Ask shoppers about their beauty routine today, and you might be surprised: yes, skin care and fragrances, but also cold plunges, snail-mucin serums, and K-beauty products purchased via livestream. And now, some consumers are using AI agents to suss out products and make purchases. On this episode of The McKinsey Podcast, McKinsey Partners Alexis Wolfer and Sara Hudson speak with Global Editorial Director Lucia Rahilly about McKinsey’s latest State of Beauty research—including what brands need to consider to win over both humans and algorithms.
The McKinsey Podcast is cohosted by Lucia Rahilly and Roberta Fusaro.
The following transcript has been edited for clarity and length.
Where consumers look for beauty expertise
Lucia Rahilly: For so many people, visiting the department store makeup counter was, for a long time, a ritual. What’s the status of the beauty counter in today’s online era?
Alexis Wolfer: People still seek out beauty expertise, but not generally at a department store makeup counter. Department store counters are often organized by brand. You have to know which brand you’re interested in before you engage with the expert, who is often a salesperson for that brand.
Brand affinity and loyalty have really been turned on their head. Consumers very infrequently buy their entire beauty routine from a single brand these days. They shop across price points, brands, and retailers in a way that was hard to imagine a decade ago.
So expertise is still really important—someone who can show me how to wear and apply a product. But that’s increasingly happening on platforms like TikTok, where the expert might not be a brand sales rep; it’s an influencer a couple of doors, towns, or countries away.
What counts as beauty now
Lucia Rahilly: Your research suggests that consumers increasingly think about beauty in terms of how they feel—confidence, self-care, a sense of well-being—rather than as simply looking better or younger. How is the definition of beauty changing? And does that have implications for what counts as a beauty company?
Alexis Wolfer: It’s changing quite rapidly. Five years ago, the most elaborate routines meant cleanser, toner, serums, and makeup. Today they might include GLP-1s, infrared sauna, cold plunges, or functional nutrition—categories that weren’t part of our past research. This year, we expanded our definition of beauty to include services, nutrition, at-home devices, and more.
Lucia Rahilly: Talk to us about the influence of Korean beauty products. Is K-beauty still a thing?
Alexis Wolfer: This is the second wave of K-beauty. Korea has consistently earned global praise as a leader in skin care technology and innovation. When we ask consumers who makes the best skin care products, Korean beauty is often in the top three.
K-beauty’s success rests on sharp price positioning—bundling or “masstige” price points that feel like good deals—and on novelty, whether a new format or a new ingredient, such as snail mucin or PDRN [polydeoxyribonucleotide].
Sara Hudson: K-beauty has also done particularly well on signals of efficacy and clinical backing. For example, many applicators look like syringes, with measurement lines on the side.
Who influences the consumer the most?
Lucia Rahilly: The right social media influencer can now help a product sell out overnight. Who has the power today—the brand, the retailer, the influencer?
Alexis Wolfer: Amazon is now the largest beauty retailer in the US. TikTok Shop will be a $4 billion beauty retailer by the end of this year. Consumers also say retailers from Walmart and Target to Sephora and Ulta are good at selling across price points, so assortments are looking more similar. Browsing with no particular product in mind is now less common; most trips are preresearched. Either I know the exact product I want, or I saw it on TikTok and want to see it in store. That significantly affects go-to-market strategy and growth for new brands.
Browsing with no particular product in mind is now less common; most trips are preresearched.
Sara Hudson: TikTok Shop and social selling are also changing how fast brands can scale. TikTok Shop–native brands are seeing very fast growth, and we see a halo when some of them move into brick-and-mortar.
Brands are becoming increasingly savvy about building that buzz.
Why fragrance is surging in popularity
Lucia Rahilly: Fragrance has overtaken color cosmetics to become the third-largest beauty category, even though you can’t experience it virtually. Why are people so excited about fragrance right now?
Alexis Wolfer: First, although e-commerce remains the darling of beauty growth, more than two-thirds of beauty sales globally, and about 50 percent in the US, still happen in store, where fragrance can shine.
Second, consumers use fragrance very differently. My grandmother had a signature scent. Younger consumers largely don’t; they have collections and layer them to create bespoke scents, with different ones for the gym, work, and date night.
Third, premiumization, with a resurgence of niche brands and designer brands from fashion houses. And men—particularly young men—continue to engage, which is helping bolster growth.
What’s the opportunity in GLP-1s?
Lucia Rahilly: The research draws a link between GLP-1s and beauty: Households using GLP-1s spend an estimated 30 percent more on beauty products. What’s happening there, and how big an opportunity could this become as GLP-1 use spreads beyond weight loss?
Sara Hudson: There’s a significant ecosystem around GLP-1s, and it’s broader than beauty; it’s also the merging of beauty and wellness.
Then there are the side effects. Hair loss and thinning are fueling a lot of activity in the hair category—vitamins, and increasingly sophisticated serums and masks. Skin laxity is another, where the response spans firming creams—some are existing products with new marketing, and some are tested on GLP-1 users—up to more aesthetic procedures, facial or body. Some filler brands have been running clinical trials on GLP-1 patients specifically to show efficacy in that population.
So we see a significant opportunity in appearance, well beyond nutrition and muscle.
Is livestream shopping the future?
Lucia Rahilly: Livestream shopping is already mainstream in markets like China and India, but less so in the US or Europe. Is this a global phenomenon, or is it regionally specific?
Sara Hudson: It travels, but not as broadly. Consumers in markets like India are very interested in live shopping. In the West, interest is much lower: about 35 percent in the US and about 25 percent in Western Europe.
Those who use it are very engaged. They typically use it for product discovery and for one-offs, such as special editions you wouldn’t find elsewhere, and some use it for discounts or bundles. It’s not just entertainment; it’s a shopping channel.
Alexis Wolfer: Lines are also blurring between marketing and sales channels—between livestreaming and influencer channels like TikTok Shop, Instagram, and Amazon’s live platforms. It will be interesting to see how that evolves in different countries and for different customer cohorts.
When AI agents do the shopping
Lucia Rahilly: AI agents may soon act as intermediaries, choosing products for us. Your research suggests AI platforms could drive as much as 35 percent of e-commerce transactions in the next three to five years. What happens to beauty when you’re no longer marketing only to humans, but also to the agents acting on our behalf?
Sara Hudson: The words that LLMs [large language models] and agents pick up are very different from traditional marketing words, which appeal to emotions and brand image. LLMs pick up on functional words: how something is used, what ingredients are in it, and what ingredients are not. They also pull from a much wider range of sources.
It’s important to adjust marketing and content for those algorithms. Agents increasingly curate product lists on retailer websites, and if yours isn’t picked up, you’re not even in the consideration set.
The words that LLMs and agents pick up are very different from traditional marketing words.
Many beauty categories are high engagement: Consumers want to research and choose, rather than have something picked for them. So I don’t think many will go fully agent to agent, though some personal care and household categories may do so. Toilet paper, for example, is a replenishment purchase where you’re happy to tell your agent: “Buy me more toilet paper.”
But even without fully autonomous agents, the influence is incredibly important. Executives are already seeing SEO and SEM, the traditional digital marketing approaches, become less effective, and many are shifting to optimizing for LLMs, which we call GEO [generative engine optimization].
Alexis Wolfer: We’re also tracking the impact of instant, “perfect” price comparisons across retailers, which further democratize shopping choice. Say I tell an agent, “Help me find this product for the cheapest price possible,” or I’m open to waiting until it’s on promo. Those behaviors will cause real pricing pressure and presumably even less differentiation across retailers when products have to be offered at the same prices across all of them.
What successful brands do differently
Lucia Rahilly: What separates the beauty brands that are gaining momentum from those that are stalling?
Sara Hudson: The brands getting attention tap into the culture and have something distinct and easily recognizable—sometimes visual, sometimes surprising or novel, like unexpected ingredients. Building community has also been important for certain brands, making consumers feel the brand is in line with their ethos rather than targeting a certain type of person.
Tactically, they invest in content and work with content creators. TikTok is often where they get traction and scale. Many have then moved into brick-and-mortar, picking the right partners for their value proposition.
The brands getting attention tap into the culture and have something distinct and easily recognizable—sometimes visual, sometimes surprising or novel, like unexpected ingredients.
Lucia Rahilly: Can you share tangible examples of what these changes look like in practice?
Sara Hudson: One company I work with is applying learnings from China, particularly on social selling, to its larger brands. It has been experimenting on TikTok in the West, launching a product there before wider distribution and offering special editions and limited drops. It has had success with a few of its brands and is working out the role of social selling and TikTok Shop across the portfolio, which can vary by brand.
Alexis Wolfer: One brand plays in the novel-ingredient space, so the challenge is explaining it and telling the real story to consumers. It also distributes through professional channels, so it has very different audiences: plastic surgeons, dermatologists, and med spa owners, as well as end consumers.
Consumers can do an extraordinary amount of research on products and ingredients. So you need a simple, targeted, personalized story about why this will work for them, as the bar for efficacy keeps rising and consumers ask more of brands at sharper price points. A clear, personalized, digital-led but omnichannel strategy is critical.
