Forgotten no more: Generation X is driving beauty sales

Move over, Sephora kids.

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

Often dubbed the "forgotten generation," Gen X spans those born between 1965 and 1980, according to Pew Research Center. Sandwiched between baby boomers and millennials, the often-overlooked generation hasn't held the spotlight nearly as much as its counterparts.

But experts said it may be one of the most important generations for the beauty industry over the next few years.

Gen X will be the consumer spending leader globally through 2033, surpassing $20 trillion in spending power, according to data from NielsenIQ. The generation makes up roughly 25% of the total spend for beauty, both on beauty products and beauty services.

More importantly, the Gen X beauty market will grow to 1.3 times its current size in 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 been leaning into anti-aging and longevity trends, and is heavy on brand loyalty.

According to Chicago-based market research firm Circana, households with members of Gen X accounted for 44% of total dollars spent on beauty in the past year, with skincare being their top category.

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

The cohort will also see an increase its spending across haircare and makeup, Jensen added.

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

"We're not ignoring people as they get older in the beauty industry as much anymore," said Anna Mayo, a NielsenIQ beauty thought leader. "For the first time, we're seeing brands launched and they're 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."

Gen X is also at the "prime spending phase" of their lives, with NielsenIQ estimating that between 2021 and 2033, the cohort will spent $15.2 trillion a year, expected to rise to $23 trillion by 2035.

Though 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 to and continue investing in a product once it sticks.  

"Part of this is the industry has gotten really good at developing brands that are made for a lot more niche audiences," she said. "We're less so in the era of these mass market brands."

It's a growth that companies are taking note of, too. In early 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 40s," she said. "So those of us that are aging, we want to age gracefully, so if we can find products that are actually helping the longevity of the look, we're leaning into that."

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

Sephora is seeing similar growth, telling CNBC the company is actively investing in broadening its brands that target the high-spending Gen X group.

"As we expand our assortment – particularly for our Gen X clients, with brands like YSE Beauty by Molly Sims, Sarah Creal and U Beauty – our focus remains on delivering brands with a clear understanding of our consumers' goals, concerns, and preferences, while elevating authentic founder stories and expertise, which we know resonates with our clients," Carolyn Bojanowski, Sephora's U.S. executive vice president of merchandising, told CNBC in a statement.

Bluemercury, a personal care company, even launched a campaign last year celebrating women who are over the age of 40. The company identified Gen X as one of its biggest opportunities given its spending power and focus on luxury beauty.

The winners from Gen X's spending spree will be clear, according to Lindy Firstenberg, a consultant at AlixPartners.

"Ulta is going to win because they've doubled down on wellness, and they have a huge focus on menopause brands," Firstenberg said.

While Sephora has been outwardly advertising for younger cohorts, Firstenberg said even it's emerging as a sort of Gen X "hotspot," along with Bluemercury. The key, she said, has been investing in curation and one-on-ones with clients.

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

Brands that focus on meeting Gen X where they are instead of chasing younger generations, will secure their spending power, Firstenberg added.

"That is what Gen X wants: They want the best products, they want to be educated, they want that high talent and they want that service," she said.

Kirti Tewani, a member of Gen X and a content creator focused on promoting beauty and wellness for her cohort, said she's seen a growing interest in investing in products that work to slow down or prevent further aging.

That generation posed a largely "untapped" market when she started seeing increased attention on it roughly two years ago.

"Gen X has been a generation that has gone through so many ups and downs in their lives that now we are at a position where we're financially more independent, the kids have grown older and now we have the time to put into ourselves," she said. "So we're taking care of ourselves from the inside out."

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

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

"I think the brands definitely knew that this was coming," Tewani said. "Now, more brands are jumping on the bandwagon because they're understanding where the spending markets are, and Gen X definitely fills in that gap."

And Gen X's age also means its spending for beauty expands beyond the surface level.

According to AlixPartners' Firstenberg, people of those age are likely to be in a so-called "sandwich generation," which means they're buying beauty products for both parents and children, contributing to its large spending share.

It's also not a generation that's focused on newness or flashy marketing and instead want the products that show proven results.

Gen X's spending power is nearly 25% above the national average, she added.

"We're not only seeing that they have this power, but they yield it," she said. "They're going to maintain this highest spend by generation for at least the next eight years."