During her presentation at BeautyMatter 2026 State of Play, “The Beauty Divide in 2026: Navigating the K-Shaped Consumer Landscape,” Anna Mayo, Vice President of Beauty Vertical at NIQ, examined how widening economic inequality is reshaping beauty purchasing behavior. While beauty continues to deliver stronger sales growth than most other retail categories, the consumers driving that growth are concentrated among affluent households. Drawing on NIQ retail and consumer data, Mayo stated that this “K-shaped economy” is creating two distinct beauty markets, with increasingly polarized shopping behaviors, spending patterns, and definitions of value.
The presentation explored how beauty remains one of retail’s most resilient categories despite persistent economic pressures, but highlighted an uneven market where affluent consumers are increasing their spending as lower-income shoppers become more selective. For brands, understanding those diverging patterns is becoming critical to future growth.
Before examining the market in 2026, Mayo revisited the four predictions NIQ made at last year’s BeautyMatter State of Play. One year later, she said that each continues to shape the industry’s trajectory.
Beauty has remained remarkably buoyant despite a challenging macroeconomic backdrop. Beauty and personal care sales have continued growing by around 10% even as retail store sales increased by a mere 2%, consumer confidence weakened, and fuel prices rose. Rather than pulling back from beauty altogether, consumers continue to prioritize the category, with Mayo describing it as an “affordable indulgence.”
Online beauty sales are growing at roughly three times the rate of in-store sales and now account for 45% of all beauty and personal care sales, reinforcing digital commerce as one of the industry’s primary growth engines.
Independent brands also continue to outperform conglomerates, growing 22% compared to 6% for larger beauty companies year over year (YoY). However, Mayo noted that success is becoming uneven.
"Some brands are really struggling with longevity and loyalty,” she said.
While the indie segment is expanding overall, maintaining long-term consumer loyalty is becoming difficult, giving larger companies an advantage in managing brand portfolios over time.
Instead, long-term growth increasingly depends on combining online discovery with a strong in-store presence, using each channel to fulfill different roles throughout the consumer journey.
The central theme of Mayo’s presentation was the emergence of the “K-shaped economy,” an economic landscape that benefits affluent households while leaving lower-income consumers under increasing financial pressure. A K-shaped economy reflects a widening divide in consumer spending. Consumers with greater exposure to appreciating assets, including property and investments, continue to accumulate wealth. Meanwhile, lower-income households are facing rising prices without comparable wage growth, creating two distinct consumer groups.
"The wealthier segment of the economy [is] feeling really positive . . . and it's a very different story on the lower end."
Those differences are becoming visible inside the beauty category. Among consumers earning more than $100,000 annually, beauty spending has continued to grow at double-digit rates over the past three years; mid-income shoppers have maintained healthy growth of around 6% YoY, while lower-income consumers have become considerably more selective, evaluating whether products genuinely justify their cost.
Even as consumers faced rising living costs and declining confidence, Mayo argued that beauty occupies a unique position within household spending. Rather than eliminating beauty purchases, consumers are reallocating spending from other discretionary categories such as fashion, home goods, and entertainment, while continuing to invest in products they perceive as delivering value.
Digital commerce remains central to that growth. Online beauty sales are growing more than 20%, compared to approximately 3% in-store YoY, with e-commerce now accounting for 45% of all beauty and personal care sales.
"Fragrance is our number-one growing category, with 15% growth" compared to a year ago, according to Mayo. She says brands are successfully extending fragrance-led innovation into hand and body lotions, scrubs, and body washes as consumers seek more immersive, scent-driven routines that go beyond a single-fragrance purchase.
"What's been interesting to watch about fragrance is [that] it's starting to move now outside of just perfume and cologne, and we're seeing scent make its way into many other categories."
Instead, it is becoming a broader product strategy, with scent-forward body care creating new opportunities for brands to extend fragrance franchises, encourage product layering, and increase consumer engagement across multiple categories.
K-beauty continues to be one of the fastest-growing segments in the US beauty market, with sales reaching $2.8 billion, up 48% year over year (YoY). While Korean skincare remains the foundation of the category, Mayo suggested the next phase of growth will come from expansion into adjacent categories. The category’s influence is currently strongest in facial skincare, where innovation around formulations, textures, and routines attracts consumers.
"This is mainly impacting the facial skincare market right now, though we are [also] seeing really strong momentum in haircare and bodycare, and we are expecting to see K-beauty brands really make their way into other segments as well."
For beauty brands, an opportunity extends beyond competing with Korean skincare products. As K-beauty expands into new categories, it is exporting its broader approach to product innovation, ingredient-led formulations, and multi-step routines, raising consumer expectations across the wider beauty markets.
Fragrance emerged as the category benefiting most from higher-income spending while facial skincare and cosmetics remain more reliant on lower-income consumers, creating greater risk if economic pressure continues.
Quarterly spending data illustrates how sharply the market has diverged. While spending behavior remained relatively consistent across income groups in 2023, a clear divide emerged in 2024 as higher-income households continue increasing their beauty purchases while middle- and lower-income consumers become more selective with discretionary spending.
Mayo said that this is more than a temporary response to economic uncertainty. Instead, it signals a structural shift in the beauty market. With households earning more than $100,000 annually now accounting for 49% of all beauty and personal care sales, affluent consumers are becoming the industry’s primary growth engine.
However, Mayo stressed that this does not mean lower-income shoppers have stopped spending on beauty. Instead, consumers across all income levels remain focused on value—although what constitutes value is changing.
"Shoppers are looking for value, and products that offer them the best experience for their investment." For higher-income consumers, value is increasingly tied to experience, innovation, and discovery. NIQ's data showed that affluent shoppers are drawn to brands that offer more than affordability, favoring products that deliver enjoyable, experience-led shopping moments. Those preferences are reflected in the brands gaining momentum among affluent shoppers; Mayo pointed to Tarte and Kitsch as standout performers.
Lower-income consumers, meanwhile, are becoming more intentional in their purchasing decisions rather than abandoning beauty altogether. Mayo noted they remain willing to invest in products that deliver genuine excitement or performance, but are more likely to switch to lower-priced alternatives, buy only essentials, or shop promotional periods when prices drop.
NIQ’s data showed that brands succeeding with lower-income shoppers are those combining strong value with innovation or social relevance. Mayo highlighted Maelys, Dr. Squatch, and Grace & Stella as examples of brands gaining momentum, alongside haircare brands Kitsch and Not Your Mother’s. In bodycare, fragrance-led brands including eos, Dove, Method, and Philosophy continue to resonate, suggesting consumers remain willing to spend on products that combine strong performance with sensorial experiences, trend-led innovation, and distinctive branding, giving consumers an affordable way to indulge without trading up to prestige.
For beauty brands, the implication is clear: Value can no longer be defined purely by price. Whether targeting premium or mass consumers, brands must clearly communicate why a product is worth the investment, tailoring that proposition to the priorities of different income groups rather than assuming a single definition of value applies across the market.
Beyond category growth, Mayo highlighted a broader shift in how consumers define beauty, with routines shaped by technology, wellness, and self-expression rather than aesthetics alone.
Beauty technology is gaining momentum as consumers seek professional-level results from home. Mayo pointed to growing demand for at-home beauty devices, professional-grade products, and wearable technologies that allow consumers to personalize routines and monitor aspects of their health.
At the same time, wellness continues to influence purchasing decisions across the category. "Beauty is not just about looking good, it's about feeling great as well, and feeling great from the inside out," said Mayo.
That shift is driving growing interest in ingredient education, with consumers becoming knowledgeable about actives such as hyaluronic acid, peptides, and vitamin C. Rather than limiting that scrutiny to facial skincare, Mayo noted that shoppers are now looking for those same ingredients in haircare, bodycare, and even sunscreen, reflecting a broader expectation that efficacy should extend across the entire beauty routine.
While consumers are becoming more intentional about investing in products that deliver proven results, they continue to embrace affordable purchases that allow them to experiment with new colors, scents, and trends. Mayo pointed to the ongoing strength of the “lipstick index,” with lip cosmetics remaining one of beauty’s fastest-moving segments.
"Lip cosmetics continue to show really strong growth." From lip oils and glosses to stains, new formats and textures continue to encourage trial and repeat purchasing, demonstrating that even in a more value-conscious market, consumers remain willing to invest in products that offer novelty, self-expression, and small moments of indulgence.
NIQ’s prediction that Amazon and TikTok Shop would become beauty’s most influential retailers has also continued to prove accurate. Amazon remains the largest beauty retailer in the US, winning routine replenishment purchases through convenience and repeat purchases, while TikTok Shop continues to drive discovery and impulse purchasing. However, Mayo cautioned that the strongest brands are not choosing between digital and physical retail.
Retail channel performance also reflects changing shopping behavior. Amazon remains both the largest and fastest-growing beauty retailer in the US, delivering approximately 28% growth in both dollars and units. Unlike TikTok Shop, Amazon’s success is being driven by habitual purchasing behavior. "Consumers are relying on it more and more as a place to order . . . their staples, the things that they're buying over and over again."
TikTok Shop, by contrast, is building its business around discovery and impulse purchasing. Mayo described the platform as a destination where consumers encounter products organically before purchasing almost immediately through creator content.
Rather than competing directly, the two platforms fulfill different roles within the beauty purchase journey: Amazon dominates replenishment, while TikTok Shop accelerates discovery. Mayo cautioned against viewing digital success in isolation. Brands building long-term equity continue to combine strong online execution with physical retail presence, suggesting digital and brick-and-mortar strategies are becoming complementary rather than mutually exclusive.
Ultimately, Mayo reminded people that the K-shaped economy is reshaping the category far beyond pricing. As consumers increasingly diverge into “haves” and “have nots,” brands can no longer rely on a single value proposition or retail strategy. Success will depend on understanding how different consumer groups define value, whether through premium experiences, efficacy, affordability, or convenience, and meeting them across the channels where they choose to discover, replenish, and shop for beauty.
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