Uncharted territory: Beauty navigates a new way forward amid challenges
Will consumers turn to mass retailers for their beauty needs in the midst of the COVID-19 pandemic?
While few industry observers want to talk about it, there seems to be a growing consensus that shoppers will look to mass outlets for their products for two very important reasons: price and accessibility.
Before the pandemic hit in March, the mass-market beauty category finally was showing a flicker or two of life after three years of difficult growth as more consumers turned to premier brands sold mainly through department stores. Now those department stores are closed and consumers who still want to look good — even if they are stuck at home — are taking advantage of their trips to the drug store and food store to purchase cosmetics and other beauty supplies.
No one really knows when the pandemic will end and what consumer shopping habits will be like when it does. Still, mass retailers are creating the perception with shoppers that they are here during the crisis, with good selection and price points, and will be here after it ends too.
When the smoke clears, there are many theories swirling around the future of the beauty industry in chain stores. No matter what, efforts to elevate departments have been put on hold to offset costs associated with increasing benefits and pay to employees during the epidemic.
Some think the economic crunch will drive shoppers back to the value pricing of mass stores. Retailers will be ready, stocked with the latest makeup and skin care. Others wonder if Americans — forced to work at home — might reduce beauty regimens. Liz Kaplow, founder of Kaplow Communications, doesn’t believe people will ever give up on the power of a made-up look. “Even while working at home, people got up, worked out and put on full makeup because it gave them confidence for their Zoom meetings,” she said.
Ulta Beauty’s Mary Dillon supported that philosophy in an interview with CNBC on March 25. “Many of us are on video conferences all the time,” she said. “We still want to look good in that environment.” She also gave a shout out to Ulta Beauty’s digital tool, called Glam Lab, which allows for virtual try on. Dillon also said upticks in online sales of necessities like shampoo, but also self-care, have occurred, especially with skin care and facial masks, while its stores have been closed.
Will shoppers who ran to the local CVS Pharmacy for a thermometer make a mental note of the bevy of new items stocked in beauty when they are ready for a new blush? After dashing out for a new skin care product they couldn’t buy at Sephora, will consumers stock with the No7 they purchased at Walgreens? Can Ulta Beauty’s online tools build up pent-up demand when stores open with their well-trained beauty experts at the ready? “A lot of times, people think it’s great that e-commerce is up and running, which is great, but 80% to 85% of retail sales still happen in brick-and-mortar stores,” Dillon told CNBC. “We feel that going back to normal and enjoying things you enjoyed will be high on the list of priorities.”
Certain categories will undoubtedly see renewed consumer interest, such as at-home hair coloring; nail color, as people could be slow to return to nail salons; at-home devices to duplicate spa services; and skin care, as people rethink procedures. Augmented reality apps to virtually try on beauty are expected to gain traction as testers could be a thing of the past in beauty doors. The industry waits for how it will all shake out.
In the comments below, industry executives discuss actions they took in the wake of COVID-19, such as free educational programming, and what they see happening in the months to come.
Carlotta Jacobson, president, CEW
One of CEW’s strengths has always been to offer knowledge and networking, and now that mission is more critical than ever. With the largest global database in the industry of more than 10,000 executives, CEW is in an ideal position to give back to the beauty community by offering free programming and content to both members and nonmembers.
We are producing a robust calendar of webinars that we are now offering for free. We have also opened subscription access and adapted the content of our Beauty News digital newsletter to provide timely information for brands in developing strategies to navigate these uncharted waters. In addition, we are working to create our events into digital experiences, and offering virtual member meetups and discussion forums to help people feel less isolated while working remotely.
We will continue to develop our plans to meet the changing needs of the industry over the course of the coming months. Over these many years, the beauty industry has supported CEW, and it is our priority to support them in a time of need.
Mahisha Dellinger, CEO and founder, Curls Beauty
Curls has manufactured thousands of FDA-approved KN95 masks and hand sanitizers that it has donated to local hospitals in Texas and New York City. Curls is including a free bottle of hand sanitizer with every order purchased on curls.biz. In early April, Curls will kick off a two-week series of virtual wellness seminars on Instagram led by various female experts to help practice self-care, along with recovery tactics, for when the pandemic ends.
As far as the current state of the mass beauty market and how it will change the rest of the year, beauty was thriving and is typically a recession-proof industry. Given the COVID-19 pandemic, this will dramatically change. Dark days are coming for the retail industry as COVID-19 spreads across the United States. Stores closed, larger gatherings were banned, and people spent time in homes only going out when necessary.
My message to the industry: Listen to the consumer, deliver an experience they long for, not what you think they want. Studies show that the consumer and retail executives’ opinions on key buying experiences are disjointed.
Jennifer Walsh, founder, Walk with Walsh, and wellness columnist at Good Housekeeping magazine
The current state of the mass market is in a tough spot, where many of the brands are owned by a larger entity. These larger entities often don’t have a person or face of the brand that can truly speak to a customer. Also, the mass market was not experiential and those are the brands that customers enjoyed being a part of. People are prioritizing their purchases for the long haul with so much uncertainty ahead. People will buy more food and necessities over makeup and more skin care products. People are at home and will not be seeing others, therefore less makeup, skin care and hair care is being used on a daily basis.
As for what’s ahead, I really don’t know. If a beauty brand has a strong founder voice or one that really connects people to living simply and is able to share that story and that message throughout this period, that would be ideal.
Marketing should be done with a lot of storytelling. Sharing honestly what is happening through video. Everyone is home and consuming so much content, and no one wants to feel like they are being sold to. People want to know that brands care for them and are right there with them during this time of uncertainty. The more transparent with video that you can be, the better.
The brands that do the best during this time will be communicating kindly and compassionately with their customers and doing it through all forms of video content and on the platforms that are best suited for the brand.
Allan Mottus, industry consultant
The state of the mass beauty business is mixed. Drug chains, such as CVS, are attempting to offer a greater mix of merchandise, especially in skin care. Their beauty advisors are also attempting to compete with department stores and target where knowledgeable sales personnel are reaching out to consumers in store, as well as those who are loyal, repeat customers. Vendors, such as Revlon and Coty, are beset with numerous marketing problems, and the chains are more reliant on L’Oréal, Maybelline and Neutrogena. It is time that drug chains take greater steps to offer more lines, especially as drug chains are drawing more female customers looking for wellness products.
Because of the coronavirus catastrophe, drug chains will become more important to treating and diagnosing consumers/patients, and should up their game in body and skin care. Addressing consumer needs with well-trained personnel is essential for drug retailers to carve out a more secure consumer niche as Walmart continues to do so.
I would tell retailers it is time to upgrade beauty departments and attempt to make them less prone to discounting by adding lines that are unique to them. This may include working with vendors like Target does to develop proprietary lines.
Shannon Curtin, CEO, New World Natural Brands
NPD reported skin care would fare well during the crisis as a matter of people continuing to adhere to their skin care regimen and the increased demand in hand and body moisturizers. I am seeing this in our business as our brand portfolio is predominantly skin focused, however, our specialty teas and wellness gummies are continuing to sell during this time too.
Consumers are looking for ways to adapt to the changes happening daily and are very focused on holistic health right now. The healthy beauty category — holistic beauty — will continue to grow in and out of the crisis.
Our five brands have different primary channels of distribution, however, they all started in someone’s house and online. We are fortunate that we have a solid online business. As we began thinking about our own stores and salons closing, similar to Italy, we prepared ourselves to become a direct-to-consumer, Amazon and e-commerce only business a few weeks ago.
We applaud the work that Amazon is doing to supply the demand of the U.S. population. We have been working around the clock to keep up with the changes to fulfill consumer demand differently. The work of retailers has been world class in their efforts to help consumers from their physical locations, and, as a result, our agility muscles are growing with each passing hour. Flexibility is the new normal.
We are hopeful the Senate can come to an agreement soon on ways to help businesses and the independent beauty professionals impacted by COVID-19. Our beauty advisors, stylists, massage therapists, makeup artists, aestheticians and many others in this industry that are unable to work right now are incredible, creative and caring people. We need a bridge of relief for a few weeks, so they can go back to work as soon as it is safe to do so.
As an industry, we are doing everything we can to define a new path forward in unchartered territory. I have witnessed an immense dedication to serving consumers and customers in new ways. When given a challenge, the industry has become a coalition to serve the greater good. The beauty industry specializes in care through listening and human touch, and while we may not be medical professionals, we do know how to take care of others.
Care begins with listening. We listen to consumers by asking questions while they sit in a stylist chair, by reading their reviews, by performing a Google word search, by having a conversation with a beauty advisor, by collaborating with an influencer or an affiliate. Our industry superpower is listening to what is needed and creating an action plan to resolve it.
To be clear, we are in a battle. When I worked for a big house beauty company a few years ago, I learned how to prepare for long battles. Every big and small beauty business must reforecast as if they were a direct-to-consumer and e-commerce-only business for the next eight to 12 weeks. As such, all of us are going to have to make really difficult choices to avoid a liquidity crisis. Indie brands that were once an hour by hour business are now managed minute by minute. Indie brands do not have big company problems, we have big problems for a small company. But we do have agility on our side.
The most agile and consumer-centric companies will weather the storm and recover, although we’ll have inevitable battle wounds. While on the battlefield, I use my four P’s of leadership as a guiding principle: Purpose, People, Process and Profit. We can’t lose sight of why we rise and who we rise for. This is a battle that happens every 100 years, and we are in this together.
Scott McKenzie, leader of Nielsen Intelligence and senior vice president of communications, Nielsen
As the novel coronavirus sweeps the world, companies around the globe have refocused efforts to figure out how to navigate through this very serious and turbulent time. For many drug store categories, consumer demand levels are hitting record levels and record speed. To help shed some light, a Nielsen investigation has identified six key consumer behavior threshold levels that tie directly to concerns around the novel coronavirus outbreak. The thresholds offer early signals of spending patterns, particularly for emergency pantry items and health supplies, and we are seeing these patterns being mirrored across multiple markets.
The six threshold levels based on early indicators across markets (though at different times as the virus outbreak evolves at different rates in different geographies) are detailed below. Each one correlates with different levels of consumption. For drug store players in the United States, learning from purchase habits in countries where consumers have progressed through the six threshold levels may help supply chain management in the states and regions that have been most hit with COVID-19.
- Proactive health-minded buying;
- Reactive health management;
- Pantry preparation;
- Quarantine living preparation;
- Restricted living; and
- Living a new normal.
The outbreak has caused an array of changes in shopping behavior, and we’re focused on understanding the ones that will come next, how long they’ll last — and whether any will stay with us after the outbreak is behind us. As patterns begin to emerge in response to news events of this nature, it will be imperative for companies to learn from these scenarios to sustain growth.
Mia Duchnowski, CEO and co-founder, Oars & Alps
Oars + Alps is working relentlessly to give our consumers what they are asking for — antibacterial hand products. We produced hand sanitizer sprays and hand sanitizer gels in weeks, which wasn’t our plan in early March. But given the challenging times with COVID-19, we are doing our part to ensure that people are able to keep themselves safe.
Stan Ades, CEO and co-founder, Pacific Shaving; and CC Sofronas, co-founder, Pacific Shaving
It’s an exciting and interesting time for personal care. With consumers having unprecedented access to ingredient knowledge, especially in the natural beauty and grooming categories, the mass retail world has followed suit to bring these cleaner options to the masses. No longer are these products only accessible in elite organic stores and apothecaries. Consumers are more conscious than ever as to what they are putting in and on their bodies, which, in turn, causes brands to continue to innovate and differentiate their lines at all price points.
Our customers value our commitment to develop high-quality, premium products at accessible price points, and this has contributed to our staying power at retail. We keep them coming back with innovative and effective grooming products that are unlike anything else on the shelves. Our customers know exactly what they are getting with every product — safe, gentle formulas that are effective and practical for everyday use.
Given the events surrounding the COVID-19 pandemic over the past few weeks — and what will likely be a long tale of economic uncertainty and hardship for many — I believe affordable luxuries will play a major role with respect to what is placed on retailers’ shelves this year. Consumers are understandably nervous, and tighter personal budgets for discretionary savings are sure to follow. That said, similar to the lipstick index, which suggests that consumers turn to small luxuries/less expensive indulgences during periods of economic uncertainty, the same holds true for grooming: spending a few extra dollars to pamper yourself with a superior product to help lift your spirits.
Additionally, because of the tenuous state of the economy, consumers appear to be more conscientious than ever about supporting small, family and independent businesses. Both of these bode well for Pacific Shaving, a family-run business that has been manufacturing safe and effective “affordable luxury” grooming products domestically since 2002.
Alice Chang, founder and CEO, Perfect
The impact of the COVID-19 pandemic is vast, transcending all industries.
Here is how we predict it will change the beauty industry in a year:
- A boost in online, mobile and digital connections. As we enter an era of no-touch retail, there will be acceleration in the selling process across digital channels;
- A surge in virtual try-on technology. WFH (work from home) doesn’t mean WNM (wearing no makeup). Looking good — and more importantly feeling good — becomes increasingly important during tense times, and beauty products offer an instant pick-me-up. With an increase in remote working arrangements, virtual try-on solutions will offer room for discovery and experimentation despite remote arrangements; and
- A shift in consumer shopping behavior from physical shopping to a 100% no-touch consumer journey rooted in digital connections.
In response to the challenges presented by COVID-19, Perfect has offered a variety of complimentary YouCam virtual solutions to help beauty brands quickly adopt a digital-first strategy.
This includes YouCam Augmented Reality Training Special Program for COVID-19, which offers brands a private, interactive, livestream channel for global education to help brands stay connected during a time of social distancing.
Perfect is also offering beauty brands free in-app product listings within YouCam Makeup — the virtual beauty app with over 800 million global downloads — to help brands connect digitally with beauty consumers at home.
Additionally, we are offering YouCam for Web service for brands to integrate virtual try-on technology into their website experience. All three special programs are available to beauty brands complimentary through July 31.
If sitting with brands and retailers, what three things would I say? Stay safe. Go digital, go virtual. We are here for you. Let us know how we can help you navigate the current challenges and lean into the digitally connected world
Shawn Haynes, CEO, Revolution Beauty
Uncertainty is always one of the most difficult challenges to overcome for consumers, retailers and brands alike. Our strategy during this challenging time has been to remain calm in our tone, consistent in our actions and loyal to our brand values. To our consumers that means continued conversation through social channels, listening to their needs and creating products that reflect what they are passionate about. For our retail partners that means closer collaboration and co-development of products and events that will attract our consumers to their omnichannel storefronts. For our people that comes to life by continuing to act with pace and following our values with passion as we launch, learn, react and execute.
The NPD Group
While there is uncertainty in brick-and-mortar, online platforms are poised to offset physical retail. Online captures less than one-quarter of total prestige beauty sales, but it’s a mighty force in the market; in fact, it was online growth that buoyed the overall prestige beauty industry in 2019. Into 2020, online sales continue to grow faster than in-store sales. Given the current store closures, can we expect to see more sales shift online in the weeks ahead? The beauty industry knows disruption. Yet in these uncharted waters, how do we navigate our next move and what can we do to ensure the health and safety of our consumers? We are an industry that comes together and supports the bigger purpose. LVMH is a shining example of this as they recently announced a plan to transform their perfume factories to create free hand sanitizer for European hospitals in desperate need.
This is our new normal, for the time being. The uncertainty ahead of us is unequalled, and its impact remains a question. But in the words of Maya Angelou, “Every storm runs out of rain.” When it does, we will return to life as we knew it and go back to focusing on finding the perfect lipstick shade for a well-deserved night out.