luxury Business Group #Insight |
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Luxury Fashion Brands in Crisis Turn to Beauty for Growth
At the intersection of the âsmall luxuryâ trend and global expansion, beauty has emerged as the new engine of growth for luxury fashion brands. |
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Marketing & Communication Team |
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"Instead of handbags that cost thousands of dollars, limited-edition luxury lipsticks are flying off the shelves."
Even in an economic downturn, people may not buy a bagâbut theyâll still buy a lipstick. This shift in consumer behavior is redefining the luxury industry. |
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đ What Youâll Learn From This Article
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Why are luxury brands shifting their focus from fashion to beauty?
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How did a single lipstick become central to global luxury strategy?
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What is the most crucial success factor in luxury brandsâ move into beauty? |
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*After 171 years, even Louis Vuitton is finally stepping into the beauty arena.
Thereâs a striking shift happening in the beauty sector. Once exclusive to fashion halls, brands like Louis Vuitton and Prada are now showing up in beauty corners. Once known only for handbags and clothing, these maisons are now offering lipsticks, foundations, and perfumesâsignaling not just expansion, but a strategic survival move.
Even amid economic uncertainty, the beauty market has shown steady growth. Todayâs consumers are unwilling to let go of luxuryâchoosing instead to experience it through âsmall luxuries.â Industry experts predict this trend will only grow stronger in the coming years.
So whatâs driving this sudden pivot to beauty? Letâs explore the strategies behind this shift and the ripple effects itâs sending across the entire industryâthrough four key trends every insider should be watching. |
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1ď¸âŁ Cosmetics: The New Growth Driver Amid Stagnant Sales
The financial logic behind luxuryâs beauty pivot is compelling. While traditional luxury goods like clothing and bags are struggling under global economic pressure, the beauty segment is holding strong.
Take LVMHâs 2023 performance as an example: while revenue from fashion and leather goods dropped 3% year-on-year, its perfumes and cosmetics division grew by 2%. Achieving growth in a declining market is a noteworthy signal.
According to Bain & Companyâs 2024 luxury report, âbeauty productsâespecially fragrancesâcontinue to perform well, driven by consumersâ appetite for âsmall luxuries.ââ In fact, beauty led all luxury segments in 2024 with a growth rate of 3â5%.
The global outlook is also promising. Global Market Estimates (GME) projects the beauty industry will grow from $380.2 billion in 2021 to $465 billion by 2026, reaching $519.1 billion by 2033. McKinsey adds that the true luxury and ultra-luxury beauty market, now worth $20 billion, could double to $40 billion by 2027.
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2ď¸âŁ Tailored Market Entry Strategies by Brand
Each luxury brand is taking a unique approach to entering the beauty space.
Louis Vuitton recently announced its official foray into makeup with the launch of La BeautĂŠ Louis Vuitton. Previously limited to fragrances and beauty pouches, the house is expanding into makeupâled by none other than Pat McGrath as its creative director.
McGrath has been the backstage makeup artist for Vuittonâs fashion shows for over 20 years, working closely with artistic director Nicolas Ghesquière since 2014 and now collaborating with menâs creative director Pharrell Williams. âPeople have been asking for years when Louis Vuitton Beauty would launchânow itâs finally here,â she shared.
One detail worth noting: the lipstick line will include 55 shades, a nod to the Roman numeral interpretation of LV. This level of storytelling reflects the brandâs dedication to detail and heritage.
Jacquemus, on the other hand, has opted for a different strategyâpartnering exclusively with L'OrĂŠal to launch a new beauty brand. Founder Simon Porte Jacquemus noted that âbeauty has always been part of the vision,â signaling a long-term investment in brand storytelling rather than short-term sales.
Marc Jacobs is staging a comeback, relaunching its beauty line through a partnership with Coty after exiting the space in 2021.
Other key players like Prada, Hermès, Gucci, Dior, and Chanel are also ramping up their beauty portfoliosâsome launching formal beauty divisions for the first time.
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3ď¸âŁ Lowering the Barrier: Beauty as an Entry Point for New Customers
Luxury brands see beauty as a powerful way to engage a broader audience. Compared to multi-thousand-dollar fashion pieces, premium cosmeticsâranging from tens to hundreds of dollarsâare far more accessible.
According to a report by NIQ, todayâs consumers no longer purchase exclusively within luxury brands. They move fluidly across price points, categories, and channels. Even high-end beauty shoppers often purchase both luxury and mass-market products. A Chanel skincare customer might pick up a budget sheet mask at a drugstore, while a first-time buyer may treat themselves to a Dior lipstick.
This blurring of lines between mass and luxury opens the door to a wider consumer base. It also addresses a critical psychological needâallowing consumers to indulge in âsecond-tier luxuryâ even during downturns.
Luxury brands are also reappropriating the rise of the âdupeâ cultureâwhere consumers seek affordable alternatives to premium goodsâas an opportunity. Rather than losing customers to cheaper imitators, theyâre drawing them back with luxury-branded beauty products at more accessible price points. For first-time buyers, beauty serves as a gateway experience into the world of luxury.
Beauty remains the easiest, most effective way for consumers to connect with a brandâand for brands to expand their reach, especially among Millennials and Gen Z. These younger consumers are highly responsive to product reviews and swatch content on social media, making beauty an ideal touchpoint.
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4ď¸âŁ Global Expansion Brings a New Challenge: People
As luxury brands expand their beauty divisions globally, understanding local beauty culturesâMiddle Eastern fragrances, Asian skincare rituals, Western makeup preferencesâbecomes essential. But the real key to success? The people on the ground.
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Why is the beauty retail environment so different?
Luxury cosmetic stores demand a completely different approach compared to fashion boutiques.
- A multi-sensory space: Beauty products engage all five senses. Consumers test fragrances, textures, finishesâsearching for a personalized experience. Here, staff play a pivotal role. Beyond explaining products, they must understand skin types, preferences, and deliver truly personalized consultations.
- Short time, strong impression: Many luxury beauty counters operate as shop-in-shops within department stores, with limited space and customer interaction time. Staff must communicate brand heritage and value quickly and effectively, making every second count.
- Repeat purchases = relationship-building: Unlike fashion items, beauty products are bought repeatedly. That makes beauty stores a crucial starting point for long-term customer relationships. Personalized service and ongoing care are key to building loyalty.
Ultimately, the success of luxury beauty retail lies in creating immersive service experiences that go beyond the product. At the heart of that experience is a highly trained, empathetic, and knowledgeable team.
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The beauty business is no longer optional for luxury brandsâitâs essential. Beauty offers the most approachable way to deliver a brandâs world to the consumer and has become the beating heart of the small luxury trend.
Whatâs even more notable is how beauty is fueling luxury brandsâ global market expansion. From the Middle East to Asia and the West, brands are facing new challenges: how to ensure a consistent, luxury-standard brand experience across all global retail touchpoints.
No matter how good the product or story, if that brand experience fails at the point of customer interaction, it loses meaning. In beauty, that frontline experience includes not just product functionality but also heritage and luxury storytellingâmaking the role of store staff absolutely critical.
LBI (Luxury Business Institute) supports this global expansion through specialized training programs tailored to regional cultures and cosmetic retail environments. We help brands deliver a truly global standard of service, bringing their luxury DNA to life across every touchpoint.
At the end of the day, the key to winning in the beauty sector lies with peopleâboth staff and customer relationships. |
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To support this transformation, LBG offers a fully integrated suite of services for luxury beauty brands:
- LBI (Training Division): Employee training and coaching for cosmetic retail, regional service playbooks, VIP customer care program design, in-store mystery shopping, and global-standard curriculum implementation. On-site training is also available in overseas markets to ensure brand consistency.
- LBT (Talent Division): Recruitment services for cosmetic stores, including store managers, beauty advisors, sales staff, trainers, and HQ support roles. We match brands with the best-fit talent, from industry veterans to new recruits.
- LBP (Consulting Division): Strategic consulting for premium mall and department store entry, brand development and positioning, global market expansion, competitive analysis, and differentiation strategy.
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Luxury Business Group (LBG) |
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Connecting Talent and Opportunity
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đBrand Store Operations
- Are you planning to open a new flagship store?
- Are you facing challenges in hiring and managing talent in the service sector?
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- Do you need an on-site service quality assessment and solutions?
đPlanning and Branding
- Are you planning collaborations with various brands (art, luxury, retail, etc.)?
- Would you like to share news about our company with luxury businesses, brands, and professionals?
- Are you considering expanding your services to other regions (Europe and Asia)?
- Are you planning to create premium spaces for VIPs?
đCorporate Training and Recruitment
- Are you looking for a training program that is more distinctive than traditional corporate programs? (Luxury attitude, new normal selling skills, storytelling, employee/brand branding, etc.)
- Do you need a training program customized to your brand?
- Do you need to recruit top-tier talent that aligns with your company or brand?
Luxury Business Group (LBG) supports numerous companies in the luxury service and retail sectors across Europe and Asia, leveraging its unparalleled expertise in providing total solutions for service and retail training and consulting.
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Luxury Business Group (LBG)
LBG Marketing & Communication Team | Gayoung Lee, Jade Lee, Booki Jung |
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