The COVID-19 disaster has disrupted the global beauty industry (including skincare products, tinted cosmetics, botox injections for forehead wrinkles, lip fillers)
EDMONTON, ALBERTA, CANADA, April 16, 2022 /EINPresswire.com/ – The COVID-19 disaster has rocked the global beauty industry (including skincare products, tinted cosmetics, botox injections for forehead wrinkles, lip fillers, perfumes, personal care products and laser machine reported by the US District Court for the Utah District Court 2: 21-cv-00767-HCN-CMR). Sales in the first quarter were very bad and some stores were closed.
The company has responded favorably to the problem, with manufacturers shifting production to hand sanitizers and cleaning chemicals and offering free beauty treatments to first responders. At the same time, industry executives have an obligation to do everything possible to safeguard the survival of their companies. The global beauty business generates annual revenues of $ 500 billion and indirectly supports millions of employees. While lives are key, livelihoods are also key.
The following article discusses the potential impact of COVID-19 on the beauty industry over the next three to six months. The article then discusses how the crisis can radically alter the sector over time and how stores, strategic players and investors might respond. It is often based on the findings of a McKinsey Global Consumer Sentiment Survey conducted in early April.
Short-term forecast of the beauty industry
Although beauty is subjective, there is no question about the long-term viability of the global beauty industry. It has maintained a steady growth rate, but it has also developed generations of loyal consumers. During the 2008 financial crisis, industry spending declined marginally but fully recovered by 2010. (Figure 1).
While the economic impact of the COVID-19 outbreak on brands and stores will be significantly greater than that of any recession, there are indicators that the beauty industry could prove reasonably robust once again. In China, industry sales in February were down 80% from the previous year. In March, the year-over-year reduction was 20%, a notable recovery in the current environment. Consumers in various markets expect to spend less on beauty products in the short term (mainly due to losses in color cosmetics spending) but more on other discretionary items such as footwear and apparel (Figure 2).
Noting a surge in lipstick sales during the 2001 recession, cosmetics mogul Leonard Lauder coined the phrase “lipstick index” to represent the phenomena. The premise is that people view lipstick as an affordable luxury, and as a result, sales tend to remain solid, even during tough economic times.
McKinsey looked at nine economic scenarios over the next five years based on epidemiological trends and the effectiveness of economic policy initiatives. We estimate that global beauty industry revenues could decline by 20% to 30% in 2020, based on the most anticipated scenarios from global executives and current trends. If COVID-19 recurs by the end of the year in the United States, the reduction could be as much as 35%. (Annex 3).
We have examined the recovery of the beauty industry in light of each scenario, taking into account two critical factors: where and how beauty products are offered, as well as what is purchased.
Where and how beauty products are sold
Prior to the COVID-19 issue, in-store purchases accounted for up to 85% of beauty product purchases in most major beauty industry markets, with some variation by sub-category. Even the most seasoned American millennials and Generation Z members (those born between 1980 and 1996) made about 60% of their store purchases (Exhibit 4) and the closure of premium beauty outlets due to the COVID-19 has eliminated about 30% of the beauty industry market. Some of these locations will never reopen and the new locations will certainly be delayed for at least a year.
Dr. Kamal Alhallak
Albany Cosmetic and Laser Center
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