The economic gloom that took hold last year has ravaged the business world with such force that many companies have had to shut up shop for good. But how has the beauty industry fared during the hard times and have consumer purchasing habits changed?
If you have been living in the civilised world you will no doubt have talked about it, felt it and have been affected by it. The global credit crisis started back in 2007 and Europe was officially declared as being in the middle of a recession in late 2008. The full repercussions of the economic gloom had well and truly started to take hold by this point, however, and the housing market was not the only one in a state of disarray. Banks were collapsing left, right and centre, businesses were taking any measures to keep their heads above water and as a result unemployment figures rose considerably.
But as optimistic rumours emerge that the recession is drawing to a close, what is left of a thriving beauty industry and how has it coped during the hard times? The saying goes that beauty is pain, but is there a limit to how much financial pain consumers are prepared to go through before sacrificing their cosmetic purchasing?
Taking the rough with the smooth
The European C&T industry was of course no different than other industries and the recession took a sizeable chunk out of its sales figures. Not only this, it also had an effect on consumer purchasing trends, with many buyers trading down and choosing either lower priced beauty items or spending more on one quality item rather than buying several.
Sandra Sheals, sales director for anti-ageing skin care brand Lifestyle Aesthetics says: “What we have seen in our business is that consumers have not stopped buying but they may not buy as regularly and they may try to make their products last longer. I believe the beauty consumer will not totally sacrifice their spending but what they are doing is seeking alternative ways of looking younger. They want to know that a product is going to work before they spend a lot of money – they are now looking for added value.”
According to CTPA figures for the 12 month period between December 2007 and December 2008, the UK beauty industry was a resilient one, with year-on-year growth still coming out strong. The figures are somewhat telling with the different categories highlighting the areas that consumers are unwilling to scrimp on. Both the fragrance and colour cosmetics categories saw growth of 10.9% and 9% respectively, while the skin care category saw a loss of 1.4%. And the sub-sector that saw the biggest slide was prestige skin care, which dropped 9.2% from £366.794m to £332.945m. Sheals gives her opinion on the skin care market including fillers and treatments: “Within the prestige/non-surgical skin care sector consumers take longer between their treatments, so instead of having fillers and treatments three times a year, they make do with twice a year. The consumer is also increasingly looking for products that do what they say on the tin in order to stay feeling younger.”
In the more recent 2008 to 2009 period, when the effects of the downturn really started to hit, TNS Worldpanel data shows that the categories within the C&T industry have started to be more affected. Most hair styling markets across the Big 5 European countries were hit hard, as were deodorants and body care. But what is noticeable is that the losses were often very small and were forecast and therefore not a surprise. This indicates that while the beauty consumer has inevitably tightened the purse strings they have continued to react to the offers and promotions that savvy C&T marketers have created in order to keep a firm hold on their valued customers.
Where there’s a will ...
Debbie Hunter, director of commercial affairs at industry trade body CTPA, explains why the C&T industry is more resilient than others: “The industry is well placed to provide affordable gifts, daily essentials and the all important confidence giving appearance-related products. Companies are continuing to invest in both innovative and value for money products that provide full consumer choice at a number of price points.”
Lena White, UK distributor of the nail brand OPI has adapted its marketing policies after studying the change in women’s needs and has created special discounted offers in order to assist its customers. And it seems discounting products and offering complimentary treatments has been something of a trend during the crisis. Dove Spa, an upcoming brand in the spa market that offers treatments and products through salons and online, has created loyalty cards to keep customers coming back and has seen a boom in business during promotional periods. “In the salon market, Dove Spa has noticed guests purchasing more products in special promotional periods. A good therapist is still key to a guest’s decision on her skin care needs and the trust built up during treatments has meant a lot of guests are continuing to buy the correct products for their skin, but are now perhaps choosing cheaper professional brands rather than masstige,” says international brand development director for Dove Spa, Fran Hayter.
The fragrance category is similar where consumers continued to spend on their scent, but have reviewed the quantity and size of products bought. Sales and marketing director for fragrance house Jigsaw, Kate Morris, thinks that the crisis has affected the fragrance sectors differently: “Customers are purchasing smaller sizes of fragrances and in some instances are economising by purchasing one level lower than they normally would. Large sizes of fragrances have been hit particularly hard as women may be economising by buying a smaller size so they don’t have to do without.” However, buying cheap and opting for lower priced brands may be nothing more than false economy in tough times as the efficacy of the products may not be up to scratch. “Customers want good, basic and affordable products so we believe that investment to improve the product is key and instead we will be offering more Christmas coffrets at good value prices,” says Morris.
Beauty at any cost
What has become apparent is the sense of camaraderie that the beauty manufacturers get from their consumers. Regardless of what official statistics say, most beauty manufacturers relay the fact that the people buying their products are remaining loyal and are prepared to sacrifice the £70 coat for the £10 lipstick, with women in particular refusing to forego their cosmetic routines and the feeling of pampering. “Women will always find money to spend on beauty products, which are more affordable than clothes and yet have the same positive physiological effect,” says Morris. White of OPI agrees: “Beauty treatments are essential to the well-being of women, therefore they are not willing to abstain from them. Women will still buy the very best their money can stretch to. During any downturn in the financial world women worldwide will seek to purchase beauty items to give them that feel good factor, and this is the same for both mass and premium brands.”
As more and more financial experts appear in the media declaring the end of the recession, there is hope that the worst is over. And regardless of whether beauty consumers have been more steadfast in their purchasing habits than other industries, this can only come as good news to the C&T industry. But do the businesses feel that this is really the end, or will they be feeling the repercussions for some time? “No, I don’t think we have reached the end of this crisis,” says White, “and this is something responsible employers need to work with.”
The future’s bright
Indeed with the implications of the recession running deep, the abrupt change in consumer spending habits will be hard to overcome. “I think it will be hard to break the current mindset and we will be of a similar state of mind for a while. The economic downturn has made many people take stock and rethink their lifestyles,” says Morris. And the companies that had a steadfast following pre-recession and have gone the extra mile to maintain consumer loyalty will no doubt win out in the end, says Sheals. “Smaller brands will be removed by the recession and there will be less competition within our sector – recession tends to weed out a lot of businesses.”
CTPA’s Hunter agrees that brands that have the ability to navigate through the troubled times will no doubt have a better chance of a secure future. “Nobody is immune to the credit crisis, but companies investing in consumer value and trust are sure to grow stronger as the economy strengthens.”