In an era increasingly defined by capital discipline, “growth at any cost” is quickly becoming a concept of the past.
The early 2020s were dominated by an unconditional growth mindset, but persistent economic and geopolitical uncertainty has caused both public and private players to embrace a more balanced strategy — one where expansion is prioritized alongside sustainable, stable profitability and strategic capital allocation.
Undoubtedly, this can be a tricky balancing act. For companies, the key is to have a detailed understanding of the return each dollar provides to successfully achieve both aims.
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Executing the Balancing Act
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Jeannette Smits van Oyen is a strong advocate for this approach. “In today’s environment, companies need to understand and demonstrate how they can pair growth investments, such as marketing spend or product innovation, with thoughtful operational guardrails,” she said.
“Let’s take marketing as a practical example,” she explained. “Investors look closely at how companies utilize marketing spend to see how well they understand their end-client, as well as, most importantly, their ability to effectively and efficiently deploy dollars to drive product trial and conversion.”
Driven by platforms such as TikTok, consumers are discovering and engaging with content at a higher rate and volume than ever before.
Driving Growth IRL
If the pandemic spurred companies and consumers to lean entirely into the direct-to-consumer (DTC) model, the mid-2020s are being defined by consumer demand for a mix of online and in-person experiences. It is no longer enough to be dominant in just retail or just DTC. Instead, brands must flex in both directions to capture mind and market share.
Investors are also placing increased value on omnichannel strategies. While direct channels provide an opportunity for brands, particularly new ones, to launch and scale rapidly, retail channels provide a more focused point of discovery and support habitual consumption.
“Many new beauty brands are opting for a retail-first approach — a major pivot from where we were three or four years ago,” Smits van Oyen said. “During the pandemic, DTC digital shopping was really the only option for launching a product. Today, consumers are eager to go into brick-and-mortar stores where they can enjoy the tactile shopping experience. Digital sales via the company’s website or via aggregators like Amazon are supplementary to in-person.”
Smits van Oyen said this omnichannel approach is helpful to frame whitespace opportunities, which are critical to investors’ understanding of a brand or product’s growth trajectory. “We have seen brands achieve incredibly rapid growth by adjusting their channel mix, and it is something that deeply resonates with potential investors. Companies have been able to scale up to $100 million to $200 million in sales in just two to three years.”
Finding Opportunity Amid Volatility
While the current environment is putting added pressure on companies to be thoughtful in their growth and distribution strategies, it is also presenting them with a myriad of new opportunities. Smits van
Oyen said many investors and acquirers seek to spur change during times of disruption and she encourages founders and brands to adopt a similar mindset — though without losing sight of their original ethos and operational priorities.
“Having a core understanding of your working capital demands and inventory needs will help to create a repeatable formula that can thrive through volatile cycles,” she said. “Seasonal trends and virality can impact and benefit short-term activity but showing investors that you know how to capitalize on those moments — within the context of your existing working capital model — gives them confidence that you are more than a flash in the pan. They will see that your company is built for sustainable, future success.”
Ultimately, the shift toward a more disciplined beauty playbook signals a maturation of the industry where financial rigor and creative innovation must coexist. By anchoring growth in a robust omnichannel strategy and a granular understanding of marketing ROI, brands can navigate the transition from viral moments to long-term market leadership.
As the landscape continues to favor those who prioritize sustainable profitability alongside expansion, the retailers and brands who can master this balancing act will not only survive current market volatility but will emerge as the most attractive targets for future investment and acquisition.
To learn more, visit jpmorgan.com.