JULY 21 – 01
FROM NICHE TO UNDERSERVED MARKETS
How the beauty industry explores untapped growth potential in diversity
While the concept of the market niche had long been holding a particular allure within the beauty industry, we have recently been observing the dynamics of a shift from niche to underserved markets. Whereas the niche does not necessarily cater to socially, culturally, or economically marginalized groups, but appears to attract especially wealthy consumer that want to distinguish themselves from the mainstream, the idea of underserved rather builds on ever more pressing requests for racial justice and equity. Consequently, “inclusive beauty” is no longer simply an industry buzzword that gained substantial traction with Fenty Beauty’s launch in 2017, but also describes an increasing focus on financially backing brands that target and serve, for instance, consumers of color or Gen Zers who do not believe anymore in binary perceptions of gender. The necessary reframing from niche to underserved is also reflected by a massive buying power that these newly discovered segments demonstrate.
To name but two examples of brands that have been early jumping on the bandwagon. The clean haircare brand “Ceremonia” was launched in 2020 in New York and caters to the special haircare needs of the Latin woman. The direct-to-consumer business was founded by Babba Rivera, a former UBER executive who had long run her own marketing agency in New York. Although seeming like a small, potentially irrelevant target group at first glance, market data tells another story about Latin people: In the US, Hispanics represent the biggest minority that spends 46% more on haircare products than non-Hispanics, and that, being one of the youngest demographics in the US, shows a steadily rising purchasing power.
In addition to the business perspective, the desire to truly represent the target group currently drives this trend. “Plenaire” is a community-based beauty brand for Gen Z that wants to be and act truly inclusive by showing diverse faces and people with disabilities or in highly vulnerable positions. Their approach is broader than that of Ceremonia, claiming that a beauty brand is only throughout inclusive if those who have long been excluded from consumption and usage can finally join the norm, that is, the current consumer base.
We at Circle Culture Consulting are convinced that all those beauty brands will thrive in the future that show genuine interest and sensitivity toward these hitherto underserved communities while being as broadly inclusive as possible.