Back to business: Restart could give mass retailers an edge in beauty
What is it going to take to get the beauty business back on its feet again?
The answer, according to more than a dozen key industry officials that Drug Store News contacted in late April, is a solid, step-by-step, in-store merchandising and marketing program by retailers and suppliers backed by coordinated advertising and, yes, a little bit of luck.
The COVID-19 pandemic hit the beauty category right in the face. Sales tumbled in most, but not all, segments as consumers were forced to stay home by government order, and the thought of using cosmetics and other products simply faded away.
Yet, that was last month. Now, more and more signs of an economy on the rebound are springing up and, importantly, consumers are going back to work. The equation is quite simple: More people working equals more beauty sales.
The best news, it appears, is that consumers are going to be looking for the best deals, and mass retailers are best positioned to offer them.
Social media posts started filling up with how-to videos on removing gel nails, applying at-home gels or fake nails, and how to create a spa at home. Americans even began posting fully made-up faces to show they still knew how to apply makeup. There was hope.
No matter how the numbers are diced, the beauty category has taken a hit during the pandemic as many people were forced to work from home and often bypassed a morning dash of lipstick and spritz of fragrance.
Despite some solid numbers from the nail care and hair coloring segments, the last two months have been tough. Nielsen numbers for the first quarter of 2020 in mass doors showed cosmetics dropping by 5%, skin care and hair care each growing by just 1%, and fragrances sinking down by 11%.
Kline’s market research forecast the worst drop for U.S. cosmetics and toiletries in the 60 years it has been tracking the business with a worst-case scenario coming in at an 8% decline. Kline’s likely picture is a 2.5% decrease. Prestige beauty, where stores are closed, showed a 58% drop in sales in March. While some of the business was siphoned off by online activity, mass merchants undoubtedly picked up some of the sales.
The life-changing events drove sales of several mass categories. For example, constant washing of hands promoted almost 30,000 online searches for hand masks, according to Trendanalytics, a 1,400% increase over last year. Interest in ingredients seen as immunity boosters soared, such as vitamin C, echinacea and elderberries — all ingredients that brands are adding to skin care.
As stores begin to reopen and a “new normal” emerges, tremendous opportunities for mass market retailers to win in beauty exist. In a report about the future landscape, the Los Angeles-based HatchBeauty Brands painted a bright future for mass merchants.
“With the shutdown of stand-alone beauty retailers, we believe multi-category retailers like drug and food stores, who’ve made a break for beauty in the last few years, will be able to convert even more shoppers to their beauty section with greater ease and efficiency,” the HatchBeauty Brands’ report “Here + Now, Beauty in a Post COVID-19 Economy” said. “Beauty and bananas sound more convenient than ever before,” the company said, singling out retailers to watch, including Walgreens, CVS Pharmacy, Trader Joe’s, Kroger, Target and Whole Foods Market.
Equally bullish on mass retail is Jim Corbett, vice president of retail sales and analytics at Rogers, Ark.-based Inclusions Companies. “Mass retailers and grocery chains will have business tailwinds in cosmetics and beauty categories coming out of the COVID-19 pandemic,” he said. “Shopper behavior will be impacted by customer confidence, greater price awareness and increased desire for all-in-one trips. Beauty enthusiasts will grow in conviction to choose products and service themselves in home if they find brands they trust.”
There are conversion opportunities, as well. “Consumers will be looking to stretch every dollar, and that will convert some from higher-end department stores,” Corbett said. There also will be a decline in shopping trips, which can benefit one-stop stores.
Stephanie Wissink, an analyst at New York-based Jefferies, also said that not only were department stores shuttered during the coronavirus, many face store closures and bankruptcies. If they close, that could further erode the 22% share that department stores control of the beauty pie.
“During recessions, consumers typically trade down to lower-priced beauty products, especially in more discretionary categories, [such as color cosmetics and fragrance],” Wissink said.
Yet, even with these positive indicators, the mass beauty department of tomorrow can’t stay the same as it was pre-pandemic. Odds are that the use of makeup won’t revert, at least in the short term, to pre-pandemic levels, especially since women got used to foregoing it when stuck at home. Usage already was on the downturn because of more natural makeup choices.
There will be need for more contactless selling, especially in terms of sampling cosmetics. Yet on the other hand, the role of pharmacists and other experts will continue to be a reason to visit drug, discount and food stores with pharmacies.
Ulta Beauty’s CEO Mary Dillon said the beauty powerhouse is running several “scenarios” of what physical retailing will look like. “We’re putting our inventive hats on with experts to say, ‘How do we get back in the business and lead the way?’ Consumer demand will be out there,” Dillon said. Among the challenges will be duplicating the hands-on service in a world concerned with germs. “We are consulting with health experts and consultants to get the lay of land and have a ready stance.”
DSN spoke to a number of key executives in the beauty industry to get their feelings on the immediate future of the category.
“Mass retailers have a tremendous opportunity to capture consumers.”
As we begin to look at beauty post COVID-19, we believe mass retailers have a tremendous opportunity to capture consumers who, to date, have been more likely to shop stand-alone beauty retailers. Right now, and in the following weeks and months, consumer needs will be focused on a mix of practicality and psychology. Practically speaking, many typical beauty routines are moving from out-of-home services to in-home do-it-yourself moments.
As such, we expect to see a surge in demand around nail, hair and skin care typically reserved for spas and salons. From a psychology standpoint, we believe as consumers continue to focus on ‘fighting germs’ they will seek products with high efficacy, especially as it relates to antibacterial and detox. This trend is likely to bleed into the inside out beauty space with ingestible beauty increasing its focus to include both glowing skin and immunity benefits for the balance of 2020 and into 2021.
As a company, we’ve made many shifts in the last weeks to accommodate the changes we are seeing. We’ve launched a hand sanitizer program at mass retail. Additionally, we are currently tweaking critical ingredients in many of our innovation products to accommodate what we are seeing in the skin care and ingestible space.
— Preston Bottomy, president, HatchBeauty Brands
“Back to the days when drug and mass were your DIY beauty sources.”
There has been a measurable lift in sales in the FDM beauty aisle, particularly hair texture hair aisles. I believe this sales lift is due to closure of Ulta, Sally Beauty, salons, barber shops and neighborhood beauty supply stores. Essential workers still need to meet their beauty needs. I am sad for the reasons behind the shift and pray for the employees that have been furloughed in the other chains.
I am happy for FDM retailers that are seeing the lifts. It takes me back to the days when there were no specialty stores and drug and mass was your DIY beauty source. It is my opinion that shoppers will see FDM with a new lens, and a good percentage will continue to look in these aisles for hot new trends. Do-it-yourself, whether it be nails, hair, color or waxing is taking a whole new look, and the DIY is reaching all income levels. The result is that the total basket will get greater.
I don’t believe the online sites like Amazon are positioned to meet immediate beauty needs. Shipping has been slowed to allow for delivery of essential items. Being quarantined has reminded shoppers of how effective visual, touch, feel is to the purchase decision.
As far as supply chain challenges, we work with our vendor partners and the FDM chains, we manage to assure supply chain is grade A. Forecasts and projections are a challenge when unexpected lifts occur. Add to the challenge production facilities closing, employees working virtually, and imports of raw materials and finished goods can be delayed. It’s not just hand sanitizers and toilet paper that have been out of stock. Being nimble is required.
— Roslyn Chapman, president and founder, The Chapman Edge
“Create a destination in stores.”
With more people looking to bring the spa to their homes, it is helpful to create a destination in stores. This is something that, for the most part, doesn’t exist in mass market stores. Customers also appreciate being able to find all of their needs in one stop. With Plum Beauty, we offer affordable tools for people looking for noninvasive alternatives. They also want multipurpose tools to enhance their natural beauty. We can customize our selection for each retailer.
We’re especially seeing younger customers getting proactive and looking for products with youth-boosting appeal. Some of our best sellers are our facial cleansing devices — a great time-effective option for women juggling multiple priorities and can’t take time to go to a spa. Other best sellers are our rose quartz rollers, nail kit and our eyebrow shaping razor.
We were stressed before COVID-19, so the idea that people can take control of their own wellness is a desirable experience. They feel good about retailers who acknowledge this shift and make it easy to find products, so they don’t have to go to multiple stores.
— Stephanie Trachtenberg, marketing director, Clio/Plum Beauty
“There is low-hanging fruit to grab.”
While beauty junkies are staying home more and dressing up less, it is pretty temporary. And many of them are being more experimental than ever before. For example: nose waxing, do-it-yourself nails, creative at-home hair color and more. Some women are like, “Wow, this is actually fun, and it saves time and money.” There are also many who can’t wait to get back to the salon.
As far as usage, color cosmetics will definitely take a hit — a dive — especially as special events, parties, weddings, etc., are on hold. Putting on a full eyeshadow, liner, mascara, lashes isn’t a lead usage right now. Skin care and hair care will see a surge. Also, tools like the Revlon Hair Styler.
Once the floodgates open, there is a big part of the beauty community that is so going to get super dressed up and wear a lot of makeup. Everyone is getting super bored of the lazy beauty look. Now it’s up to the beauty companies to entice, convince and intrigue consumers to wear, explore, buy and have fun with beauty more than ever before. Chain drug, supermarkets and discounters need to really step it up, too. They need to elevate how they present and showcase their products. They are right on trend with sanitary concerns, with their sealed packaging. The major mass brands still need to truly elevate the way the products look and how they show shades. There is still so much work to do in these areas. Reinvent the hook-and-hang planograms. Offering just more skin shades isn’t the answer because it still doesn’t help a customer identify their needs.
Drug stores and chains have a big lead over a Sephora or Ulta in a crisis as we have learned. They are more health focused. The pharmacy is so important, and I would love to see more interfacing between pharmacy and the beauty department. Beauty will be blending with OTC health care like never before, such as wipes, liquid hand sanitizers, etc.
Drug and supermarket retailers need to really start looking at beauty as a key sector, not just an extra afterthought. It is time for them to really dive in and understand Instagram and omnichannel retailing and platforms. There is low-hanging fruit to grab there for sure! The future is definitely going to be an interesting journey.
— Jeanine Recckio, founder, Mirror Mirror Imagination Group
“We should take note of what they couldn’t live without.”
There are two things that I think retailers and businesses must do in order to rebuild retail again. The first thing I think is to be patient with each other. We don’t all work with or for the same retailer, nor do we all live or work in the same region. So many decisions are not our own, so it will be up to each of us to be kind and conscious and considerate, all while being as responsive and productive as possible.
Remembering that the end goal is to help the customer get the value they deserve and expect, and with a little more patience than ever before. Secondly, I think this is a phenomenal time for all of us in this industry to take note of how the customer voted and what the customer voted for. When I’m in a pinch, and we all were, customers’ behavior in some cases surprised us.
It is important to get conscious and be responsive to how customers responded. We should take note of what they couldn’t live without, as well as what shopping methods resounded and how our products and shelves can move toward what customers clearly showed us they wanted.
— Psyche Terry, founder, UI Global Brands
“Merchandise healthy skin, self-care essentials in high-traffic areas.”
We are seeing people really tuning into their health and wellness during this challenging time and finding comfort and a sense of normalcy in their everyday skin care and beauty routines. Some of our top-selling products have been cleansers, sensitive facial care, detox masks and hand creams. And, now more than ever, people are considering the health and safety of their products, as well as their impact on the planet, so they are leaning toward natural and sustainable options.
In the near term, as visits to retail are still selective, there’s an opportunity to merchandise healthy skin, self-care essentials in high-traffic areas. It may not be the trip driver, but is still very important to her overall health and wellness. As people get out into stores more, merchandising “affordable luxury” items, such as balm and lipstick, will make it easier for people to infuse a little joy in their day.
— Denise Wellander, senior director of sales, Burt’s Bees
“Rebuilding will require creating sanitation protocols.”
My observations of what happened during quarantine include:
- Major hit in sales due to retail brick- and-mortar shutdown;
- Seventy-six percent of consumers said they purchased in superstores like Walmart and Target during the pandemic;
- Seventy-five percent said they were shopping on Amazon;
- Sixty-nine percent of consumers said they are buying more beauty online than ever before — online increase of 30% for brands;
- Customers were looking for DIY/spa treatments at home in lash growth, masks, nail products, hair dye, hand sanitizer, vitamins/supplements and hand soap;
- Fragrance and color took a hit in sales;
- Mass beauty did well, marking a customer shift; and
- Brands raced to social media to engage with quarantined consumers.
Rebuilding will require creating sanitation protocols to make customers feel comfortable. Retailers should take inventory of best-sellers. Perhaps bring in new categories now that customers are comfortable shopping at mass. Stay social.
Beauty Barrage is pivoting to social selling by having our 300-plus field team post/livestream and story tell on their social platforms, and leading followers to e-com. We created sanitation protocols for retailers and our staff.
Mass beauty might recover faster than prestige because they did not experience the major shutdown prestige has, plus customers will be looking to continue to save.
— Sonia Summers, founder and CEO, Beauty Barrage
“People need to do something with that mop of hair on top of their head.”
We have seen a huge uptick in home hair cutting and beard grooming over these past several weeks. This should not come as a surprise. With barbershops and beauty salons closed, people need to do something to maintain that mop of hair on top of their head. We have seen our website explode and Internet search soar on topics of home hair cutting and DIY. Someone sent me the following that they got off of LinkedIn:
“Thought you might have interest in Doug McMillon’s post on LinkedIn today:
“Here’s a look at how buying patterns have shifted in the last few weeks:
- Week 1: Hand sanitizers, soaps and disinfectants
- Week 2: Toilet paper
- Weeks 3 and 4: Spiral hams and baking yeast
- Week 5: Hair clippers and hair dye on the rise
To be on the radar of the CEO of the world’s largest retailer is certainly a new place for our category. We have seen household penetration on our products jump from around 48% to almost 60%, and even after the barbers and salons reopen, I imagine there will be many households where the DIY trend will continue. I expect this category growth to abate to some degree, but still level off at a rate higher than before we entered this time as many households will have found that what they once thought was beyond their capability is now a part of their new reality.
Add to this the fact that we may be heading towards a recession and the money-
saving aspect of home hair cutting makes our products even more attractive. In 2008, when we last hit a recession, the hair clipper category grew as families looked for ways to save money. As we rebuild our economy again, I expect Wahl hair clippers will play a role in saving money and time, while making our country look good one haircut at a time.
— Bruce Kramer, senior vice president of North America consumer division, Wahl Clipper
“Brick-and-mortar retailers will have to take extra steps to enhance the in-store consumer experience.”
Retailers will need to make sure their products are in stock and ready, due to the anticipation of much heightened demand. They’ll also need to reexamine how they’re stocking and restocking their shelves to ensure that essential products are prominently displayed, so that consumers can easily and quickly find what they need. These past few weeks have seen a higher degree of acceptance in ordering products online, so brick-and-mortar retailers will have to take extra steps to enhance the in-store consumer experience to once again draw people in, while facilitating a convenient safe and hassle-free shopping process that builds consumer trust.
Retailers will also need to build stronger, bolder, more compelling stories around the beauty products that are relevant. Their messages will need to be more meaningful and focus on products that offer the most value and benefits, and differentiate them from the immediate influx of beauty brands fighting for the attention of the same consumers. As the pandemic has shifted perceptions, values and spending habits, and people’s concern with less disposable income, beauty brands and retailers will need to speak to consumers in more authentic and innovative ways. The need to educate consumers on brand promises is more important than ever and can be led more prominently with unique value propositions.
Being an essentials provider, we have been laser focused on getting hand sanitizers, liquid soaps and other personal cleansing products onto the shelves of our partnered retailers. It’s all hands on deck for us right now, as we work around the clock to support our trusted retail partners by shipping millions of essential personal care products.
The challenge is being able to keep pace with such an immediate high demand and to ensure we’re stocked and ready for future consumer needs. Through creative problem-solving, we are currently building out and diversifying our supply chain of raw materials and components. Because there is currently such a worldwide demand for those components, we’re experiencing bottlenecks with some of our manufacturers.
To mitigate this, we’ve made some temporary substitutions of bottles, pumps and caps, while preserving the same uncompromising Raw Sugar formulations inside that make people feel clean, nourished and cared for. We’re thinking a year ahead and looking to internalize our manufacturing of materials so that we can not only meet current demand, but also satisfy our forecasts, all with an eye on our brand promise to consistently deliver premium quality products affordably.
— Ronnie Shugar and Donda Mullis, founders, Raw Sugar Living
“Retailers have an opportunity to fulfill pent-up demand for ‘high-touch’ services.”
Interesting to note the self-care element and especially the focus on foot care — masks, callus remover, callus softener and foot grater are all among the most searched skin care categories, according to Google, through mid-April. The only options for consumers who wanted beauty products were either online stores or mass market stores that definitely provided the quick fix.
Retailers have an opportunity to fulfill the pent-up demand for “high-touch” services — brow touch-ups, styling sessions (if they have in-store salons), as well as focus on education for self-care. To provide a fun experience, they can become the “hangout” place for small groups of friends who want to reconnect after the long stay at home period.
Our company is focused on providing a platform for beauty brands to connect with beauty insiders and, as such, we are providing regular Instagram takeovers with beauty and wellness experts, providing tips on self-care by sharing tips and specific “how to” techniques. For moms and daughters staying at home, we are offering a braiding lesson as a series with leading braiding influencer pros.
Considering the financial impact of the shutdown, most consumers will need to be thrifty when it comes to their discretionary spending. Mass market stores that have invested their efforts into providing a robust merchandise offering with more indie brands will be in a better position to attract consumers’ attention and dollars.
— Daniela Ciocan, CEO, Access Beauty Insider/Unfiltered Experience
“Retailers should consider a two-pronged approach.”
Overall, we see people are leaning more into skin care over makeup.
As people are spending more time at home and also thinking more about matters of health, we see that they’re leaning more into self-care, including skin care. People have been approaching skin care more proactively for different reasons: Some are seeing their skin encounter new issues from changes in daily routines or heightened stress, others are using this time to invest in skin care routines, and others are turning to self-care rituals that are more extensive like masking. With these changes, we have seen an increase in popularity in products like the Power Calm Hydrating Cleanser, which cleanses skin while supporting the skin and not stressing it out; acne targeting products; and even exfoliating masks since people are not able to visit their facialists for services.
We have also heard from our community via our social media platforms that having a morning ritual is helpful to demarcate the start of the day. We’ve also seen a lot of engagement with specific facial techniques demonstrated with the spa-grade, nontoxic, nonirritating Peach & Lily Glass Skin Refining Serum. And we see a lot of people applying non-wash-off masks like a sheet mask to decompress, as you can do this while in bed or your couch — no need to get up and wash the skin.
The coronavirus pandemic has had a huge impact on our way of life. It’s changed the way we work, the way we structure our days, and it will have an indelible impact on the way we shop. Consumer behavior will be impacted by this in the future, even when we go back to “normal.” Retailers must adjust their previous ways in order to adapt to the future of brick-and-mortar and understand that, while consumers will emerge from their homes and go back to grocery stores and work, there will be a high cautiousness for their health.
Retailers should consider a two-pronged approach: First, gain the trust of your consumers and demonstrate that your store is taking every precaution to put safety first; and second, provide compelling perks and incentives to go back into stores.
Retailers can professionally sanitize their stores, ensure they’re following specific regulations and CDC guidelines, and let clients know exactly what they’re doing to prioritize safety.
Depending on the situation, the new normal for a while may be only allowing a few shoppers in at a time, and potentially even finding ways to physically lay out the store to promote social distancing. Communication will be key. In times of fear and stress, I believe clients will appreciate frequent and transparent communication on how in-store policies work and how safety has been prioritized.
— Alicia Yoon, founder and CEO, Peach and Lily