The international situation is turbulent, the epidemic is capricious, and the recovery road of the beauty market is once again blocked.
Jefferies equity analyst Stephanie Wissink said: "People hope that supply chain tensions and shipping delays will ease somewhat, but due to the current Russian-Ukrainian crisis, rising oil prices and throughput problems at Chinese and US ports, supply chain tensions will continue into the middle of the year and possibly even the second half of the year." ”
Faced with a tough business environment, the beauty industry is actively self-help, And Debbie Erickson, managing director of Coty USA, said that supply chain problems will persist, coty has also implemented some plans to ensure that shelves are fully loaded, and bottleneck problems have been avoided by extending delivery times and increasing local procurement.
P&G is also working to focus on improving the agility, effectiveness and efficiency of production and distribution capabilities, and is also using data analytics to inform the company's plans in advance to better understand the potential for material disruptions and better manage inventory, said Alex Keith, CEO of P&G's Meishang Business Unit, "These efforts are helping us keep our factory production lines running and keeping product inventory on retailer shelves as normal as possible." ”
The international situation is turbulent, the epidemic is volatile, and the recovery of the beauty industry is challenged
Scott Kestenbaum, chief growth officer at beauty products supplier Maesa, said the company is moving more of its own production overland to mitigate the impact of tariffs, high shipping costs, and reducing turnaround times for replenishment. "We are building new, additional dedicated production lines at our core manufacturing facilities to support growth and increased capacity," he said. ”
In addition to risk aversion, Wendy Liebmann, CEO of WSL Strategic Retail, also said: "Every brand is considering the impact of inflation and supply chain issues, but where are the new opportunities?" How can we continue to grow and differentiate? In this regard, she suggested that the beauty industry can establish some related services, such as connecting beauty with health, helping diabetics with skin care, and so on.
In addition, there has been an interesting turning point in the beauty industry, and one of the biggest growth opportunities may come from the harsh reality of rising product costs and consumers "tightening their belts", and mass beauty, which has been hit hard by the epidemic and is struggling under the aura of luxury beauty, may be the key to this.
Mark Griffin, president and CEO of Lewis Family Drug, shared his observations, saying, "In the last two years we've attracted a lot of new customers, a lot of people who are buying what they need nearby, rather than driving specifically to high-end department stores. "The ups and downs of the epidemic have led consumers to buy an eyeshadow directly in a drugstore or supermarket, and for some consumers, the difference in product quality is not obvious.
Ulta Beauty's recent results also reflect this trend, Wissink believes: "Volkswagen beauty product sales have declined less than high-end beauty products, so there must be a part of high-end beauty consumers trying to buy mass beauty products." ”
According to IRI, the price of Mass beauty products has risen by about 5% since the pandemic, and Lisa Mulyk, senior vice president of IRI, said: "The increase in global raw material costs, labor shortages and the current Russian-Ukrainian conflict have led to an increase in the price of Mass beauty products, and we expect this trend to continue." ”
However, some insiders believe that the increase in cost is relatively beneficial to mass beauty products, which is more acceptable than paying $5 more for products of $30, and the price increase of $1 for $7 products is more acceptable.
In the WSL study on "Shopping Mindsets for Beauty Consumers under the Inflationary Economy," 33 percent of respondents said they were cutting back on their spending to cover basic living expenses, one-third said they were spending less on cosmetics, 20 percent on facial skin care, and 14 percent on hair care, but Wendy Liebmann explained. This does not mean that consumers do not use these products, but rather reduce the frequency of use, prioritize the use of inventory in the home, or buy discounted products. In addition, 17% said they would try to choose a cheaper cosmetics brand.
Scott Kestenbaum points out that the current market conditions are a perfect opportunity for masstige beauty, "Volkswagen boutique brands are unique in the recession, benefiting from increased foot traffic from food, medicine and large retailers, as well as the re-measurement of income expenditure by consumers of former high-end brands." In fact, the segment of Volkswagen Boutique emerged in the economic difficulties of the 1990s.
So Mass beauty retailers began to add new products to find an ideal balance – the price could not be too high, and the quality was not too low. Lauren Brindley, vice president of beauty at Walgreens, mentioned that in 2022 the company will add new mass products, involving personal care brand Hey Humans and makeup brand Makeup Revolution, she said: "Consumers affected by rising household consumption costs do not need to sacrifice the quality of beauty products for more affordable prices." ”
Fast-growing Milani has seen a push from KOLs to use the brand's products as "flat replacements" for high-end products on social platforms, especially color Fetish Matte lipstick, which is seen as a "flat replacement" for Charlotte Tilbury, with sales on the Walgreens platform increasing by 300% in two weeks.
On social platforms, bloggers compare the similarities between Milani and Charlotte Tilbury's lipstick shades
Mary van Praag, who took over as Milani's CEO in 2020, said: "This growth momentum is continuing, especially in the recent period, Milani's sales performance has exceeded its peers by 3 times, especially in the omni-channel 24-week performance growth of more than 20%. ”
P&G is also offering more price point options and is constantly introducing innovative products. Alex Keith said: "In our observation, our consumers both prefer the excellent efficacy and the 'sub-throw' experience, so we can create use value for them on multiple levels, and in this way we are seeing more and more consumers starting to try mass products. She also revealed that the company's sales have maintained 25 consecutive quarters of growth.
Tarang Amin, CEO of E.l.f, a North American makeup brand, is currently more bullish on the makeup category: "We see a good growth trend in categories such as lipstick, and now consumers need color and expect innovation. ”
E.l.f
But Caitlin O'Keefe, a partner in Kearney's consumer practice, also points to the harsh reality: "Progress in supply chain innovation is going backwards, especially when it comes to mass beauty, in part because recycled materials or PET are more expensive or harder to obtain after consumption." "At a time when sustainability has become a must for many beauty brands, this is a huge challenge for the cost control of mass beauty brands.
While consumers will be willing to temporarily abandon luxury beauty products in order to weigh their expenses, their demands on product quality, consumer experience and even values will not disappear. Therefore, although the economic recession may boost the recovery of mass beauty, brands still need to polish their ability to differentiate themselves in competition in order to seize this opportunity and achieve a new round of growth. BINC
Written by: Faye Brookman, Lucy Geng
Edit: Lee
Image source: Network