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What’s next in the post-pandemic beauty industry? Recommendations for brands and retailers

In an exclusive analysis for retail.ro, Ioana Mucenic, CEO Minio Studio, has taken an X-ray of the beauty sector and the impact of the coronavirus pandemic in the sector. The main conclusions relate to the fact that, although beauty retail is a resilient industry, revenues will decline this year by 20-30%, expecting a rebound in the first quarter of 2021.

Moreover, online does not make up for sales in physical stores, and the winners in this pandemic challenge will turn out to be the companies that invest in its mix of e-commerce, digital media, content, trial apps, and other services that deliver an experience consumers appreciate.

In Europe, people’s feelings fall on the pessimistic side, with the main concern coming from the economic situation. In this context, most say they will cut back on spending in multiple non-essential segments. Expected decreases are higher in skincare and make-up and lower in the personal care segment.

In terms of trends, consumers say they plan to reduce their purchases of skincare and make-up products by an average of 29% – with Germans estimating the lowest percentage at just 14% and Poles and people in the UK estimating as much as half the pre-pandemic volume.

 

So what’s next in the beauty retail industry?

This pandemic is accelerating some of the changes that already exist, without necessarily generating completely new trends, says Ioana Mucenic, who talks about:

The evolution of the digital environment, on multiple levels

On the one hand, direct-to-consumer sales channels, such as brands’ websites, shoppable social media, or marketplaces, will grow in importance and more attention needs to be paid to the user experience. On the other hand, the use of artificial intelligence will increase as direct product testing and customized in-store consultations will decrease.

Therefore, digital transformation will be geared towards touch-free solutions for product testing, discovery, and customization.

The pace of innovation will accelerate

The beauty industry was doing well in this respect before the pandemic. But now, production will play a more important role, as the need to rapidly diversify the portfolio in line with consumer trends and delivery logistics capabilities will increase. This will increase the potential for collaboration between brands, manufacturers, retailers, and consumers and we are likely to see more partnerships and acquisitions (M&A).

Over-fragmented online communication

There will be a trend to give brands a stronger voice. In social media, we have become accustomed to following leaders, strong voices, and influencers and this trend will continue. However, brands are expected to have more control over their communication, especially with the need to talk more about safety, new digital interfaces, and the rapidly changing times ahead.

A trend to simplify consumption

The evolution of the fast beauty & fast fashion industry has led to overconsumption and clutter. Therefore, we will see a trend to reduce consumption, which will indicate an increased appetite for quality products (upscale) and reuse (upcycling).

 

Communication specialist recommendations for beauty retailers

When communicating directly with consumers, the recommendation is on two important segments: creativity in communication and customer experience.

Creative offers

Once we’ll be finally out of our homes, the next challenge will be to boost purchases and we expect to see an influx of discounts, promotions, freemiums, and vouchers of all kinds. But we need to keep the Lipstick Index in mind – people will want to buy products that make them feel good and make it easier to get through the difficulties of the period. That’s why commercial offers need to be dressed up creatively, with upbeat, period-appropriate messages. Discount signage alone, without storytelling, will create a sense of panic, of despair even, which is at odds with what the beauty industry stands for.

Online communication, online benefits

We talk more and more about digitization, not just in terms of logistics or as a sales channel, but from a consumer relationship point of view. Online activities need to continue, even if people can go into the stores – because of the fear of touching the products, the shelves, will remain for a long time. Rather pique their curiosity with webinars, creative online platforms, games, apps that allow for virtual testing, dynamic social media communication, and Instagram lives, and always make sure to bridge the gap between online information and offline benefits.

Bridging the gap between online and in-store

Proactively build a connection between online activities and physical stores, for instance, using Buy Online – Pick In-store systems. People may buy from the website, but they will pick it up in-store, possibly accompanied by another benefit (a voucher, a gift). Statistics show that 69% of people who use this system buy at least one more unplanned product when they get to the shops.

Consumer Experience – extremely important in times of recession

Behavioral studies show that in difficult times, people need more empathy and consideration from those around them. And this is where brands come in. If a consumer chooses to spend their now-reduced and frazzled income to buy your products, then they need to feel that their purchase does indeed matter, that it is important, that they are being cared about. In peak times, when people have higher incomes and demand is also outstripping supply, many brands don’t focus on customer service and the experience the customer has with the brand, even though they should. But in recessionary times, brands need to convey to customers that they are valued and provide added value. That’s why the recommendation is to take care of the customer experience and to even use service design solutions (specialist consultancy that helps you improve service and the consumer experience, often through behavioral and creative approaches, not complex operational solutions).

Community involvement

More than ever these days, you see companies with heart, those that, despite their business struggles, have been involved with the community, whether by adapting production lines, protecting employees, paying suppliers faster, donating directly to those on the front line, or encouraging donations to various relevant causes. In Romania, we have seen successful examples from Avon, L’Oreal, and Farmec.

The beauty industry is in a better position than other related categories, but even so, 2020 is a challenge that everyone has to overcome. The crisis will accelerate existing trends such as the growth of e-commerce, the growth of self-care categories, and the evolution of quality products at affordable prices. Success also seems to come from connecting with the consumer, the ability of each brand and retailer to understand the changes in their consumers, both consumption, behavioral and emotional, to respond quickly, relevantly, effectively, and creatively.

Article written by Ioana Mucenic, founder and CEO Minio Studio, for the #retailAboveCorona campaign through which retail.ro aims to highlight the changes the retail industry is going through, as well as solutions, strategies, and opportunities for players affected by the COVID-19 epidemic. For marketing, communication, and service design solutions, please contact Ioana Mucenic – ioana.mucenic@minio.ro.

 

Source: Retail.ro