It’s undeniable that the Covid19 pandemic has had a disruptive effect on the world economy, and the beauty industry is no exception. Beauty sales have been affected by government lockdowns and changes in consumer behaviour. Some effects of the pandemic have been evident, some are more under track. Some will be have long lasting, perhaps permanent, consequences, others will go away once the crisis is over. Here is a summary of the top 5 effects of the COVID19 in the beauty industry.
1. A new push to digital sales.
You do not need to be a top business analyst to predict an increase in ecommerce as a result of a general lockdown that keeps millions of people confined to their homes. Offline sales have gone down by over 70 percent during lockdown (pharmacies and supermarkets have been kept open in most countries) and most customers, even the hard-core brick and mortar addicts , have started massively buying online. It has been an acceleration of a trend that was already in place before the coronavirus crisis.
The real question is: Will there be long term effects on purchase behaviour? is this shift permanent? Will people go back to buy in physical stores once the crisis is over or will some stay digital? In what proportion?
2. Trade shows are a no go
Most trade shows have been postponed several times and finally cancelled. Starting from the most important international show, Cosmoprof Bologna, to the more local ones, Paris, Dusseldorf, Las Vegas, and the category specific ones (hair, skin, makeup), there are very few shows that are still on the calendar, (Cosmoprof Asia in Hong Kong and Expo Beauty Show in Mexico City are among them) but it is uncertain whether they will actually take place. Even in case they do take place, there are still doubts on how many exhibitors and visitors would show up, out of concerns for the pandemic.
Some show organizers have established online versions of trade shows, such as WeCosmoprof for Cosmoprof Bologna. There are diverging opinions regarding the effectiveness of these digital substitutes.
3. Professional beauty is under threat
Consumers have become very wary of entering salons and have close physical contacts with hair stylists and aestheticians. As a result, traffic in hair and beauty salons, even when lockdowns have been lifted, have decreased dramatically. Moreover, legislation in many countries is making salon operations more costly as only a set number of customers is allowed in each salon at the same time. Some professional associations have estimated that 20-30% of salons risk bankruptcy in 2020.
The decrease in salon visits may have a long-term effect, even beyond the Covid 19 crisis. Many consumers have started privately performing treatments they used to get done in salons (hair coloring, wax, etc). Once the pandemic is over some will go back to salons, but a some will get used to DIY and will prefer to save money and stay home.
This could lead to a long-term decrease in salon retail product sales and an increase of home treatment products (hair coloring kits, home waxing kits, skincare treatments). Moreover, customers used to spend money on salon treatments will have more available resources to pay for home treatments, thus a substitution effect with more expensive home products is also possible.
4. Organic products are booming, as health and wellness are a greater concern
As with digital sales, the coronavirus pandemic has strengthened a movement that was already trending in beauty: rising demand for organic and natural products.
Sales of organic and natural products have traditionally been driven by 2 different trends in consumer behaviour: Ethical awareness and consciousness for the environment, on one hand, and a new health-related attention to non-chemical ingredients, on the other. Covid19 has strongly reinforced the latter, as consumers grow more and more concerned about their wellbeing and immunity.
This will lead to an increase of space for natural and organic products in consumer touchpoints and sales environments. We can expect more natural ecommerce platforms, dedicated natural areas in brick and mortar retail spaces and an increase in demand for organic products from professional operators.
5. Category switch
Social changes bring consumer behaviour changes, and this also applies to the different categories preferred by consumers. One of the famous characteristics of the beauty sector is the ¨lipstick effect”, the theory that when facing an economic crisis consumer will be more willing to buy cosmetic products. Instead of buying expensive clothing or accessories, according to the theory, people will buy expensive lipstick, having the same “luxury effect” for a fraction of the cost.
If we take the definition of “lipstick effect” literally, meaning actual purchases of lipstick, this has not happened and will not happen. Since people must wear masks in public, it is likely that consumption of lip products will decrease. However, there is legitimate hope that consumption of beauty products (not specifically lipstick) will still increase because of the substitution effect. What is highly likely to happen is a switch in categories. Because of masks and social distancing, consumers are likely to spend less on lip and perfumery, but may increase purchases of haircare (another pre-existing trend strengthened by Covid 19) , skincare and eye cosmetics.
In addition to these 5 most important effects, one should also consider other changes derived from the pandemic, such as adjustments in sampling policies (many countries have forbidden beauty product testing in physical stores), the new market of PPE for professional beauty operators and massive increases in soap and hand sanitizer sales.
What is very difficult to define is whether all these changes, big and small, will be of short duration and things will go back to where they were once the pandemic is over, or if they will be permanent, and stay well after the health situation goes back to normal. It is highly likely that the actual outcome will be in between these two scenarios. Some changes will stay, others will not, but there is little doubt that there will be some long term consequences in the mindset and behaviour of consumers and industry operators.