COVID-19 and the changing face of the business of beauty — from sanitized salons to DIY kits and acquisitions
- The beauty industry in India, projected to be worth $20 billion by 2025, was one of the sectors whose path was redefined during the coronavirus pandemic.
- With people staying away from salons, quick home solutions became important.
- The future of the beauty industry has got a digital push with the pandemic but it might not be enough for a behavioural change.
The beauty industry in India, projected to be worth $20 billion by 2025, was one of the sectors whose path was redefined during the coronavirus pandemic. The lockdown led to salons shutting down, and even as they began reopening in phases, the situation remains cautious. Work from home and lack of social gatherings meant lesser business for the salons. Also, people remain wary regarding the safety of getting any beauty procedures done outside.
Here’s what worked in the beauty industry
So, the beauty industry has settled for the simpler things – people took to self-grooming as they spent time at home. In a recent YouTube chat, Janki Gandhi, Managing Director, Consumer retail investment banking division, Cross Markets Group, Goldman Sachs said that the categories that did well globally were skin, hair and personal care. “Even within those, it's really subcategories that are more health and wellness oriented, self-care where people finally have time at home have gravitated towards those categories,” she said during the chat.
|Green, clean natural products||Hair colouring and hair care||DIY products, bath and body wash products|
Even products that one can use while wearing a mask – eyeliner, concealers, mascara saw a steady demand through the global lockdown phases, she said while adding that heavy make-up products saw a slowdown as people weren’t going anywhere. “Certain categories have been reinvigorated during this time like nail, grooming and devices,” she said.
Beauty e-commerce during lockdown
In the last one year the beauty and wellness category in e-commerce has been one of the fastest growing sectors. “Beauty & wellness is one sector that has witnessed an unprecedented order volume growth of over 130% as compared to the last year. This is more than six times the overall e-commerce growth,” said a report by Unicommerce on India’s online retail market.
That explains the fast rise of beauty retail startups like Nykaa, which has solidified an online as well as offline presence. The beauty e-commerce platform has also announced major sales and forayed into the home and travel care essentials category during the past few months.
“We have seen favorable trends in customer buying behavior including higher AOVs (average order volumes) as customers are willing to spend more on platforms such as Nykaa. While personal care is growing for us, we are seeing an overall return in demand across traditional categories such as make up and are currently tracking higher than pre-lockdown numbers,” a Nykaa spokesperson told Business Insider.
At home, Do-It-Yourself
With people staying away from salons, quick home solutions became important. As non-essential deliveries began, trimmers and grooming devices saw a surge in demand across e-commerce platforms like Amazon, Flipkart, Snapdeal and Paytm Mall.
The beauty and wellness category has seen a 57% jump in demand in June 2020 as compared to February 2020, according to the Unicommerce report.
From women resorting to YouTube tutorials to cut their hair to taking care of their own beauty needs, DIY kits are the flavour of the season.
“In our case things came back to business-as-usual on the skincare and haircare fronts. People were ordering a lot more of specialist solutions, face packs, scrubs and creams. Our skin care kits are seeing excellent demand. These have always been about DIY skin care at home, and therefore ideally suited in a "locked down" environment,” said Shankar Prasad, Founder of beauty and wellness startup Plum.
And for those not indulging in DIY, home services came to the rescue. Even in men’s grooming, after months of growing out their hair, men's haircuts become the most in-demand service for a home services startup Urban Company.
“Relatively speaking, men’s grooming people tried DIY, but cutting your hair is fairly problematic so its rebounding faster and that category has grown five times from where we were pre-COVID, but their consumption in beauty beyond that is limited,” said Mukund Kulashekaran, SVP of Business, Urban Company.
For women, Kulashekaran says its a mixed response as the main trigger for demand has been the need to go back to office or festivals. “Otherwise people will make-do for sometime with alternative versions of waxing for instance. I would say one in two women are being safe even now. However, Delhi has come back for us to 70-80% of pre-COVID levels while Tier II and III cities, which haven’t yet really seen the impact of COVID-19, have bounced back 100%,” he said.
The future – Will we go to the salon?
As salons open up and pictures of beauticians wearing full gear – PPE kits, face shields, and masks, trend on social media — the question remains, whether people find it safe to venture out.
Experts believe that while at-home solutions will continue to reign supreme for another year, it's too short a time to change behaviour. And people will turn to stylists soon. “Making yourself look good is not an easy task. There’s a reason why people have been opting to go to stylists over the years. As soon as aspects of socialization come back, people will go back to salons or ordering services at home. In the near future, consumption will remain low but I don’t see people replacing it,” said Kulashekaran.
And when it comes to the sale of beauty products, companies will have to look at an omnichannel strategy as especially with beauty products people would want to try before buying – it’s very experiential. “COVID-19 has accelerated the jump to digital buying by a few years. This kind of push has made people somewhat agnostic to where they are buying their products from. It will be interesting to see how brick and mortar plays into this omnichannel strategy,” said Gandhi in the Goldman Sachs chat.
M&A activities will grow
From a business perspective, mergers and acquisitions in the beauty industry too are set to grow. The Goldman Sachs exec said that globally companies are aggressively pursuing opportunities in the space, which will help them modernise their business and become category leaders, technology-driven, or tap into a new market.
In India too, deal activity has been seen in the beauty and wellness category. Earlier,the beauty marketplace MyGlamm had acquired the Priyanka Gill-led startup PopXO. Most recently, Lotus Herbals acquired the whole business of the startup SoulTree. “We have been scanning the market for a premium certified organic Ayurvedic brand that resonates with modern consumers and SoulTree checked all the boxes,” said Nitin Passi, Joint Managing Director of Lotus Herbals.
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