According to McKinsey’s new report, From Aisle to Algorithm the global beauty market is set to grow 5 percent a year, reaching $590 billion by 2030 but this growth is not evenly spread. Africa’s e-commerce channel is projected to grow at 33.5% CAGR through 2030, the fastest of any channel in all regions. Latin America follows at 15.8%, the Middle East at 16.3%, South and Southeast and Central Asia at 11.3%. North America and Europe should experience slower ecommerce growth, at 6.8% and 7.1%, but those numbers still outpace nearly every physical channel in their own regions.
Department stores tell a different story. The channel has already declined 2% annually since 2019, and bankruptcies and brand withdrawals keep pressuring performance, particularly in the US. Beauty sales from department stores are expected to contract 3.7% per year until 2030 in the USA, 2.2% in Australasia and 1.4% in Europe.
In the US, four retailers now account for just under half of beauty sales: Amazon, Ulta Beauty, Sephora, and TikTok. McKinsey expects Amazon and TikTok’s combined core beauty sales to pass the combined sales of Sephora and Ulta Beauty this year. TikTok beauty sales have grown at triple-digit rates since 2023 and are on track to hit $4bn in 2026, up roughly 260% annually. Skincare leads that growth, up nearly 300% over the same period.
None of this means physical retail disappears. Specialty beauty is still expected to grow at a high-single-digit rate in most regions, and travel retail should recover everywhere, with notably a projected 12% CAGR in Africa and 9.5% in the Middle East. The retailers that will win will give people a reason to walk in. The rest will compete on price and convenience against Amazon and TikTok which is a fight most of them will lose.
