With nationwide lockdowns and store closures currently maintained in five of the biggest European beauty markets – Germany, France, Italy, Spain and the UK – the impact on the category had certainly been felt. And whilst many beauty brands and retailers had shifted online to respond, the changes to shopper missions had impacted how consumers prioritised beauty.
“For beauty specifically, we’ve seen that the impact has been pretty big. And that’s due to the type of shopper mission,” said Florence Wright, retail analyst at Edge by Ascential.
“Typically, beauty is about going out; leaving the house; socialising, and that’s had implications in terms of consumers cutting back on that, for obvious reasons,” Wright told CosmeticsDesign-Europe.
Retailers worldwide had also been forced to prioritise essential item categories like food and drink, she said, as well as reduce assortment sizes and SKUs of other categories across the store.
Colour cosmetics and fragrances hit, uptick to come?
Wright said the ongoing coronavirus crisis and associated lockdowns and closures had impacted colour cosmetics and fragrances, in particular, with consumers “putting off their purchases for the moment”. Soaps, hand sanitisers and other personal care items had fared better, she said.
However, as lockdowns were lifted and economic woes took hold, she said it was likely consumers would look to treat themselves, as they had done in past recessions. Once this happened, beauty categories like facial care and nail care were “well positioned” to support the type of smaller indulgences consumers would likely seek out, she said.
An uptick in non-essential item spend would likely be seen in the coming weeks and months, as consumers came out of the initial anxiety and stocking up phase, though this would vary across markets, Wright said.
“It’s dependent on those consumers who can afford to do it. What we’re predicting is seeing very different impacts depending on the market. Some of the Western markets where they’re a little bit more able to cope with this type of impact and they can subsidise the shop-on-demand, we might see some of those consumers able to spend on those non-essentials. But, in some of the emerging and less-developed markets, people don’t have that safety net.”
“…[Coronavirus] is going to have a huge impact on 2020 retail and for the beauty category we would expect to see declines,” she said.
Supply chain focus and product prioritisation
Edge by Ascential had extensively tracked UK retail trends from the start of lockdown, Wright said, and findings showed that out-of-stock levels recently peaked to “much higher than normal”. UK retailers reported 23.1% out-of-stock levels – in store and online – which suggested a need to look more closely at supply chains, she said.
“For beauty retailers and beauty brands, clearly the impact from that is they need to be thinking about their supply chains; shifting production to more essential products where the demand is being seen.”
“No-one could have really planned for this, but the retailers and brands responding best are those who have already set up or got very efficient supply chains, and particularly those who are more set up for online – which is where we’re seeing more demand,” she said. Although, even these companies had to ensure they could respond to the surge in online activity that put “huge strains on supply chains and supply”.
Asked what the key message was for beauty retailers and brands in riding out the impacts of this ongoing crisis, Wright said: “The first thing is to focus on the supply chain; focus on responding to shortages in and essential demands and upgrading production in those areas; and be increasingly open and responsive with retailers and brands working together”.
“There’s a real need here for collaboration in the short-term,” she said.
In the mid- to longer-term, she said it would be about a clear shift towards digital selling platforms and online engagement. “I would expect to see online and digital momentum increasing beyond the crisis, given that everyone has started to shift towards that channel.”