Seizing Missed Opportunities: A Venture Capitalist's Insight on Youthforia's Shade Inclusivity Dilemma
Introduction:
In the ever-evolving landscape of the beauty industry, inclusivity has emerged as a driving force, reshaping norms, and consumer expectations. However, amidst this progress, the recent controversy surrounding Youthforia's shade inclusivity practices sheds light on persistent challenges within the sector. Let's delve deeper into this unfolding saga.
Summary of the Youthforia Issue:
The recent uproar surrounding Youthforia stems from its foundation shade range controversy. The brand faced widespread criticism as consumers, influencers, and retailers alike voiced concerns over its limited offerings, particularly for individuals with darker complexions. What's particularly alarming is the disproportionate number of shade options available for lighter complexions compared to the severely limited options for darker complexions. This outcry prompted several retailers and influencers to sever ties with Youthforia, underscoring the gravity of the situation and the brand's misstep in meeting the demands of its diverse consumer base.
Personal Background and Expertise:
Drawing from my experience as a venture capitalist deeply entrenched in finance, coupled with a profound interest in retail, consumer packaged goods (CPG), apparel, and the beauty sectors, I've closely monitored market dynamics and investment avenues across these domains.
Market Opportunity Assessment:
At the crux of venture capital investment lies the critical assessment of market opportunities. The beauty industry, in particular, stands as a pivotal arena for growth, with Americans lavishing billions on beauty products annually. Per McKinsey, over the past decade, Americans have spent more than $500B on beauty products, with the US beauty industry alone worth over $60B last year. With a compounded annual growth rate of 5%, it's expected to reach $73B by 2025. This flourishing market presents a golden opportunity for brands to seize upon, provided they adeptly navigate evolving consumer preferences.
Fenty Beauty's Impact:
The emergence of Fenty Beauty in 2017 heralded a transformative era for the industry. By embracing inclusivity and offering an expansive array of shades, Fenty Beauty not only championed a social cause but also exemplified astute business acumen. It underscored that catering to diverse skin tones isn't just morally commendable but also commercially lucrative.
Missed Opportunities:
In stark contrast to the strides made by brands like Fenty Beauty, Youthforia's misstep underscores the challenges of failing to grasp prevailing market trends and consumer sentiments. Brands that falter in adapting risk alienating swathes of potential consumers and squandering significant market opportunities.
Financial Implications:
The financial reverberations of Youthforia's misstep loom large. Again per McKinsey, spending among people of color in the beauty industry is robust, with Black Americans alone spending $6.6B on beauty in 2021, comprising 11.1% of the US beauty market. Addressing racial inequality in the beauty industry presents a $2.6B opportunity, highlighting the untapped potential for brands to cater to diverse consumer needs and preferences.
Conclusion and Call to Action:
In summation, the furor encircling Youthforia serves as a clear call for inclusivity within the beauty domain. As venture capitalists, we're duty-bound to implore brands to recognize the intrinsic value of diversity and equity, transcending mere moral prerogatives to embrace strategic imperatives. Brands that champion inclusivity stand poised to not only propel societal progress but also unlock unparalleled market vistas. It's incumbent upon Youthforia and its contemporaries to heed this call and embark on a transformative journey towards a more inclusive future.
For those unfamiliar with venture capital terms, it's crucial to understand the definitions of key concepts. In the context of market analysis, venture capitalists often assess three key metrics:
Total Addressable Market (TAM): This represents the total market demand for a product or service. It encompasses all potential customers or revenue opportunities for a particular product or service within a specific market segment.
Serviceable Available Market (SAM): SAM refers to the portion of the total addressable market that a company or product can realistically target and serve based on factors such as geographical constraints, regulatory limitations, and resource availability.
Serviceable Obtainable Market (SOM): SOM represents the portion of the serviceable available market that a company can actually capture and convert into revenue or market share. It takes into account factors such as competition, market penetration strategies, and sales capabilities.
As an investor, conducting a thorough market analysis, including assessing the total addressable market, serviceable available market, and serviceable obtainable market, is crucial. It's evident that Youthforia failed to conduct adequate research to understand their core audience and market. With two chances at inclusive beauty, there are legitimate concerns from an investor perspective regarding their understanding of the market they operate in.