How the Beauty Industry Survived after the coronavirus

The beauty business has proven to be robust in the past, as well as after and during the coronavirus outbreak.

The industry has responded well to the issue, with companies shifting production to create hand sanitizers and cleaning agents and providing free beauty treatments to frontline response workers. At the same time, industry executives have a responsibility to do all possible to secure the survival of their firms. The worldwide beauty business generates $500 billion in sales each year and directly and indirectly employs millions of people. Lives come first, but livelihoods are equally important.

Because of the coronavirus pandemic, sales of skin care products increased significantly in the United States. Between February and March 2020, sales of hand masks grew by roughly 606.4 percent.

The primary product categories of the cosmetic market include skincare, hair care, make-up, fragrances, toiletries and deodorants, and oral cosmetics. Since the early twentieth century, a few multinational businesses have dominated the manufacture of cosmetics and beauty goods, including L’Oréal, Unilever, Procter & Gamble Co., The Estee Lauder Companies, and Shiseido Company, to mention a few. In 2018, the United States was regarded as the most lucrative beauty and personal care market in the world, producing around 89.5 billion US dollars in revenue.

Where and how beauty products are being sold

Prior to the COVID-19 issue, in-store shopping accounted for up to 85 percent of beauty-product purchases in most major beauty-industry markets, with some variance by subcategory. Even online-savvy millennials and Gen Zers (those born between 1980 and 1996) in the United States made over 60% of their purchases in shops (Exhibit 4). Due to the closure of premium beauty-product shops as a result of COVID-19, roughly 30% of the beauty-industry market was closed down. Some of these businesses will never reopen, and new ones will most certainly be delayed for at least a year.

Here are several ways beauty-product sales are changing:

• Increased internet sales are not compensating for the drop in in-store sales. Some beauty-product companies and merchants with ready-to-scale inventory and shipment operations are reporting e-commerce sales that are twice as high as pre-COVID-19 levels.
• Beauty product sales are decreasing at major stores. While traditional drugstores, as well as mass-market and grocery stores, remain operating, their consumer traffic and revenues have declined.
• China demonstrates that the return to in-store purchasing may be gradual and differentiated. Despite the reopening of stores in China beginning the week of March 13 and rumors of “revenge shopping,” sales have not entirely recovered. In China, 90 percent of drugstores, supermarkets, beauty-product specialist merchants, and department stores had reopened by mid-April.
• Promotions are being used by retailers and brands to attract customers and clear inventory. In an unusual move, some premium companies are giving online discounts of up to 40%, vying with specialist beauty and department stores for promotion-oriented consumers. Promotions also aid in the sale of unsold seasonal goods. More discounts aimed at recovering customer foot traffic are expected once beauty-product brick-and-mortar businesses reopen.

Which beauty products are being purchased?

Given the reality of working from home, physical distance, and mask wearing, applying cosmetics and scent has become much less significant.

In terms of premium brands, we find 55 and 75 percent decreases in cosmetic and fragrance purchases, respectively, compared to the previous year. When customers return to work, many will continue to wear masks, delaying the healing of makeup. Above-the-mask treatments are one probable exception. In China, Alibaba recorded a 150 percent rise in eye-cosmetic sales month over month for the week of February 18, 2020.

Another noteworthy development is the emergence of do-it-yourself (DIY) beauty care. Many beauty shops have closed, and even when they haven’t, customers are avoiding services due to worries about intimate physical contact. Furthermore, as a result of the loss of employment and money as a result of the COVID-19 issue, many customers are expected to experience economic hardships.

As a result, DIY hair coloring, nail care, and other beauty-related services are gaining popularity. In the United States, Nielsen reported that sales of hair color and hair clippers increased by 23 and 166 percent, respectively, in the first week of April 2020 compared to the previous year.