Perspectives

The beauty industry is undergoing a major makeover this year — a change that could alter the face of its leadership.

Retailers who’ve long dominated the beauty sphere are facing a global slowdown. Meanwhile, competition is growing from discounters like TJ Maxx and Dollar General, big-box players like Target and Walmart, and online marketplaces like Amazon and TikTok Shop.

At the same time, many legacy beauty players have struggled to survive in the last year as layoffs and restructuring efforts hit indie retailers, drug store giants, and MLM brands alike.

Beauty’s ongoing disruption has broad implications for the executive talent pool. This transformation could usher in a new generation of executives with non-traditional beauty backgrounds. The emergence of new business models and sales channels also has the potential to change the skill sets needed to succeed at the executive level.

“The big houses historically promote from within,” Senior Partner Lindsay Stevens said. She added that major beauty houses have a history of either cultivating their own talent or hiring candidates from equally as large companies within the industry — and for a while, that approach paid off. “These companies thrived for years by running their brands a certain way — they had a formula and a playbook that worked.”

But that’s beginning to change.

Partner Melissa Sussberg added that younger, more innovative beauty brands have started flooding the market and taking shares away from the old guard. Now more players are willing to venture away from the traditional beauty executive profile and are open to exploring talent from other sectors.

“They’re looking for somebody who can be a creative disruptor — so somebody who understands the climate, the current consumer, attracting new customers, and what's going to get them excited,” Sussberg said. “So they're open to outside the sector.”

Where to find a fresh crop of beauty talent

The recent rise of new beauty shopping destinations and new business models is unfamiliar territory for many executives who’ve spent their careers in large beauty conglomerates.

In search of energetic and agile leaders, Sussberg said beauty companies are more open to hiring leaders from adjacent industries like fashion and tech. These are consumer-focused industries that offer a fresh perspective and have their finger on the pulse of what’s driving consumers to shop.

“It's very hard to build a loyal customer base given how quickly the industry is moving,” Sussberg said. “And so if you take somebody from different sectors, they might have a fresh approach.”

Fashion skill sets translate well with the beauty industry because both their successes are ultimately tied to their ability to build an emotional connection and establish loyalty with consumers. Meanwhile, some legacy brands, especially those in the midst of a digital transformation, could be drawn to tech executives who offer diversity of thought, experience, and innovation.

The skills needed to lead a beauty business

Beauty’s industry-wide reckoning is pushing brands to look outside of their traditional executive profile. The pace at which the industry is moving has made innovation, flexibility, and creativity critical to success.

Stevens said that the beauty leaders who are most likely to succeed are those who can capitalize on new media and sales channels, such as TikTok and Amazon. Just a few years ago, premium beauty brands skirted away from these marketplaces in fear of cheapening their brand image, but doing that now would be a lost sales opportunity. The majority of all beauty and personal care transactions in the first half of the year happened online at 41%, according to consumer intelligence firm NielsenIQ.

“Everyone's shopping for everything on Amazon — from luxury skincare to toothpaste,” Stevens said. “Beauty leaders need to meet consumers where they are and rethink how to maintain a brand image that isn’t necessarily aligned with the perception of the respective sales channel.”

It’s no secret that understanding the needs of beauty shoppers is a critical element for an executive’s success, but keeping up is more complicated now than ever. Customers are constantly fed new beauty concepts and modalities causing the trend cycle to turn faster, making it challenging to meet their expectations, stand out, and let alone keep up.

While a new playbook is crucial in the current climate, the foundational skills of a beauty executive should not be ignored, such as someone with knowledge of traditional revenue channels, financial acumen, and someone who can inspire a team.

Where the beauty industry is headed

If the “Lipstick Index,” which indicates that customers would indulge themselves with affordable luxuries like beauty products instead of big-ticket when they’re cash-strapped, held true then sales should be skyrocketing. However, the industry’s recent earnings round indicates shoppers have been holding back spending.

Stevens said it could be a challenging next couple of months for beauty executives. “Beauty has always had a very big margin, but with advertising being so expensive and so many of these channels taking a cut… you're going to see fewer profitable beauty brands,” she said.

Stevens and Sussberg agreed that the global sales slowdown, coupled with the disruption in the industry, emphasizes the importance of having well-rounded, nimble, and resilient beauty leaders at the helm.

“I just think that the bar is going to continue to rise and that these leaders are going to have to meet consumers’ pace,” Sussberg said. “You're going to have to identify a set of leaders that are comfortable in the uncomfortable.”