COVID-19 - Beauty  at  a  Price  

The global beauty industry (comprising skin care, color cosmetics, hair care, fragrances, and personal care) has been shocked by the COVID-19 crisis. First-quarter sales have been weak, and there have been widespread store closures.

But the industry has quickly adapted to the change by changing its product line to hand sanitizers and house cleaning products also offering free beauty services to front line workers to gain positive brand positioning. The global beauty industry generated $50 billion in sale a year and accounted to millions of jobs, directly and indirectly giving people in these tough times financial capabilities.

Let’s be clear we are talking about an industry which even recession couldn’t kick to the ground. In 2008 financial crises, the spending fell slightly but it was regained by 2010.

Figure 1:

Even though  recession didn’t had stronger economic impact compared to COVID-19. The current situation of the industry proves that it’s resilient at last. In China, the industry’s February sales fell up to 80 percent compared with 2019. In March 2019, the year-on-year decline was 20 percent—a rapid rebound under the circumstances. In a variety of markets, consumers report they intend to spend less on beauty products in the near term (largely driven by declines in spending on color cosmetics) but more than they will in other discretionary categories, such as footwear and clothing (Figure 2). Noting the uptick in lipstick sales seen during the 2001 recession, Leonard Lauder of the cosmetics company coined the term “lipstick index” to describe this phenomenon. The principle is that people see lipstick as an affordable luxury, and sales therefore tend to stay strong, even in times of duress.

Figure 2:

Due to the pandemic some brands and retailers have reported their e commerce sale is twice as it used to be. Now brick and mortar drugstores remained open but the sales remains slower. In an uncharacteristic move a lot of luxury and premium brands have offered discounts to sell the stock from the inventory.  

As people are getting more and more unsocial and working from home due to COVID-19 restrictions and self-precautions, it’s now less and less important to wear makeup. So for prestige brands, we see 55 and 75 percent declines in cosmetic and fragrance purchasing, respectively, versus 2018.

Even when offices are open people are still requested to wear mask resulting in slower recovery for makeup sales. Counter effect of wearing the mask is that, Alibaba has reported eye-cosmetic sales which increased 150 percent, month over month, during the week of February 18, 2020

Figure 3:

By contrast, skin-care, hair-care, and bath-and body products appear to be benefiting from self-care and pampering trends. Europe’s largest fashion and lifestyle e-commerce marketplace, reported a boom in pampering and self-care beauty categories, including candles, aromatherapy, and detox products; sales of skin-care, nail-care, and hair-care products were up 300 percent, year on year.

Another notable trend is the rise of do-it-yourself (DIY) beauty care as many salons were closed people was forced to groom self at home.

Even through the beauty industry stayed strong and managed the pandemic better than other consumer categories, 2020-2021 was still the worst years for it. With zoom still being the most effective way to communicate during the pandemic the self-conscious consumers who are fed up of unflattering webcam are still using make up in their everyday lives.  

People are now more than ever aware of self being and self-care which still gives us hope that the recovery of beauty industry will be sooner than later.

 

Hope you find it useful and informative. Follow my blog for more Data related quests. Have something you wanna discuss from this topic do tweet @THEHONEYSAINI or comment below.

I would love to hear from you.

DataDevil

Honey Saini

Source: McKinsey COVID-19 Consumer Pulse Surveys,How COVID-19 is changing the world of beauty