Generation X drives beauty sales

Move over, Sephora kids.

While younger generations have been purchasing beauty products in droves, data shows that a different generation has more purchasing power: Generation X.

Often called the “forgotten generation,” Generation X encompasses those born between 1965 and 1980, according to the Pew Research Center. Sandwiched between baby boomers and millennials, the often-overlooked generation hasn't been in the spotlight as much as their counterparts.

But experts say it may be one of the most important generations for the beauty industry in the coming years.

Generation This generation represents approximately 25% of total beauty spending, both on beauty products and services.

More importantly, the Gen X beauty market will grow to 1.3 times its current size over the next five years, NielsenIQ said.

That growth, according to the company, comes from a culmination of factors: The generation is financially stable and well-established, has leaned toward anti-aging and longevity trends, and has strong brand loyalty.

According to Chicago-based market research firm Circana, households with members of Generation X accounted for 44% of total dollars spent on beauty last year, with skin care being their top category.

“This aligns with how beauty companies are focusing on solutions related to skin health, anti-aging and long-term results, areas that resonate strongly with Gen X consumers,” said Larissa Jensen, beauty industry advisor at Circana.

The cohort will also see an increase in their spending on hair care and makeup, Jensen added.

It's a trend that has been complemented by a broader focus on wellness and anti-aging.

“We don't ignore people as much as they get older in the beauty industry,” said Anna Mayo, beauty thought leader at NielsenIQ. “For the first time, we're seeing brands launching and talking about menopause… I think that really helps keep people engaged. They feel like they're not buying something that was made for a college student.”

Generation

Although the generation is spending its money experimenting with different brands and products, Mayo noted that its members have high brand loyalty and are likely to stick with one product and continue investing in it once it becomes established.

“Part of it is that the industry has become really good at developing brands designed for much more specific audiences,” he said. “We are less so in the era of these mass-market brands.”

It's a growth that companies are also taking note of. At the beginning of April, Ulta CEO Kecia Steelman told Yahoo Finance that catering to older generations is part of the company's business strategy.

“I think 50 is the new 30 and 60 is the new 40,” he said. “So those of us who are aging, we want to age gracefully, so if we can find products that really help with the longevity of the look, we'll lean toward that.”

Ulta did not respond to CNBC's request for comment.

Sephora is experiencing similar growth and told CNBC that the company is actively investing in expanding its brands aimed at the high-spending Generation X group.

“As we expand our assortment, particularly for our Gen

Bluemercury, a personal care company, even launched a campaign last year celebrating women over 40. The company identified Generation X as one of its biggest opportunities given their purchasing power and focus on luxury beauty.

The winners of the Gen X spending spree will be clear, according to Lindy Firstenberg, a consultant at AlixPartners.

“Ulta is going to win because they have doubled down on wellness and have a big focus on menopause brands,” Firstenberg said.

While Sephora has been openly advertising to younger cohorts, Firstenberg said it's even emerging as a sort of Gen X “hotspot,” along with Bluemercury. The key, he said, has been investing in selection and individual contact with clients.

Members of Generation X, who grew up with salespeople working counters in department stores, invest in the experience as much as the product. Firstenberg said the importance of having knowledgeable sales associates is 23% higher for Generation X than for Generation Z.

Brands that focus on reaching Generation X where they are, rather than chasing younger generations, will secure their purchasing power, Firstenberg added.

“That's what Generation X wants: They want the best products, they want to be educated, they want that great talent and they want that service,” he said.

Kirti Tewani, a member of Generation

That generation posed a largely “untapped” market when it began to receive increased attention about two years ago.

“Generation “So we're taking care of ourselves from the inside out.”

Tewani said she has specifically seen Generation X focused on products that boast long-term effects and target areas like hyperpigmentation, dry skin and large pores. They're also combining those products with a wellness-focused lifestyle, he added, focusing on diet, exercise and sleep.

The generation is also looking for clean ingredients, according to Tewani, coinciding with a greater push toward simpler formulations in the beauty industry.

“I think the brands definitely knew this was going to happen,” Tewani said. “Now, more brands are jumping on the bandwagon because they understand where the spending markets are, and Generation X definitely fills that gap.”

And the age of Generation X also means that their beauty spending expands beyond the surface level.

According to AlixPartners' Firstenberg, people that age are likely to belong to the so-called “sandwich generation,” meaning they buy beauty products for both parents and children, contributing to their large spending ratio.

They are also not a generation that focuses on novelty or flashy marketing and instead wants products that show proven results.

The purchasing power of Generation X is almost 25% above the national average, he added.

“We are not only seeing that they have this power, but they exercise it,” he said. “They're going to maintain this higher spending per generation for at least the next eight years.”