In 2023, the beauty industry is getting a glow-up. The rise of generative AI has created a new landscape— influencing product development, personalization, and the customer experience.
Here, we’ll explore the most significant industry trends affecting beauty this year. We’ll also look at how AI and machine learning are changing how we perceive and experience beauty.
The State of Beauty
After a tumultuous few years, the industry is flourishing. According to McKinsey, the global beauty market will generate over $580 billion in annual sales by 2027—growing by 6% every year.
Today, the intersection of beauty, science, and technology is central to the sector’s growth. With an increased focus on health and well-being, consumers demand more transparency and personalization. They want to know what’s in a product and how their daily routines might affect its performance.
At the same time, beauty shoppers expect brands to invest in sustainable production practices. Sourcing localized ingredients, upcycling waste generated during production, and an increased focus on sustainable packaging reflects the industry’s growing commitment to reducing its environmental impact.
Consumers also want simplified routines that emphasize natural looks. While this trend emerged during the pandemic, the uncertain economy has reinforced it. Consumers want cost-effective and low-maintenance beauty solutions. All-in-one products—like BB creams, CC creams, tinted moisturizers, cleansing balms, and foundation serums—are driving revenue.
How AI and Machine Learning are Transforming the Beauty Industry
Generative AI relies on machine learning, deep learning, and natural language processing. Unlike traditional computer programming, AI algorithms improve as they receive new data. These algorithms mimic human thought and behavior, identifying trends and generating insights.
While the beauty market is no stranger to AI, the last year has seen development skyrocket.
Here are three ways generative AI is shaping the beauty industry’s future.
1. Product Development
With generative AI, beauty brands are ushering in a new era of efficiency, innovation, and customization in product development.
In the past, product development relied on trial-and-error processes and time-consuming testing. Today, AI algorithms analyze vast amounts of data surrounding ingredients, consumer preferences, and market trends to optimize combinations and formulas. These applications are accelerating innovation and ensuring that products meet consumers’ evolving needs.
One way AI is shaping product development is through virtual testing. Algorithms can predict how ingredients interact and how formulations perform under different conditions. These insights reduce the need for physical experimentation—minimizing costs and resources.
At its Materials Innovation Factory, Unilever uses AI-powered robots to drive product development. (The facility has the largest number of robots performing material chemistry globally.) For example, the company used algorithms that analyzed millions of color combinations to develop its Hourglass Confession Red lipstick. Another robot—nicknamed Shirley—speeds up product testing. The robot washes, conditions, and styles hair while mimicking human behavior so scientists can analyze the performance of different haircare product formulas faster.
2. Personalization
Generative AI is also advancing hyper-personalization. AI-powered applications perform skin analysis, understanding the interaction between beauty products and a consumer’s lifestyle. These systems can track diet, sleep, fitness, and environmental differences and provide personalized product recommendations.
From products that target menopausal skin to personalized perfume, here are a few ways AI is making our beauty products more bespoke.
- Sephora recently introduced Smart Skin Scan. Consumers complete a comprehensive skin diagnostic. Sephora will then use the results to tailor your entire shopping experience—online and offline.
- L’Oreal USA created Perso, a three-in-one device that makes personalized moisturizer, foundation, and lipstick. The device uses an app to monitor your skin and environmental factors to produce daily formulas. You can also use the app to generate lipstick that color-matches your clothing.
- Ninu created an AI-powered perfume bottle. Customers use an app to describe their preferred scent. Ninu can produce up to 100 different fragrances.
- Veracity offers an at-home saliva test. The company uses the results to deliver a “personalized wellness routine.” Its recommendations include skincare, supplements, and diet recommendations optimized for your hormones.
3. Customer engagement and marketing
Today, consumer education is more important than ever. Almost 50% of Gen Z consumers research products “extensively” before buying. With AI, beauty brands use interactive experiences to drive customer engagement and loyalty.
Virtual try on
Virtual try-on technologies enable customers to see how different makeup, hairstyles, or skincare solutions will look on them. These experiences empower consumers to make more informed choices. It also allows brands to collect customer data and feedback better.
For example, Haut.AI recently launched SkinGPT. Shoppers upload a photo, and the application shows the customer how their skin will change over time using different products.
Chatbots and virtual assistants
Generative AI is also powering more sophisticated chatbots. These AI-driven virtual assistants are available 24/7, addressing concerns and guiding customers through beauty routines.
- Supergreat is a platform that provides live beauty shopping and product reviews. In June, the company expanded its offering to include an “AI-powered beauty assistant.” Users can ask the chatbot specific questions, and the app will direct them to relevant videos.
- Estée Lauder introduced a Voice-Enabled Makeup Assistant (VMA) earlier this year. Initially designed for people living with sight loss, VMA provides audio feedback and tips on makeup application.
Product recommendations
Brands also use AI to tailor the online shopping experience. These applications analyze social media interactions, customer reviews, purchasing behavior, and shopping history. With these insights, companies can better understand consumer preferences and trends. By leveraging AI, brands can better tailor marketing strategies to resonate with their audience—including more personalized ads and offers.
Experiential retail
Finally, brands are using AI to power unique virtual experiences that motivate customers to engage with the brand. For example, Shisheido recently partnered with Cult to create its latest NFT project. The companies used a series of beauty-related words to develop AI-generated artwork. Customers purchasing the NFTs will have access to over $1,000 of skincare and makeup samples over the next year.
Haircare brand Living Proof created a virtual store combining shopping and education in the metaverse. While in the digital shop, customers take an AI-powered hair quiz that helps them find their ideal haircare routine. Shoppers can then browse products and learn about their benefits. They can also visit the company’s headquarters to learn more about correctly recycling packaging.
Navigating the Future of Beauty with AI
Generative AI is changing how the industry conceptualizes, produces, and markets beauty products. From developing groundbreaking formulations to predicting trends, AI helps brands create a more personalized and immersive customer experience.
But, navigating how to integrate these new technologies can be overwhelming. At Salesfloor, we’re here to help. Salesfloor is the most comprehensive customer engagement platform. Unifying virtual shopping, clienteling, and AI-assisted selling, Salesfloor helps brands boost customer loyalty and drive revenue.
Book a demo today to see how Salesfloor is helping beauty brands embrace the future of retail through conversational AI.
Megan Honan: Apr 8, 2024
