5 Ways AI and Generative AI Are Transforming Beauty and Personal Care

The beauty and personal care industry is undergoing rapid transformation. Consumer expectations are evolving, regulatory frameworks are tightening, and market competition is fiercer than ever. Brands must keep pace with shifting trends, navigate compliance challenges, and differentiate themselves in a saturated market—all while catering to increasingly demanding consumers who expect instant results.

Artificial intelligence (AI) and generative AI (GenAI) are increasingly becoming essential tools in this landscape. From regulatory monitoring to real-time trend adaptation, AI-driven solutions empower brands to operate more efficiently and strategically. However, human expertise remains vital for validating AI-generated insights, ensuring compliance, and making ethical decisions.

According to McKinsey, Generative AI has the potential to contribute between $9 billion and $10 billion to the global economy through its impact on the beauty industry. Early adopters are already exploring its applications. As AI adoption accelerates, its role in shaping product development, consumer engagement, and regulatory compliance will only grow.

AI and GenAI are propelling significant advancements in these five essential beauty and personal care domains.  

1. Keeping Pace with Regulatory Compliance

Regulatory changes in the beauty and personal care industry are becoming increasingly frequent and complex. Governments around the world are introducing new ingredient restrictions, transparency mandates, and sustainability regulations — often with transition periods as brief as six months. Non-compliance can result in costly reformulations, supply chain disruptions, and reputational risks.  

How AI and GenAI Help:  

• Regulatory Monitoring: AI-powered systems track global regulatory updates, alerting brands to ingredient bans, labeling requirements, and new compliance standards.  
• Reformulation Assistance: AI analyzes ingredient databases to identify viable alternatives, streamlining the reformulation process while virtual simulations predict interactions before physical testing.  
• Consumer Sentiment Tracking: AI-driven sentiment analysis scans social media and product reviews to detect emerging concerns about ingredients, allowing brands to respond proactively.  
• Transparent Labeling and Claims Management: AI ensures ingredient claims align with regional disclosure laws, reducing non-compliance risk.  
• Data Privacy Adherence: AI-driven insights comply with GDPR, CCPA, and other data protection standards, maintaining consumer trust.  

2. Adapting to Evolving Consumer Trends in Real Time

Consumer preferences in beauty and personal care shift rapidly due to social media, cultural trends, and economic conditions. Traditional market research methods struggle to keep pace, leaving brands vulnerable to missed opportunities or investments in fleeting fads.

How AI and GenAI Help:  

• Trend Detection: AI scans vast social media data to distinguish between short-term fads and lasting consumer shifts.  
• Personalized Recommendations: AI-powered segmentation analyzes behavioral patterns, enabling hyper-targeted product suggestions tailored to skin type, climate, and lifestyle.  
• Virtual Product Testing: GenAI facilitates virtual prototyping, reducing R&D costs and accelerating time-to-market while ensuring final formulations undergo necessary safety testing.  

3. Standing Out in a Crowded Market

With an overwhelming number of beauty and personal care products available, consumers often struggle to differentiate between brands. To succeed, companies must identify unique value propositions and tailor their offerings to meet unmet consumer needs. 

How AI and GenAI Help:

• Identifying Market Gaps: AI analyzes purchase behavior, competitor offerings, and consumer feedback to highlight untapped opportunities.  
• Accelerating Product Innovation: AI-driven formulation tools explore novel ingredient combinations, speeding up R&D timelines.  
• Optimizing Pricing and Marketing Strategies: AI assesses purchasing trends to refine pricing models and promotional campaigns, balancing demand with profitability.  

4. Gaining a Competitive Edge with Real-Time Intelligence

In the fast-paced beauty industry, it is essential to monitor competitor activities. Traditional competitive analysis methods often fail to provide timely insights, putting brands at a disadvantage.

How AI and GenAI Help:

• Automated Competitor Monitoring: AI tracks product launches, pricing shifts, and e-commerce performance while ensuring compliance with privacy regulations.  
• Advanced Market Analytics: GenAI synthesizes competitive intelligence reports, summarizing real-time key industry movements.  
• Scenario Modeling: AI-powered forecasting tools assess potential disruptions, such as supply chain delays, allowing brands to develop contingency plans.  

5. Meeting Consumer Demand for Instant Gratification

Social media platforms like TikTok and Instagram have transformed, fostering a culture of instant gratification. Consumers anticipate immediate results, seamless shopping experiences, and hyper-personalized recommendations.

How AI and GenAI Help:

• Accelerated Product Development: AI streamlines formulation research, reducing the time needed for stability and efficacy testing.  
• AI-Powered Chatbots: AI-driven customer service solutions provide instant responses to product queries, enhancing consumer engagement.  
• Personalized Virtual Experiences: AI-powered recommendation engines and augmented reality (AR) tools enable virtual try-ons, allowing consumers to see how products will look before purchasing.  

The Real-World Impact of AI in Beauty and Personal Care

The real-world impact of AI in beauty and personal care has been significant during our recent collaborations in this area. AI and Generative AI have emerged as powerful enablers of rapid innovation, smarter personalization, and sustainable operations. For instance, we have utilized AI to predict ingredient compatibility and formulation stability, which has helped minimize material waste and streamline product development cycles. Additionally, we have enhanced retail optimization by applying Visual AI capabilities such as Deep Tagging, Visual Product Discovery, and Planogram Compliance, thereby improving shelf execution and visibility.

In parallel, our clients have leveraged integrated CDPs and unified customer intelligence solutions to unlock real-time consumer insights, driving personalized marketing and targeted promotions. By using AI, we have optimized supply chain operations for our clients, enhancing demand forecasting, improving inventory management, and reducing overstocking. We have elevated in-store customer engagement through dynamic digital experiences powered by platforms like VisionEdge. Together, these initiatives reflect how AI helps our clients stay agile, sustainable, and consumer-centric in an increasingly competitive market.

What’s Next for AI in Beauty and Personal Care?

AI and Generative AI are actively shaping the beauty and personal care industry — accelerating compliance, enabling real-time personalization, and driving product innovation across the consumer packaged goods value chain. While many brands are implementing first-generation AI solutions, the next wave of innovation will bring deeper intelligence, automation, and agility.

Key advancements to watch include:

• AI-Powered Decision Support: Brands are moving beyond dashboards to AI-driven insights that deliver instant, strategic recommendations.
• Advanced Personalization: Future AI models will push hyper-personalization further, adapting to real-time biometric, behavioral, and environmental inputs.
• Ethical AI and Responsible Innovation: As adoption grows, brands must balance automation with human oversight to maintain transparency, compliance, and ethical standards.

Leading companies are driving this transformation by leveraging strategic partnerships and evolving their AI capabilities across the value chain.

However, the most successful brands will strike the right balance between AI-driven efficiency and human-led innovation. By adopting responsible AI practices, leveraging real-time data, and staying ahead of market trends, beauty and personal care companies can carve out a lasting competitive advantage.

About the Authors

Jagannath Taduri
Principal Consultant, Wipro Consulting

As part of Wipro’s CPG and Retail Consulting practice, Jagannath Taduri brings strong domain knowledge in Consumer Packaged Goods, digital transformation, and innovation strategy. He collaborates with global clients to shape and drive strategic initiatives across product innovation, manufacturing, and AI-enabled transformation programs.

Vinay Kavde
Senior Consulting Partner

As a consulting partner with Wipro, Vinay works with a portfolio of retail and consumer product clients in areas such as B2B and B2C eCommerce, omnichannel, Industry 4.0, and supply chain.