The Impact of Coronavirus on Beauty and Personal Care

April 2020

This report examines the early impact of and short-term outlook for the Coronavirus (COVID-19) global pandemic on the beauty industry. Consumption patterns, channel dynamics and beauty routines are seeing inevitable shifts as a result of lockdown measures, selective retail, business and salon closures, and travel restrictions. As seen in previous crises, staple toiletries will show more resilience, while discretionary beauty and the premium segment will suffer in the short and longer term.

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Key Insights and Considerations

Grappling with immediate losses and disruption

As an immediate priority, attention turns to bottlenecks around supply chain operations, including raw material sourcing, excess inventory, product availability and manufacturing facilities, to address newly challenged supply and demand scenarios. With tighter border controls, re-localising sourcing and production will be an inevitable outcome in the longer term, alongside streamlining through automation and better integration. Proximity stands to benefit overall costs and speed of delivery, but also supports other overarching and prevalent issues of sustainability and ethics.

New channel perspectives

Diversion from offline to online is an immediate necessity but building on the digital activation and omnichannel strategies already observed pre-COVID-19 will need a refocus in the context of a more pronounced need for virtual experiences alongside new points of sale within social networks and livestreaming. outlet numbers, in-store experiences and product curation, given that physical shopping is still a much preferred choice for many consumers, including the all important Gen-Z.  While online will inevitably gain a larger share after the pandemic, stores will need to reinvent in terms of

Assessing longer-term attitudinal and consumption shifts

With many consumers likely to retain home habits even after the pandemic-linked recession, catering for those needs in the form of product formats, accessibility and experiences will need nurturing. Considering the economic impact of the crisis and more cautious spending patterns as a result, new stories around premium attributes will need reinforcing, both for essentials and discretionary products, to sustain business momentum and potentially commercialise completely new opportunities. Premium brands will have to show greater flexibility in terms of channel mix and turn to retail avenues previously outside their immediate comfort zone, as well as endorse the concept of ‘affordable luxury’ more strongly.

Introduction

Scope
Beauty and personal care and COVID-19
COVID-19 in context

Economic Outlook

Global GDP is likely to contract in 2020 under the baseline scenario
The COVID-19 pandemic impacts both supply and demand
In our baseline view, the pandemic peaks in June 2020
Three scenarios examine the impact of a more severe outbreak
Our view in short
Forecasts for Real GDP growth in 2020 under different scenarios
Financial markets on risk-off mode as COVID-19 entered Italy
China: an early glimpse into the economic cost of the virus
COVID-19 highlights need for supply chain diversification
Fiscal stimulus a challenge with restrictions on expenditure
What could alleviate the economic effects of the pandemic?
What could exacerbate the economic impact of the pandemic?

Industry Impact

Beauty among top 10 negatively impacted fmcg industries
COVID-19 impact at a glance
COVID-19 impact at a glance cont’d
Routes to disruption
Macro environment sets another recession-like scenario for beauty
Channel: online offers a lifeline but can’t fully cushion the blow
Beyond immediate challenges, supply chains need reconfiguring
The five-step consumer progression of COVID-19
Consumer behaviour and consumption patterns shift to digital
Varied cross-category impact in the short and longer term
Premium dynamics to enter another bumpy phase
Premium vs staples: learnings from the 2008 Global Financial Crisis

Geographic Impact

China’s BPC market sees signs of recovery but vulnerability to persist
India: BPC’s second largest growth engine may be at stake
The US to see significant shifts in beauty and personal care distribution

Corporate Response

Main priorities and challenges for b eauty players in 2020 and beyond
Geographic exposure not the only consideration to factor in
Shiseido: maintaining momentum in China is main focus
L'Oréal suffers high exposure to key markets hit by COVID-19 outbreak
Unilever to fare well on the back of solid portfolio of mass toiletries

Conclusion

Outlook: reset of priorities and values triggers a strategy rethink
Finding opportunities amid adversity and creating new relevance
Key insights and considerations

About Our Analytic Capabilities

About Euromonitor International’s Macro Model
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