The Impact of COVID-19 on the Beauty Industry
The Impact of COVID-19 on the Beauty Industry
Before the COVID-19 pandemic, the beauty industry was booming thanks to improvements in people’s lifestyles with more disposable income along with the increasing focus on appearance. In fact, the beauty industry was not only growing steadily with loyal customers, but it was also one of the most resilient industries, bouncing back from the 2008 financial crisis within two years.
The effect of the COVID-19 pandemic on the economy is expected to be much worse than any recession & the beauty industry will be no exception. It is being impacted on two fronts; the production & distribution side is being disrupted due to lockdowns being imposed across the globe & sales are impacted due to loss of disposable income of consumers & closures of cosmetics stores due to lockdown procedures. McKinsey [1] estimated that the global beauty industry revenue could fall by 20% to 30% in 2020 due to the epidemic.
However, the beauty industry is expected to display the same resilience & adaptability it has shown through all other crises. Many beauty brands are turning to producing hand sanitizers & soaps to combat the virus. Despite consumers intending to spend less on beauty products in the short term, they still plan to spend more on beauty products than other amenity categories, such as apparel.
The beauty industry is one of the few that continued to depend predominantly on in-store sales before the pandemic. The closure of stores selling beauty products due to COVID-19 resulted in the loss of about 30% of the market. Even with a growth in online sales of 20% to 30%, the loss from in-store sales will not be overcome. [1]
The types of beauty products that are being sold are also changing. Fragrances & cosmetics sales are seeing a steep decline since social distancing has become the new normal. In contrast, products that can be used at home for self-care & pampering (skincare, hair care, nail care & bath products) are seeing a spike in sales.
The anticipation of people wearing masks even after they leave lockdown, predicts the rise in mask makeup. Asian beauty trends, such as point makeup, that are more accustomed to regularly wearing face masks are expected to rise in popularity. [2] Mintel predicts that micro-categories of colour cosmetics, such as concealer or eye makeup (eyeshadow, eyeliner & mascara) will begin to rise as wearing masks becomes a habit. It also recommends that base makeup formulators ensure their products can endure wearing masks.
While the COVID-19 pandemic is sure to fundamentally impact the global beauty industry, there are opportunities to be exploited. It is an opportunity to once again prove the innovation of the industry by quickly adapting to new needs & trends. The increase of e-commerce for beauty products is expected to continue to rise along with the popularity of Asian beauty trends. With beauty still considered an integral part of people’s wellbeing, the industry is expected to remain profitable in the long run despite 2020 shaping up as one of the worst years ever experienced.
[2] https://www.mintel.com/blog/beauty-market-news/face-masks-fuel-post-covid-19-beauty-opportunities