What beauty’s 16,000 playoffs reveal

Over 16,000 layoffs were announced in H1 2025, on par with 2024 and indicative of an industry in strategic retreat. Estée Lauder plans to cut between 5,800 and 7,000 positions by fiscal year 2026, its most significant reduction in nearly a decade; Procter & Gamble is trimming 7,000 non-manufacturing roles over two years; Unilever has already eliminated 6,000 jobs; and Shiseido has shut its metaverse division and offered early retirement to 1,500 Japan-based staff, with fresh rounds of layoffs now extending to its Americas operations. While the headlines scream crisis, experts say the moves reflect something deeper: a fundamental reset of beauty’s growth logic. “This isn’t just a wave of layoffs. It’s a systemic reset,” says Jason Ong, strategist at Axxelerated Transformation. “The beauty industry is shedding its old skin. What we are witnessing is not a collapse, but a strategic pruning, removing excess to uncover what truly matters: purpose, precision, and relevance.” Beauty’s hypergrowth hangover The issues in beauty didn’t start recently: They’ve been simmering beneath the surface for years. Laura Pan, luxury strategy lecturer at SDA Bocconi School of Management, believes the roots of this downturn stretch back to the post-2019 comedown. “Beauty has been decreasing significantly since Covid after a huge rise in 2019,” she tells Jing Daily, citing LVMH’s fragrance and cosmetics division, where operating profits have stagnated despite revenue growth. A 753% drop in profit between 2019 and 2020 was followed by a brief 2021 rebound, thanks mainly to Chinese duty-free demand. But the sector has remained flat since. “The industry grew too fast, too quickly,” Pan says. “Luxury fashion brands like Valentino, Prada, and Hermès launched beauty divisions between 2019 and 2023. Massive M&A activity also drove up headcounts. But now, as consumer spending slows, companies are realizing that growth doesn’t justify the workforce.” Stagnating sales are prompting companies to reevaluate costs, spending, and priorities, while evolving consumer behavior and technological advances are steadily displacing human roles. Jonathan Siboni, CEO of data provider Luxurynsight, says, “The layoffs are partly because these companies simply have too many people. During the old offline-dominated structure, you needed huge teams. But with today’s market moving online and consumers favoring local brands especially in China, this model isn’t suitable.” Beyond downsizing, a structural realignment What distinguishes this round of layoffs from previous ones is its strategic nature. Companies aren’t merely downsizing, they are recalibrating for a leaner, digitally native future. Estée Lauder, for instance, is not only reducing headcount but reorganizing its Asia operations, merging Hong Kong and Taiwan. Having already let go of 1,500 staff in Japan and closed its metaverse division, Shiseido is now restructuring its Americas business after a sharp sales drop at Drunk Elephant, the brand it acquired for $845 million in 2019. Ong believes that there are several forces behind the cuts. The first is over-expansion during the Covid boom, when a surge in selfcare spending led to rapid headcount growth that is no longer justifiable. Second is consumer downtrading, driven by inflation and economic uncertainty, which has squeezed discretionary spending. Third is digital fatigue: expensive bets on tech, including metaverse activations, have failed to emotionally engage consumers. Companies are also implementing AI across operations, reducing the need for large teams. Finally, a wave of portfolio rationalization is underway, with global players shedding underperforming brands and narrowing their focus to core categories. Talent loss, or tech upskilling? While smaller, more agile organizations may emerge from the reset, there are concerns about what’s being lost in the process. “Experienced teams, those with deep connection to the brand DNA, are being let go,” Ong says. “This erodes long-term brand equity. Innovation might become more risk-averse, especially with budget cuts to R&D and digital teams. At a time when bold reinvention is needed, many brands are retreating.” On the other hand, cuts help boost business flexibility and prevent structural stagnation. “It seems bad because they’re laying people off, but they’ll hire for new roles, more skilled ones,” Siboni says. “You don’t need 1,000 people anymore to reach the same market share. But do you need people who understand digital, local nuances, and AI tools.” Asia’s beauty boom hits a wall The Asia-Pacific region, long considered the growth engine of global beauty, is undergoing its own reckoning. Estée Lauder cut about 100 staff in Hong Kong (7% of its local workforce), while Shiseido shut down multiple brands in China and Japan, including D Program and Drunk Elephant. “Brands are realizing Greater China, Southeast Asia, and India must be treated as distinct ecosystems,” says Ong. “A centralized strategy no longer works. Local decision-making, supported by AI and better consumer data is now essential.” Pan says that some beauty brands misaligned their regional approach. “Hermès has a clear strategy: beauty is an extension of its offering, not a mass-market play,” she says. “But others, like Valentino Beauty, must now decide whether to continue pursuing a branding adjacency that isn’t working.” The wave of layoffs comes at a time when beauty’s aspirational role is being questioned. “Beauty used to be the accessible entry point to luxury,” says Pan. “If you couldn’t buy a Birkin, you could buy a Hermès lipstick. But consumers are finding better, cheaper dupes. Beauty is no longer a symbol of luxury lifestyle.” In China, in particular, global brands are losing ground to local players that boast better pricing, digital agility, and cultural relevance. “Many brands feel they’ve lost control of the China market,” says Siboni. “You can’t just push products anymore. Luxury needs to seduce, not shout.” A new playbook: Lean, local, and data-driven The business model of beauty is undergoing a fundamental shift. Siboni believes the industry is moving from B2B2C to direct B2C. “Margins are better and you own the consumer relationship. In China, don’t just rely on Tmall: build your own WeChat stores, use Douyin, know your customer,” he says. The beauty landscape in the next one to two years will likely look leaner, more digitally integrated, and increasingly niche. “Expect fewer SKUs, centralized operations, and AI-assisted innovation,” Ong says. “But also expect rising fragmentation, with indie brands and purpose-driven players filling the gaps left by conglomerates.” For Pan, consolidation is on the horizon. “We’ll likely see expired beauty licensing contracts not being renewed, like Marc Jacobs, and luxury fashion houses exiting beauty if it no longer aligns with their core offering,” she says. As for the workforce, the current wave of cuts may not be the last. But Ong believes the industry is simply catching up with economic reality: “For leadership, the challenge is no longer about chasing scale, but about scaling what matters.” Siboni adds a final word of caution: “Brands need humility, agility, and technology. You can’t win today with yesterday’s playbook.”

What beauty’s 16,000 playoffs reveal

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Published August 07, 2025

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What beauty’s 16,000 playoffs reveal