Based on a recent McKinsey & Company report “How COVID-19 is changing the world of beauty”, the market of global cosmetic products has shown declining growth Since January of 2020. This correlates directly with the COVID-19 pandemic. Due to global lockdowns cosmetic manufacturers were forced to stop production resulting in a labor shortage. Additionally, numerous retail cosmetic outlets shut down. McKinsey estimates that global revenue for the beauty industry alone could fall by up to 30%.
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. With a recession looming, and consumer buying habits changing quickly, beauty businesses must adopt an agile approach, taking learnings from Covid-19 into the next phase. The industry has responded positively to the crisis, with brands switching their manufacturing to produce hand sanitizers and cleaning agents and offering free beauty services for frontline response workers.
Prior to the COVID-19 crisis, in most major beauty markets, 85% of the beauty product purchases were in stores. This holds even with American millennials and Generation Z who made close to 60% of purchases in stores. However, with the closure of beauty outlets during the lockdown, approximately 30% of the market was shut down, leading to an increase in online sales. However, the increase in online shopping was not enough to offset the decrease in in-store shopping. Surveyed UK consumers say they expect to spend around 50 percent less on beauty products than usual. In response, retailers and brands are offering discounts online to clear out inventory and bring new consumers.
The Shift in Shopping Behavior
Given that people are starting to work from home and when they go out, they are wearing masks and social distancing, there is less importance on wearing makeup and fragrances. As a result, there are declines of 55% to 75% in cosmetics and fragrance purchases compared to the previous year. This might recover after consumers return to work, but expected to be slow, as behaviours have changed in the longer term, with people continuing to wear masks and workplace flexibility around remote working is likely to continue. By contrast, skin-care, hair-care, and bath-and-body products appear to be benefiting from self-care and pampering trends. Zalando, Europe’s largest beauty e-commerce platform, along with Amazon has seen increased sales in self-care products during the pandemic period. This is in-line with trends we have seen around increased consumer health consciousness.
The Long Term Impact of COVID-19
We can expect that even as the world begins to recover, the impact will be long-lasting, with the trends resulting from the pandemic likely to remain even after the world begins to recover.
The digital trend that was already happening pre-COVID is likely to be accelerated, with direct-to-consumer e-commerce, such as brands’ websites, shoppable social-media platforms, and online marketplaces becoming more important. Across the globe, consumers indicate they are likely to increase their online engagement and spending. The beauty industry needs to prioritize digital channels to capture and convert the attention of existing and new customers.
The world under the COVID-19 crisis has changed dramatically, and so have consumer demands. Brands are under pressure to innovate quickly in order to catch up with the rapidly changing environment and to differentiate themselves in a crowded field.
Although the pandemic has hurt the beauty industry, making the past year one of the worst on record for the industry, the market still remains attractive in the long run. The COVID-19 crisis is likely to accelerate trends that were already shaping the market, such as the rise of the global middle class and the use of e-commerce, rather than mark entirely new ground.
BioAktive is a supplier of functional, plant-derived ingredients for use personal care and cosmetics. Our products are inspired by nature and designed to provide real value and functionality for our customers as they develop products in skin care, hair care, cosmetics, soaps and toiletries.
Our portfolio includes natural-derived alternatives to common chemical products such as silicone oils and petroleum jelly as well as plant based functional ingredients such as our emulsion concentrates and other lipid based emollients.
BioAktive is an agile supplier, putting emphasis on product selection, R&D, market knowledge, marketing and distribution. We are responsive to our customer and business partners needs, and work together with them to create solutions to real problems. We are strategic, pragmatic and solution oriented, working to ensure high quality, reliability of supply and cost effectiveness.