Circana’s Larissa Jensen on Beauty 2025 Outlook for Mass and Prestige

Despite being one of the industry’s foremost data analysts, Larissa Jensen is a storyteller at heart.

Take her presentation at the 2024 WWD Beauty CEO Summit, where she shared key data points around the spending potential of Gen X. Rather than rely on pie charts and bullet points, Jensen brought her full self on-stage, soundtrack included, concluding her keynote with a fist pump to the tune of Simple Minds’ “Don’t You (Forget About Me).” (Readers of a certain age will recognize the gesture from the cult film, “The Breakfast Club.”)

“I bring life and color to numbers, and it’s still my most favorite thing about what I do,” said Jensen, the senior vice president of beauty and industry adviser at Circana. “It has resonated deeply with the industry, because at the end of the day, we’re all people who appreciate a good story.”

Jensen has spent nearly two decades at Circana, formerly known as the NPD Group before its merger with IRI in 2022. Prior to that, she had stints at the Estée Lauder Cos. and L’Oréal, and she’s also currently an adjunct professor at the Fashion Institute of Technology.

In a wide-ranging sit-down with Beauty Inc, Jensen discusses what she thinks CEOs should be focused on in 2025, how her communication style has evolved and finding the data points that matter most.

If you were to describe beauty in 2024 with three key words, what would they be?

Larissa Jensen: Resiliency, stabilization and evolution. 

From a resiliency standpoint, the industry as a whole has continued to grow over the last several years, even in a period where other industries are challenged. Beauty continues to be strong — prestige beauty, more specifically, but there is still growth in mass. 

We are also starting to stabilize in terms of performance. There was stronger growth, and we are now having softer growth, which is to be expected.

In terms of evolution, there are a lot of shifts in the marketplace and those have led to more changes in the industry overall.

What should every CEO be thinking about as we enter 2025?

L.J.: First would be to connect directly with the consumer, which might be in stores or via social media. Direct interaction is essential to understanding the needs and psyche of who’s purchasing your product. That information could be a really powerful tool in ensuring that both company goals and consumer desires are met. The most successful leaders do not lead from ivory towers.

The second priority would be authentically aligning strategic plans with trends that are important to your consumer. If you’re in the trenches, you should know what those important trends are, and then it’s about deciding if they’re aligned with a company’s values. And if not, you have to ask yourself how to connect those dots.

The last thing is creating a culture of innovation and fun. I believe work is work, but it should also be fun. Finding joy in our work is key to satisfaction in what we do, and innovation is critical to keeping yourself and your brand relevant. Creating that culture where innovative ideas thrive means ensuring that management is supportive of new ideas.

Speaking of CEOs, you present to them all the time. How has your communication style evolved?

L.J.: When I first entered the world of market research, I started out as a reporter of facts: what’s up, what’s down, what’s driving it. I homed in on the fundamentals of data analysis. As my role evolved, and I moved into a position of more influence, that approach was no longer relevant. I recognized the need to go beyond the “what” to the “why,” and I began to tell stories.

Numbers just don’t stick. People like stories. We remember stories. And this is coming from a data nerd. Numbers are important, but you can show the most exciting numbers ever and they mean very little without a story that shows you why those numbers are exciting.

How would you describe your leadership style?

L.J.: I’m very much about growing my team, putting them in a position where they are strong, so they continue to contribute in a positive way. It’s also very much about having fun, and that’s something I strive to do. Nurturing them and seeing them grow brings me joy personally, it’s why I mentor a lot, and it’s also a part of why I’m an adjunct professor. It’s the same concept of helping others find their way and helping them to identify what they’re good at.

You sometimes deliver news to people that they don’t love. What have you learned about delivering tough truths?

L.J.: As an eternal optimist, delivering the tough truth is actually a part of the job that I relish now. It sounds counterintuitive, but every one of those tough truths has an opportunity, and opportunities are what drive growth.

A few years ago when I had to report the dismal sales results of 2020 — the pandemic had closed retailer doors in prestige for part of the year, and even as doors opened, consumers cautiously ventured out and sales plummeted across every category, brand and retailer — that was the toughest truth I’ve ever had to deliver. I believed it was a defining moment that would open up many opportunities going forward, and it became a call to action for the industry to come back stronger than ever. And it did.

In the past two years, you’ve started working on mass market analysis as well. What have you learned having access to both sides of beauty?

L.J.: Having the understanding of the beauty consumer more holistically is golden. Sometimes you see something declining in mass that is also one of the strongest performing areas in prestige. These dynamics are a treasure, because if you’re on the mass side, it’s not that consumers aren’t buying these products, it’s that they’re buying them elsewhere and you can figure out how to win them back. On the prestige side, it points to the opportunity to amplify our consumers’ indulgence mindsets.

How do you see retail evolving?

L.J.: Brick-and-mortar will never die. It may change, as it already has, but beauty will always be an industry that consumers want to interact with in stores. This does not mean technology won’t play a bigger role in how we shop in stores, and it doesn’t mean online shopping won’t continue to be important. But brands and retailers need to ensure their investments are reflective of where consumers are shopping, and broadly speaking, that’s in stores.

For 2025, what are you bullish on and what are you bearish on?

L.J.: I’m bullish on three things. The concept of elevated value is definitely one of them. Whether it’s premium skin care in mass, value-type products and prestige fragrance — that concept of indulging but feeling like you got a deal is something that we see continuing. I’m also bullish on fragrance because it has had double-digit growth for three years straight. While we expect to see a slow down in the growth, it’s firing on all cylinders from high-end to value-based. I’m also bullish on Gen Alpha. There is what feels like a full-force movement happening with them. While tapping into this whole new crop of unexpected buyers is exciting, it’s a double-edged sword for the industry, because we need to keep them safe. Developing appropriate products and having that continued education will be key.

We are preparing for a bit of a slowdown in makeup. It has been struggling this year in the mass market, it has slowed down significantly in prestige. It’s been strong over the last several years, but we expect to see softness continue into next year and also anticipate a resurgence down the road.

I’m bearish on Millennials, too. They’re in the prime of “life is expensive” mode, with kids and housing and student loans. They are showing the biggest pullback in different areas of the market outside of beauty. They’re still engaged, but I’m expecting they will continue to make choices with regard to discretionary spend.

I’m bearish on luxury skin care, too. It has been challenged for several years now, and given what we’re seeing in the market, we expect that it’s actually going to remain challenged for quite some time. That’s not to say we don’t see pockets of growth, but it is a soft market overall. The growing brands are not quite as expensive but a bit of an indulgence — maybe not $100 per item, but $60.

Are you expecting Gen Alpha’s interest in beauty to maintain this velocity?

L.J.: They’re very young, and beauty is the hot topic of the moment for them. They’re experimenting, and there’s a certain level of play, and that’s going to continue. The beauty industry is addictive and there’s so much to discover. They’re just starting younger than the rest of us did. But once you dip a toe, you can ask anybody — once you get started, you’re hooked for life.

We’ve seen so many new players surge this year, like Amazon and TikTok Shop. How do you think they will impact the landscape moving forward?

L.J.: The pie just gets bigger, and then the pieces get a little bit smaller. But any type of growth or nontraditional channel is a positive for the industry overall and for the consumer, though can be a challenge for those already in the industry.

Data has become so central to how decisions are made. What numbers are the most important?

L.J.: All data is important, and the data that’s most important is highly dependent on what you want to understand. Consumer data informs usage, purchase behaviors. Sales data provides the basics of market trends and performance drivers. For us, that informs all other data sets: forecasts, price elasticity, promotion, media optimization. 

We have other data points on psychographic profiles, buyer analytics and consumer panels. Of course, there’s regional views too. Those have shown us time and time again how important it is to understand the nuances of these regional insights. We have found that the top markets for certain trends do not cleanly align to the top markets overall, so recognizing where those opportunities are regionally is critical to understanding how to maximize distribution. We are literally swimming in data, and that’s why it’s so important to cut through the complexity, extract the clarity and identify the stories.

With so much, how do you avoid analysis paralysis and cut through the clutter to the most impactful insights?

L.J.: When I teach or lecture on storytelling with data, I make an analogy to Legos. If you get a data dump, it’s like sorting a pile of legos. You need to go through it, make piles of the same-colored blocks, and as the numbers begin to make sense, you find those nuggets of insights.

That’s when the storytelling aspect comes into play. You may have 100 yellow Lego bricks, and not use all of them. If you’re a good analyst, you’re going to find those many insights. But a great analyst  recognizes that just because there’s all of these points to share, doesn’t mean you share all of them. You only use the ones that help you tell the story. By anchoring your analysis on a story, it becomes much easier to move away from analysis paralysis.

How is it best to action data in a timely way?

L.J.: Prioritizing everything. Everything moves fast, and you need to recognize what’s important and what will drive growth and should be actioned quickly. The challenge is when you’re looking at trends, every trend is important to recognize and understand, but they can be disruptive. There’s a lot of noise, and not every trend is relevant to everyone. I recommend leaning on data to identify, to measure and quantify where you need to invest for the biggest return — and act fast.