Effects of Coronavirus on the Beauty Industry
The global beauty industry is one that experiences $500 billion in sales a year. In-store shopping accounted for up to 85% of purchases pre-COVID 19 so it’s not a surprise that the industry experienced dismal first quarter sales (February sales fell 80% year over year in 2020) and there were widespread store closures. However, even in this time of crisis, the beauty industry also exemplified itself as a key, strategic player in the response to the pandemic. Many brands pivoted from manufacturing their own products to hand sanitizers and cleaning agents, and provided many products to front line workers.
In a world of social distancing, Zoom calls, and masks, certain types of beauty products such as makeup or fragrance were no longer necessary. The industry saw a decrease between 55–75% in these types of products year over year. However, other sub-niches began to boom. Self-care and at-home pampering became a pastime of many. As a result we saw skincare, haircare and bodycare segments benefiting. In addition, to replace in-person salon treatments, DIY (do-it-yourself) beauty saw a rise. DIY also addressed the issue of less disposable income many consumers faced in light of the pandemic. Post financial crisis in 2008, a phenomenon called the lipstick index came about. It was an observation that showed when consumers are faced with tight budgets, instead of cutting out extravagances all together, they simply substitute the larger ones for small ones, such as lipstick and makeup. This did not hold true in the pandemic though: lipstick and color purchases fell 15% in the period of March 11-April 11 2020 compared to the same bracket in 2019. What grew? Nail care sales grew 218% in the same period. This is now called the nail polish effect.
How did beauty brands adopt? In an industry that was all about in person interaction between experts and consumers, trials and samples, brands had to figure out how their customers could swatch and sample products through their devices at home. Using AI, AR and interactive online content, brands recreated shade-matching consultations and makeovers online. L’Oreal Paris and Estee Lauder invested heavily into their e-commerce sites to offer free virtual makeup services to stay connected to their consumers. Overall, we saw a shift to better imaging and videoing of products that allowed consumers to better identify shades and textures. VR also gave opportunity for brands such as BareMinerals to create branded events with celebrities, which helped them promote new product launches and drive engagement with core product lines. It helped also that prior to COVID-19, many beauty brands and retailers were investing in their online operations to support increased e-commerce sales. Sephora for instance saw around 30% growth in sales on their online platform in 2019.
The rise in subscriptions. As consumers sat at home, they wanted to simplify their shopping and subscription models with their favorite products helped. Everything from skincare to razors, fun and bright packaging gave way to excitement for every day item that breathed life into consumer’s day to day lives.
Finally, the rise of TikTok. Beauty also took advantage of the boom seen in TikTok over quarantine. Many brands took the opportunity to create quick tutorials and fun clips for their customers to connect with them virtually while at home. Showing a customer how to use a certain product or line on TikTok led to booming sales. For example, the Ordinary saw a 426% sales spike in its AHA 30% + BHA 2% Peeling Solution after an influencer mentioned it in one of her stories. My own experience working at a color brand last summer showed that the rise in TikTok over quarantine is here to stay in beauty. The aforementioned color brand saw a sell out of every shade in its new foundation line when it went viral on TikTok.
To summarize, the beauty industry was definitely disrupted by COVID-19 but showed its resilience by adopting technology in a way it never did before. It took advantage of new ways to connect with consumers online and embraced new social tactics that humanized them in a world where a representative could no longer entice a potential customer one on one.
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