With the exception of a few industries that specifically leverage online audiences, very little has been left unaffected by COVID-19. The beauty industry is no exception. This month, we look at the trends leading up to the COVID crisis and speculate on where the industry may be headed. The beauty industry as a whole has been continually expanding due to rising disposable income, and increased concern related to appearance and presentation.1 Will the COVID crisis change the trajectory of the market, or can we expect to see similar trends in the future?
Current Trends and Potential Shifts
While COVID will surely have an impact on the skincare and the larger beauty industry, we expect that at least some of the existing trends leading up to 2020 will still remain relevant. As a starting point, let’s look at three major trends within the industry.
- CBD Products
- Social Media Marketing
- Clean/Natural and Vegan Cosmetics
Cannabis and, more specifically, CBD products have been trending in the skincare and beauty product market for some time now, especially among the smaller companies. The space is still new, with Canada just recently opening its doors to cannabis. There is some lack of clarity on how regulations will play out, especially in the United States, where regulations vary state by state. This confusion allows smaller brands to get a head start in this space as regulatory risks may keep some larger players out.2 However, now the larger industry is starting to embrace CBD, as companies like Sephora are beginning to enter the space. As regulations become clearer in Canada and in some of the legal States in the US, more companies will be incentivized to step in to take advantage.3
Social Media Marketing
As the demographics of consumers change, advertising is also shifting. While traditional advertising via television and newsprint is still king with the older generation, many of the younger consumers can no longer be reached as effectively. Adults who have never subscribed to a traditional pay-TV are now 12%4, who now outnumber cord-cutters who once subscribed but are considering unsubscribing. The never-cord demographic is likely only going to increase as online content continues to expand, and competition in this arena is fierce, pushing innovation. Social media played a relatively small role in advertising for skincare and beauty products, but the trend has shifted significantly in the last decade. Instagram influencers, media packages, and product openings have now become a staple for smaller brands and are beginning to become mainstream.
Lastly, clean cosmetics have become an important keyword in cosmetics marketing today. While the term has come under scrutiny for its lack of a clear definition from the industry, the concept has resonated with many consumers. There are several related trends such as vegan cosmetics, cosmetics with fewer preservatives, and cosmetics with fewer ingredients. They all have their own positives and negatives, but as the term becomes more defined, more brands will jump on this train.
There were good reasons for all of these trends to emerge, and none of them have changed as a direct result of COVID. We expect these trends to continue, and social media marketing may even see a boost with more people staying indoors more.
The COVID Curve Ball
The other side of the argument is that perhaps COVID really is a once-in-a-lifetime event that changes many fundamental assumptions about the market. COVID-19 has caused a halt to the global economy, and we are likely to see further aftershocks for months and perhaps years to come. Across all sectors, there are immediate impacts that can be felt due to the fallout.
- Labor shortages
- The shutdown of cosmetics stores
- The shutdown of manufacturing plants
Additionally, since we are part of an increasingly interconnected network in today’s global economy, there are likely to be impacted further downstream that are difficult to measure. Some examples may include:
- The financial squeeze on consumers and reduction in the budget for all expenses, including skincare products
- Less public exposure and less demand for sunscreen or makeup products
- A shift in the long-term purchasing habits of consumers
As the global economy tips toward a recession, its general impact will inevitably affect the beauty product market. While there are many unknowns, the overall trend will likely be downwards. The mid to high-end brands may lose, and this may have an effect on how various brands choose to market themselves. We may see some new trends in the industry focusing on cost-effective products or a cut or change in marketing strategies. This might also accelerate the move towards more online and social media marketing as well.
COVID-19 can also present a significant disruption to a person’s life. This might be a tightening of the budget strings as unemployment rise. Some people will change careers. Marketers know that major life events are opportunities to change a person’s purchasing habits. We may see a new kind of trend come out of the crisis.