Gen Z is obsessed with 2016, and beauty stocks like e.l.f. and Ulta are riding the nostalgia wave
The beauty industry is experiencing a 'nostalgia cycle' as Gen Z consumers embrace the high-pigment, 'full-glam' makeup
The beauty industry is experiencing a 'nostalgia cycle' as Gen Z consumers embrace the high-pigment, 'full-glam' makeup trends of the mid-2010s. This shift is significantly benefitting value-oriented players like e.l.f. Beauty (ELF) and specialty retailers like Ulta Beauty (ULTA). For investors, this trend underscores a pivot from the minimalist 'clean girl' aesthetic that dominated the pandemic era, which typically required fewer products, to a multi-step routine that drives higher basket sizes and unit volumes. e.l.f. Beauty, in particular, has managed to maintain its momentum by bridging the gap between drugstore pricing and prestige-level marketing, consistently gaining market share despite broader consumer discretionary spending concerns. Ulta stands to benefit as the primary destination for these trend-driven consumers who often mix high-end and mass-market products. This trend also reflects the power of social media algorithms on platforms like TikTok in accelerating product cycles. While the 'beauty boom' has faced some normalization post-2023, the return of more complex beauty routines provides a structural tailwind for margins. Investors should monitor quarterly comparable store sales at Ulta to see if this trend can offset the increasing competition from Sephora’s expansion within Kohl’s.
Watch upcoming earnings, policy statements and sector-level price action for confirmation.
Key Takeaways
- 1Gen Z's return to 2016-era beauty trends is driving demand for specific product categories like full-coverage foundations, contour kits, and bold lipsticks.
- 2e.l.f. Beauty continues to outperform the sector by rapidly replicating prestige trends at mass-market price points, appealing to 'dupe' culture.
- 3The resurgence of multi-step makeup routines leads to higher average transaction values (ATV) for retailers compared to minimalist beauty trends.
- 4Ulta's integrated business model, featuring both prestige and mass products, positions it as the primary beneficiary of consumers 'mixing and matching' their routines.
- 5Social media-led nostalgia cycles are shortening product lifespans, requiring beauty companies to have highly agile supply chains and marketing teams.
The beauty industry is experiencing a 'nostalgia cycle' as Gen Z consumers embrace the high-pigment, 'full-glam' makeup trends of the mid-2010s. This shift is significantly benefitting value-oriented players like e.l.f. Beauty (ELF) and specialty retailers like Ulta Beauty (ULTA). For investors, this trend underscores a pivot from the minimalist 'clean girl' aesthetic that dominated the pandemic era, which typically required fewer products, to a multi-step routine that drives higher basket sizes and unit volumes. e.l.f. Beauty, in particular, has managed to maintain its momentum by bridging the gap between drugstore pricing and prestige-level marketing, consistently gaining market share despite broader consumer discretionary spending concerns. Ulta stands to benefit as the primary destination for these trend-driven consumers who often mix high-end and mass-market products. This trend also reflects the power of social media algorithms on platforms like TikTok in accelerating product cycles. While the 'beauty boom' has faced some normalization post-2023, the return of more complex beauty routines provides a structural tailwind for margins. Investors should monitor quarterly comparable store sales at Ulta to see if this trend can offset the increasing competition from Sephora’s expansion within Kohl’s.