As the world continues to adapt to the norms of social distancing, the Beauty and Personal Care industry is transforming to meet the needs of today’s consumers. Brands and consumers are interacting differently — a high-touch shopping experience is being traded for a hands-off, digital buying process that prioritizes personal safety and health.
Netrush Advisor Daya Fields is an expert in this category. Over the last decade plus, Fields has produced award-winning work for top beauty and personal care brands. We caught up with her in a recent interview to talk about industry changes and how different aspects of Beauty and Personal Care are being affected.
Q: Can you give us some context on how the Beauty & Personal Care industry has been doing in 2020?
Daya Fields: Before COVID started, Premium and Prestige Beauty was up $78 million year-over-year in the January and February 2020 timeframe, per Nielsen Public Data (NPD).
During this period, 85% of beauty shopping was happening on location, in brick-and-mortar retail stores. Then COVID hit, and a major shift occurred — store closures of all types, both temporary and permanent.
In Q2, Premium and Prestige Beauty sales declined 36% year-over-year, which is a dramatic change from the increase in trend that was happening in January and February. Online sales spiked 90%, representing about 61% of the sales volume for the industry with online channels comprising right around 70% of the total market share — dramatic shifts like we’ve never seen before.
Beauty shopping, much like a majority of industries, moved from being a predominantly in-store experience to being a solely digital one overnight.
Q: How were the different subcategories of Beauty & Personal Care affected?
Daya Fields: Makeup took the hardest hit in Q2 with sales declining by more than 50%. However, there are some subcategories that have seen glimmers of hope and growth. Eye products have led growth in the makeup category — jumping 6% amid widespread mask usage in May through June. Some of the most popular eye products included false eyelashes (up 14%), mascara (up 8%), eyebrow products (up 8%), and eyeliner (up 7%).
Prestige Hair Care sales experienced a modest decline of 10% year-over-year. E-commerce sales for hair care rose 95% year-over-year, and dollar volumes continued to outperform via online channels through June.
Specifically, hair coloring in mass rose more than 36% year-over-year for the first half of 2020. That rise was driven by a 137% spike in online sales. Grocery channel hair color sales also rose 34% for that same period.
According to NPD’s data, skincare had the biggest share of Prestige Beauty sales March-June. E-commerce sales of skincare products spiked 93% year-over-year in Q2, and skincare contributed to a 50% share of all Prestige Beauty sales throughout the period.
Mass facial skincare grew more than 22% year-over-year in the first half of 2020, led by a 42% rise in online sales. Grocery channel facial skincare sales rose 14.5% for the first half of 2020.
Overall, US Prestige Skincare sales overall dropped 18% year-over-year in Q2, and skincare is actually expected to decelerate through 2024, per Euromonitor.
What does this tell us? During COVID, the Prestige Skincare beauty shopper traded down for the most cost-effective, similar-benefit products that were readily available and widely distributed. The trade down to mass and masstige will continue to happen for an undefined period of time for two major reasons:
- E-commerce products will continue to take longer to arrive at home, and out of stocks will take longer to fulfill.
- The economic environment for all people, except the 1%, will consistently see periods of flux and instability.
Fragrance took the second hardest hit — second to makeup — declining 37%. Overall, fragrance purchases have declined 75% year-over-year based on the latest 2020 McKinsey & Company study.
Pre-COVID, fragrance was always the category that struggled the most with pivotal growth in beauty. For brands that have a 100% fragrance-based product portfolio — or have a sizable fragrance mix of business — it will continue to be tough to sell through new launches for this simple fact: Unless a fragrance consumer is brand loyal, sampling scent to acquire new customers seems to be an impossibility, from my perspective. We are living in a world where getting close enough to waft the smell of someone’s fragrance of choice, and linger, is now considered dangerous.
Q: In your opinion, was the industry ready for a major shift towards e-commerce?
Daya Fields: The beauty industry as a whole was ready, but the real question is, were all brands ready? And the answer, as you can expect, is that it’s a case-by-case basis and varies from brand to brand.
Digitally native brands were the best prepared. As for personal care brands that relied heavily on their in-store presence and footprint, the results were mixed.
I think it’s more interesting to look at what industries as a whole were more e-commerce ready than others and what beauty can learn from those industries.
For instance, the automotive industry was ready with customization, personalization, and door-to-door service and delivery. The real estate industry was ready with home sales and purchases done completely virtually with virtual tours and mobile notaries. The fast-food industry knew how to pivot and introduce service delivery innovation.
Beauty as a whole was pretty well prepared. Virtual events and at-home gift boxing are some examples. Post-COVID, I predict that beauty consumers will prioritize safety, health, sanitation, and hygiene in their upcoming shopping experiences.
Brands will need to continue delivering a personalized experience that consumers love while simultaneously addressing consumer concerns about contracting viruses. Moving in the direction of virtual reality makeup and skincare try-on is a great, but significant, investment in a longer-term strategy.
Q: What’s going on with consumers right now in Beauty & Personal Care?
Daya Fields: Before COVID, consumers were buying in-store, at travel retail in airports, through DTC, via retailer.coms, and through in-home brand ambassador sales networks.
Even before COVID, a majority of consumers used digital mediums to explore makeup, skincare, and haircare via influencers on Instagram and on YouTube. These mediums continue to be the prominent bridge between beauty brands and consumers.
There’s also been a steady rise in natural and clean beauty— including personal care with this criterion— that continues to grow through COVID. In looking at data within the skincare category, these segments were a bright spot pre-COVID, remain a bright spot during COVID, and will continue to be post-pandemic.
Consumers are also showing an increased interest in mission-based brands that prioritize business process transparency, packaging sustainability, and social impact. Consumer interest in these types of brands was already strong pre-pandemic.
There’s also increased interest in brands that are third-party certified with reliable, trusted claims of non-toxic formulas that demonstrate a commitment to safety and clinical testing.
Consumers are highly engaged in clinical results and claims backed by science. During the pandemic, consumers have been more open to taking the time to understand data and science.
Q: Can you talk about some of the challenges Beauty & Personal Care brands face on Amazon?
Daya Fields: Beauty brands have concerns over consistently controlling their brand image, their “search result neighbors” on screen, pricing, and unauthorized distributors on Amazon.
It’s a constant challenge. On one hand, Amazon presents an enormous opportunity — brand awareness and exploration, incremental revenue, convenience, and a ton of eyeball traffic. On the other, it’s a risk.
Brands need to be careful with how they navigate the marketplace and make sure they have the right strategies aligned and in place to make Amazon work for their brand instead of against it.
Q: In your opinion, where do you see the Beauty & Personal Care industry going in the next 12 months?
Daya Fields: I see several things happening in the next year. These are my predictions and I’m owning them:
- There’s going to be an expansion of the clean beauty movement with an emphasis on self-care, relaxation, and beautifying the space in which you live.
- The sexual wellness category will explode with innovation and continue to grow at double-digit pace within the category of beauty. Get comfortable talking about it.
- There will be a lot of interest in immunity-building/virus-blocking, skin-health focused innovations in beauty, supplements, and CPG overall.
- There’s going to be growth in Black-owned beauty brands. The marketplace is ready and wants to see them win.
- There’s going to be more innovation in survey and app-based technology that will allow for further customization and personalization in skin, hair, and foundation products. Technology to build your “exactly right for you” beauty regime from the comfort of your home.
- The virtual component of all things is here to stay and will continue to exist alongside in-person interactions for brands, companies, and organizations.
- There’s going to be a widespread birth of social change initiatives pioneered by beauty brands. I believe this is not just a moment in time. The positive effects will be expanded, and I am personally hoping for this outcome.
Q: What are some of the immediate actions brands should be taking right now to reach consumers?
- First and foremost, brands should continue to invest in digital-based consumer acquisition and retention channels. Consumers have moved online, and brands should continue to invest in ways to meet them there — constant review, constant learn, constant flex.
- Brands should continue to innovate and launch new products. Consumers are still looking and are intrigued by newness.
- Create emphasis around proof of formula safety, clinical testing and skin health. Providing transparency and valid, clinically-proven reassurance will go a long way in reaching consumers.
- Increase distribution and expand beyond domestic selling, if possible. E-commerce has the power to offer cross-border marketplaces, and if done correctly, can introduce brands to new customers, new cultures, and new revenue streams.
- Invest in mobile-first, consumer-experience technology, such as SMS marketing texting and more. Mobile-first has been considered a best user-experience practice for years. And right now, it’s more important than ever.
- Lastly, make sure your brand (or brands) are utilizing re-targeting, trigger-based CRM, GA reporting, and analytics to predict consumer actions and make your brand presence known to your targets wherever they are online.