The beauty industry is currently undergoing a profound transformation, shifting from a market driven by prestige and occasional indulgence to one defined by resilience and essentiality.

As we look toward 2026, it is clear that consumers aren't just buying small luxuries during tough times; they are fundamentally prioritizing beauty and personal care as non-negotiable pillars of their daily health and self-image. 

Despite broader economic shifts and a moderate growth rate across the total store, the beauty category has remained a standout performer, fueled by a consumer base that is more knowledgeable, tech-savvy, and wellness-oriented than ever before.

To unpack these shifting dynamics, I sat down with NIQ’s Katie Hazlett, who spoke at ECRM's Everyday & Holiday Cosmetics, Skin Fragrance & Bath Session on emerging trends that will define the retail landscape in 2026, and offered a roadmap for both beauty brands and buyers seeking to navigate this high-growth sector. 

From the blurring lines between luxury and affordability to the explosive impact of social commerce and artificial intelligence, the insights gathered provide a comprehensive look at how the modern shopper defines "beauty from the inside out.” (Download the slide presentation here: NIQ State of Beauty 2026 ECRM.pdf)

Beauty is a resilient category with robust gains

The beauty category has demonstrated remarkable strength, maintaining a trajectory that outpaces many other retail sectors, according to Hazlett. Currently seeing 11 percent total growth, the category is particularly dominant in the digital space, where online sales continue to climb toward nearly half of all beauty transactions.

"Consumers are really prioritizing beauty and it's really become a must-have category," she says.

Premiumization vs. affordability: The new value proposition

A critical shift for 2026 is the reconciliation of luxury and cost-effectiveness. The traditional hierarchy is being disrupted by a consumer who values performance over a prestigious label. Some trends NIQ sees in this area: 

• Knowledge is power: Shoppers are now ingredient experts, capable of identifying high-quality components regardless of the price tag.
• The rise of "dupes": "Dupe culture" is a major driver, as consumers actively seek affordable alternatives that provide premium results.
• Strategic shopping: Consumers are increasingly comfortable "mixing and matching," shopping across various price points to find the specific products that best suit their unique needs.

Beauty and wellness convergence: 'Inside out' care

The boundary between beauty, personal care, and health is quickly disappearing. Post-pandemic, the definition of beauty has expanded to include holistic wellness, focusing on how internal health manifests externally. "Consumers' view of beauty has really expanded to include wellness," says Hazlett. "They're kind of looking beyond the mirror and looking for beauty from the inside out.”

This convergence is fueling several key sub-trends:

• Vitamins and supplements: Categories once reserved for the pharmacy aisle, like ingestibles for sleep or gut health, are now viewed as essential beauty tools.
• Aromatherapy and scents: Products like scented candles and fragrance-forward body care are being integrated into beauty routines for their therapeutic and emotional benefits.
• Ingredient crossovers: Skincare staples like hyaluronic acid, retinol, and Vitamin C are migrating into body care and hair care, as consumers treat their entire body with the same rigor as their face.
• The digital frontier: Social commerce and the impact of AI

Discovery and purchasing behaviors are being revolutionized by social platforms and Generative AI, making the path to purchase more seamless – and more persuasive – than ever.

Interestingly, the fragrance is experiencing explosive growth online, driven by influencers who can effectively communicate the emotion and vibe of a scent. Additionally, TikTok Shop has rapidly emerged as a top beauty retailer, leveraging viral trends and ease of purchase.

AI is quickly becoming a primary tool for personalized product discovery, with nearly a quarter of consumers using it for recommendations. "It's very simple to type in your age, where you live – for example, I live in a higher altitude, so it’s a dryer climate," Hazlett shared regarding her own AI-assisted search for a moisturizer. "I love the product it recommended. I've already made a repeat purchase of it.”

Digital platforms have also impacted global influence, with K-Beauty now worth over $2 billion in the U.S. market. Consumers easily discover trending Korean ingredients and brands via social media and purchase them through major retailers like Amazon, Sephora, and Ulta.

Men’s grooming: Redefining category norms

The men's grooming segment continues to accelerate as category norms are redefined. While many men seek simplification – favoring "all-in-one" products like whole-body deodorants – there is also booming interest in fragrance, specialized hair removal, and scalp health.

Retail Outlook: Navigating economic headwinds

Despite the overall optimism, retail buyers must be mindful of varying growth across different income levels. High income consumers are showing the strongest and consistent growth in the beauty category, with middle-income consumers seeing moderate growth. Among low-income consumers, sales are currently flat, with these shoppers prioritizing convenience and lower price points, often shifting their spending toward platforms like Amazon.

For brands and buyers looking toward 2026, success will lie in meeting the consumer wherever they are – whether that's on TikTok Shop, in a personalized AI search, or through a wellness-focused retail set.
 

Watch the full video interview with NIQ's Katie Hazlett below