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The #1 Challenge for Beauty Businesses in 2021

Updated: May 19, 2021

The challenges of 2020 surpassed anyone's expectations. Even the strongest beauty brands have seen unexpected setbacks and continue to feel the effects today, finding themselves in a similar vulnerable situation to smaller businesses and having to adapt to stay afloat.



The #1 challenge facing beauty businesses in 2021 is navigating the new economy. In order to protect the economy, the Government is under pressure to provide a solution to the complex position many small companies have found themselves in, suffocated by a lack of profitability and liquidity.


A New Economy


The good news is, according to a Conference Board forecast, U.S. Real GDP growth will rise 5.5 percent (year-over-year) in 2021. Growth is improving rapidly, with an expected higher recovery speed in future quarters as the new COVID-19 vaccination program expands and an additional sizable fiscal support program is put into motion. Following a very concrete recovery in 2021, the economic growth is predicted to reach 3.5 percent (year-over-year) in 2022.


Morgan Stanley even improved their expectations in March for this whole year due to economic reopening, a faster vaccination rate, and more robust job growth (with a 4.9 percent unemployment rate predicted by the last quarter of 2021).


Adapting to New Trends in the Beauty Industry


Amidst the opportunities that will appear during economic expansion and business growth, the challenges in 2021 for beauty businesses will stem from the need to adapt to current changing trends. These trends are influenced by the following:


  • Social Media: As the world went into lockdown, businesses recognised the importance of a strong digital presence. The attention that brands are now giving to their social media has created a competitive environment in which every detail is important. The preparation necessary for this level of quality often requires the skills and equipment of a small production company. Beauty businesses will have to prioritise their social media to stay relevant and production skills will become increasingly important in the industry.


  • Sustainability: As people become increasingly aware of the threat to our environment, considering products in terms of sustainability has influenced every industry in the last few years. This is particularly so with regards to products for which packaging is an essential component of the product’s branding.


  • Social Responsibility: Products and services are under much stronger scrutiny than they ever were before. Sustainability and employee relations are becoming an area of hazard for companies that may damage their brands not only through their own actions but through those of their providers.


  • Healthy Choices: According to experts in the industry, the times of concealing are over, and the age of natural beauty is here. People are becoming more conscious about how lifestyle habits affect their skin and are seeking out products to protect and nurture it.


  • Personalization: Consumers are now willing to pay more for a personalized service. The use of technologies such as Big Data allows businesses to identify consumer preferences in advance, propose new experiences, and offer them innovative products.

Room for Action


Readiness to adapt is a virtue of the beauty industry. A focus on shifting trends is paramount to making successful changes and by looking at the current market we can find clues as to what the future will bring:


  • Knowledge of Buyers: Understanding how and why trends change has to be a priority; consumer decision-making leaves an online trail that can be turned into experience improvement as soon as possible. These could relate to factors such as the speed and quality of the shopping experience, ease of payment, product availability, and security.


  • Financial Planning: Reducing liquidity risks and creating economic scenarios in the short and medium-term is essential to steer your business in the best direction. Having a solid but adaptable business plan helps maintain focus even through difficult moments and it provides a firm base to strive for new opportunities in every market turn.


  • Positioning in a Growing Economy: If this is the era of a vast economic shift, then we are at the start of the positive consequences of that change. Statista indicates: revenue in the Beauty & Personal Care market is expected to grow annually by 4.06% (from 2021 to 2025). The core expectations of the market are right now associated with Personal Care, at a volume of US $38,373m for 2021. The U.S. is at the top of the worldwide market and the generation of wealth in the beauty industry will have an estimated revenue of US$82,264m.


There is no doubt that in the wake of the pandemic, the year ahead will be a demanding one for beauty businesses but for those that are willing to learn and adapt there are new and exciting opportunities on the horizon. The industry is experiencing a shift in trends and the economy is ready to bounce back along with those brands that can demonstrate resilience and versatility.




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