When the Covid-19 pandemic hit our world and our industry nobody could yet assume what it meant for our businesses. The closure of retail stores, travel restrictions, the postponement of exhibitions and events, delays in supply chains, a shift in production priorities and of course a change in consumer behavior were among our biggest worries. Companies had to make adjustments on every level. At CLR we established flexible work modes and schedules and modified our ways to communicate and connect with partners and customers in order to stay adaptable in a dynamic situation.
But what exactly has changed with the pandemic? What are the near- and long-term consequences and opportunities? We assembled CLR Marketing and Sales experts from different parts of the world and asked them what challenges and trends they see in a world with and after the pandemic.
International Technical Sales Manager, Singapore
Harald van der Hoeven
Director Technical Marketing
International Technical Sales Manager, China
Vice President Technical Sales, North America
Director Global Sales
Responsable Filiale France
Director Global Sales & Marketing
How do you assess the impact of Covid-19 on the cosmetics market?
Our customers have concerns on supply chain and availabilities, logistics are strongly affected due to longer lead times based on lack of transport capacities. R&D projects are postponed or have less priority due to uncertainness also on economic situation in some areas. But end consumers still seem to have high interest in cosmetic products.
Yes, many launches have been delayed but the major part of business is ‘alive’ in 2020.
Nevertheless, demand for decorative and color cosmetics will be decreasing as now most of the face will be covered by a face mask, while demand for hair care and body care products, such shampoos, shower gels or bar soaps will be increasing since consumers prioritize them for hygiene purposes. However, the demand for skin care products in total might decrease as consumers might prefer using multifunctional products which are more cost-effective in the upcoming predicted recession.
We see that people expect brands to connect with the concerns they are facing, and make things as easy as possible for them to decrease stress. Multifunctional products are expected.
With the beauty salons being closed, the demand for home hair dyeing products is increasing. The demand of hygiene products is obviously the main increase, and the increased frequency of hand washing will also encourage the use of skincare creams.
This increased focus on cleanliness might also affect how consumers perceive ingredients safety. According to Mintel, it is possible that the pandemic makes consumers rethink their approach towards preservatives, for wanting to have not only natural products, but with a bigger emphasis on health and safety.
Sustainability, local productions, short supply chains are also expected to be a bigger demand from consumers.
The whole of the market is suffering as, on average, people have less to spend. The impact on mass market brands will be lower than that on premium brands. Especially because of the fact that duty free shopping on the airports is an important sales channel for premium brands. Overall, the impact will be large, possibly larger than the impact of the global financial crisis which started in 2009. The use of cosmetics rates high on the list of ‘necessities of life’, higher than one would assume, though. Toothpastes and deodorants are important to people, but skin and hair care products, as well as color cosmetics are important too. In times of crisis people still want to do something good for themselves. The use of cosmetics is going down, but will go up again and this process of recovery might well go faster than for many other markets and industries.
Yes, the industry has responded positively to the crisis with brands switching their manufacturing to produce hand sanitizers and cleaning agents. I believe even though the economic impact of the Covid-19 on brands and retailers will be greater than any recession, but there are signs the beauty industry may once again prove to be resilient.
What economic consequences do you see?
Most of the consumers will reduce their budget to buy skin care or cosmetics products as they will not meeting anyone during the day, since they will be staying and working from home.
In general, I see a big decrease in consumption. Shanghai government has organized a shopping season from May to June. Maybe other countries will have similar practices as well. We thought that people would perform “retaliatory consumption”, actually – if without “discount” stimulation – this does not happen.
Global consumers intend to spend less on beauty products but other categories could fall even worse. In-store shopping will go down, online shopping will go up. Some premium beauty outlets will close. Some of these existing cosmetic stores never open again and new openings will take place with new innovative strategy.
Sales channels like duty-free or premium stores do not exist currently and will have major impact for some brands. Private label and mass market products remain important as customer try to reduce the shops they are going to visit. Prestige impulse buys are expected to drop, regular use products will continue. Maybe the consumers will be less adventurous in their choices.
Some factories closed during the lockdown, some switched part of their production to make hydroalcoholic gels. Most of them, if not all, obviously reduced their regular productions. It is expected that even if there is a catch-up effect, many businesses will find themselves in difficult situations.
We see that especially the smaller companies are suffering. Obviously, smaller companies have less of a financial buffer. We expect that a significant number of small companies will disappear from the market, which means that larger companies and brands will, in relation to the rest of the cosmetic industry, strengthen their position. This is in contradiction of what has been happening in the cosmetic market in the last 5 to 10 years, where many new brands entered the market and were able to find their niche. This will have an important impact on the cosmetics market, but, with time, the situation will be back on track again. Crises will always have an impact and ‘derail the cosmetic train’, but the train will get back on track again. Question is: how long will it take?
Which trends do you see?
The current developments in the market might be seen as part of a process of market evolution, where ‘survival of the fittest’ is the credo. In this context ‘fittest’ does not mean ‘strongest’, but rather ‘most flexible’, i.e. best able to adapt to changing situations. This includes the products themselves, marketing concepts, sales activity and, obviously, much more. Brands and companies which are conservative and lack flexibility and – in the broadest sense of the word – innovation, will feel the need to change their mentality. We recognize that quite a lot of indie brands are virtually unaffected by the current crisis. These brands appeal to consumers and know very well how to communicate with them. On top of that, their main point-of-sale is often the internet. This is an important sales strategy, not just in the current situation, but this will also continue to be the case in the future.
Trends that will be supporting better personal ‘hygiene’ and that promise to give stronger immunity are becoming more popular to consumers in this season.
TikTok is one of the social media platforms that have been very popular in Asia recently as viewers can watch how a skin care product is being applied step by step during the quarantine or lockdown period. People of various demographics are more willing to try products that are popular on this social media platform and have shown positive results from using them. An example that can be seen is the sudden spike in popularity of the AHA+BHA peeling solution of The Ordinary due to a viral TikTok trend.
Cosmetic brands will definitively strengthen their online selling services. Salon-at-home products or beauty kits are widely used. Consumers enjoy AI technology to take care of their skin and give skin care suggestions. Video advertisement will be the first choice online.
Yes, I agree. There will be an increase for online shopping, services, meetings, QVC, popping up of more MLM companies, DIY products, improvising at home. There might be more attention and focus on probiotic technology and as Elizabeth already mentioned immune boosting products. Significant attention to hand hygiene has left many people in and beyond professions looking for personal care and treatment products that can help protect and repair dry hands and nails.
Yes, strong use of sanitizers leads to increased demand of products like hand creams due to strong damage of skin barrier and skin microbiota, so actives which bring this functionality will be important. Cleaning in general will remain important and might gain even more importance than before, so development of additional benefits for those products might be a topic.
Stock level and supply chain might become more important than before in order to avoid sudden shortages.
What can be learned from the crisis and what consequences do you see e.g. in the field of digitalization?
The Covid-19 outbreak will have lasting impact on the beauty industry as experts have predicted that the pandemic may last throughout the year or longer, therefore there will be more companies leveraging on strong e-commerce platforms to continue serving their consumers who often will be staying at home. To boost consumer engagement, companies can use live streaming to broadcast their new product launches and campaigns to interact with isolated consumers due to lockdown. Virtual campaigns will become the new norm for consumers.
The presence of screens in our lives has grown massively during the lockdown, and with it, apart from YouTube tutorials or videos, the use of social media, because people, locked down at home, need to connect with the outside world. Cosmetic brands adapt and create partnerships with influencers, or also their own employees. Main influencers give visibility, smaller ones or employees give human connection. They do live stories, live broadcast, e.g. on Instagram, showing cosmetic lockdown routines for example.
But what is really interesting is that they also engage with consumers on other levels: yoga classes, cooking classes, drawing classes, poetry lectures, tips on well-being and psychology. They address their concerns, their stresses, their needs of slow-living, security and reassurance during the crisis through social media. And I believe that brands will continue to communicate on these multi approaches level, being closer to their consumers, and not only from a cosmetic point of view. I believe the « slow » trend, which was already very popular, and to which we are forced now, is also meant to stay!
Digitalization is a must. Brick-and-mortar stores will continue to suffer if they stay with the old-fashioned way of doing business. Digitalization, or rather, using available technology at the point of sale looks to be helpful. Technologies which allow for the analysis of consumers’ skin which help in providing the right product for them will be important in keeping consumers loyal to the brick-and-mortar concept, for instance. As brick-and-mortar stores have limited space and ability to store cosmetic products, the possibility of ordering cosmetic products for delivery at home, inside the store is another important tool to keep consumers going to the stores. ‘Shopping’ in the sense of physically going to a shop will keep on appealing to consumers, but only if they can find the right products for them and if the experience stays pleasant. In order to succeed, brands must have a strong presence on the internet and in social media too, though. The technologies and possibilities on the internet will continue to develop and it is important for brands to stay on the forefront of these developments. As soon as they lose their digital reach, they will lose consumers.
We learn how much we had to rely on ourselves and use some of the old skills that we had stopped using. Work dependency, virtual communications and virtual result sharing.
One of the advantages of digitalization is that I can connect with everybody much faster, more economic, but the downside is not having face to face connection socialization to make a closer bond. Social gathering and meetings are still essential in North America.
Yes, and “health” and “immunity” will cause more attention in all respects: food, cosmetics, screen light…
The way of promoting and customers communication might be changed more to digital tools. But personal contacts and the relationship building side of the work will remain important as digital tools can be sterile. In the end people will still buy from people.
Country specific needs and demands need to be taken into account, individuality is important and cannot be replaced by globalisation and harmonisation. Reliable partners who can guarantee supply even during crises will become more important. And exactly here lies our strength.
Thank you for your participation.