Question

Marketing Short Essay (300 words): Problem exploration

**Needs reference sources as articles and company databases

Question: explore the problem of beauty brands (in sales, marketing strategy, etc...) in Australia during Covid-19 and specifically for male consumers.

Answer 1

The global beauty industry (comprising skin care, color cosmetics, hair care, fragrances, and personal care) has been shocked by the COVID-19 crisis. First-quarter sales have been weak, and there have been widespread store closures.

COVID IMPACT-

Even though the economic magnitude of the COVID-19 pandemic on brands and retailers will be far greater than any recession, there are signs that the beauty industry may once again prove relatively resilient. In Australia, the industry’s February sales fell up to 80 percent compared with 2019. In March, the year-on-year decline was 20 percent—a rapid rebound under the circumstances. In a variety of markets, consumers report they intend to spend less on beauty products in the near term (largely driven by declines in spending on color cosmetics) but more than they will in other discretionary categories, such as footwear and clothing . Noting the uptick in lipstick sales seen during the 2001 recession, Leonard Lauder of the cosmetics company coined the term “lipstick index” to describe this phenomenon. The principle is that people see lipstick as an affordable luxury, and sales therefore tend to stay strong, even in times of duress.

The long-term impact of COVID-19 on the beauty industry

Some changes resulting from the COVID-19 crisis are likely to be permanent. Here are three areas in which the pandemic could alter the beauty industry in fundamental ways:

• Digital continues to rise. Pre-COVID-19 trends will likely accelerate, with direct-to-consumer e-commerce, such as brands’ websites, shoppable social-media platforms, and marketplaces becoming more important. Across the globe, consumers indicate they are likely to increase their online engagement and spending. Beauty-industry players will need to prioritize digital channels to capture and convert the attention of existing and new customers. On the operations side, the use of artificial intelligence for testing, discovery, and customization will need to accelerate as concerns about safety and hygiene fundamentally disrupt product testing and in-person consultations.
• The pace of innovation accelerates. As the COVID-19 crisis has shown, the world can change quickly, bringing substantial shifts in demand. Sometimes, supply cannot catch up. Even before the pandemic, brands were under pressure to overhaul their product-innovation pipelines, inspired by the ability of digital-native direct-to-consumer brands to go from concept to cupboard in less than a month. Now, the need for speed is even greater. To achieve it, there may be a greater role for contract manufacturers, both to diversify (and thus reduce production risks) and to serve as thought partners in product innovation. There is also potential for closer collaboration—among brands and retailers, in particular—through data sharing and inventory pooling.
• M&A rises as multiples fall. With the COVID-19 crisis causing significant damage to the balance sheets of brands, retailers, and suppliers, many companies will need to find new sources of capital. At the same time, given the hits to revenues and the global economy, multiples could fall from precrisis levels, when some brands were trading for more than eight times revenue or 10 to 15 times earnings.

While the beauty industry may be in a relatively stronger position than other consumer categories, 2020 will be one of the worst years it has ever endured. We believe, however, that the industry will remain attractive in the long run. The COVID-19 crisis is likely to accelerate trends that were already shaping the market, such as the rise of the global middle class and the use of e-commerce, rather than mark entirely new ground. Consumers across the globe are showing by their actions that they still find comfort in the simple pleasures of a “self-care Sunday” or a swipe of lipstick before a Zoom meeting.

CONCLUSION

Even before the pandemic, the definition of “beauty” was becoming more global, expansive, and intertwined with individuals’ sense of well-being. The COVID-19 crisis is not likely to change these trends—and in that, there is reason for hope.

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