How the Economic Crisis during a Pandemic affects the Beauty Industry
18:10 08 November 2021
It seems like no other crisis has affected the beauty industry on such a scale as the coronavirus one, affecting all sectors and elements of this complex industry. This influence can be traced throughout the world without exaggeration. At the same time, it gave us all the opportunity to clearly demonstrate our civic position.
Loss of earnings by beauty salons
All countries that were and are still under strict quarantine do not hurry to open beauty salons. And the clients themselves are in no hurry to go there and prefer ordering hair dyes and other beauty products to their homes. This means that hundreds of thousands of masters and cosmetologists are now left without regular earnings.
Retail sales of cosmetics are also experiencing serious problems. At first, many networks stopped providing services. Buyers were then advised to refrain from using testers. Alternatively, online sales with free contactless delivery are actively promoted. In addition, many beauty brands offer solid discounts on online purchases, for example, in the MakeUp online store. And here, more than ever, various solutions for the virtual "fitting" of decorative cosmetics and augmented reality technologies, in which companies have invested so much over the past 2-3 years, come in handy.
Benefits of the crisis
However, there are positive aspects to this crisis for cosmetic manufacturers as well. In many countries, there is a high demand for skincare products. For example, according to the American research agency NPD, this particular segment feels much better against the background of others, having a rise of 13% versus an increase of 4% for other products.
In general, the body care products segment in the world takes 12% of the skincare products market: $16.3 billion rotates in this area.
And this is not surprising. After all, never before has a modern consumer had so much free time to spend at home. As a result, the self-care trend is gaining popularity today – that is, actions aimed at maintaining or improving one's well-being.
Manifestation of the civic position of cosmetic brands
The coronavirus has also made adjustments to the launches of new products and brands. Everyone got out of this situation in their way. For example, a week before the pandemic swept the world, the Arfa company emerged to launch a new cosmetics brand, HIKI, where all products revolve around anti-perspiration. But it was decided to refuse the usual launch. And to transfer the entire first batch, which they planned to sell, for the needs of hospitals and medical personnel for free (not only doctors and orderlies, but also cleaners, and so on).
The world's largest perfumery and cosmetic corporations have come up with an initiative to convert their manufacture to the production of antiseptics (among the first companies were Coty, L'Oreal, and LVMH) for the transfer of products to the state, hospitals and charitable foundations. Avon donated 1.7 tons of soap to quarantine centres in Romania. The world's largest Swiss manufacturer of fragrances, Firmenich, donated 20 tons of sanitizer to the University of Geneva.
Others go further and donate up to 15-20% of weekly earnings, or even net profits, to charitable foundations. This is what Haus Laboratories, a newly launched makeup brand by Lady Gaga did, and donated 20% of its weekly profits to food banks in New York and Los Angeles.
Forecasts. Lipstick effect
Undoubtedly, the industry will accelerate the processes of digitalization, robotization, and more active dissemination of augmented reality.
And in the short term, there will be an increase in sales of all types of skincare products: foam and bath salts, scrubs, face and hair masks, and, of course, hand creams: many companies are already recording a threefold increase in sales of this product. This is understandable: after endless cleansing of hands with water, soap, and sanitizers, the skin suffers greatly.
It will also be interesting to see how the economic phenomenon called the lipstick effect will evolve. The bottom line is that in difficult times, customers cannot (and sometimes do not want to) spend money on large purchases, but they are always ready to please themselves with a pleasant trifle, for example, lipstick. Therefore, in times of crisis, industrial production as a whole falls, and the profits of perfumery and cosmetic companies often grow.