Mar 23, 2020: Elisabeth King reports on this week’s business news

Safety bubble: Skincare one of the top five most popular online categories in Australia; Coty to fast-track e-commerce; and social distancing to push media consumption 60 per cent higher.

Safety bubble: Skincare one of the top five most popular online categories in Australia

Although makeup sales are predicted to take a hit amid lockdowns and home-based work practices worldwide, Euromonitor believes that skincare will weather the storm better and recover far quicker as the situation improves. Online beauty sales in China were already huge - 30 per cent of retail sales volume for skincare and 38 per cent for colour cosmetics in 2019 - and brands have been pushing health and nature-based benefits during the COVID-19 outbreak. Many have continued to advertise and promote their products, live-streaming events and placing strong emphasis on uninterrupted delivery.

A new Australian survey conducted by Cint, the world's largest sample exchange platform, for Klarna, the Swedish buy-now-pay-later app which recently launched in Australia, has revealed that the five most popular categories for Aussie online shoppers are - takeaway food (71%), groceries (60%), clothing and fashion (54%), entertainment (52%) and cosmetics and skincare (50%).

According to US analyst, Michael Goldsmith of UBS, the Swiss multinational investment bank, beauty doesn't suffer as much as other categories when times are tough. He is not talking about the Lipstick Index, a term coined by by Leonard Lauder in the early 2000s. That myth has been debunked many times yet remains a zombie concept.

The real safety bubble for the industry is skincare, haircare and bodycare. Women wear less makeup when they are confined to the home, but keep up their skincare, hair and body pampering routines. Goldsmith rightly points out that keeping your body healthy and in top condition gives an immediate positive response from a purchase.

Coty to fast-track e-commerce

The sale of its professional division is only one challenge facing Coty at the moment. The third largest beauty company in the world now expects its net revenues for Q3 to decline by 20 per cent, but believes there is light at the end of the tunnel with an estimated increase in sales during Q4. The multinational is one of the world's largest fragrance makers and plans to manufacture more hand sanitisers during the COVID-19 crisis in a similar move to its major competitors. Online sales are also expected to pick up some of the slack and Coty are focusing on increasing global e-commerce sales.

Amazon sales in the US have doubled in recent weeks and the online titan has announced it will be hiring 100,000 more workers. The US will be a major target for Coty and the company expects to gain another uplift in online sales when the Kylie Skin brand rolls out in more European countries. The multinational is also confident there will be a surge in demand in Asia when the COVID-2019 outbreak flattens in the region.

According to Chairman, Peter Harf: "We are very confident in Coty's ability not only to navigate well through this crisis, but also to exit stronger, as the management continues to reduce its costs aggressively and to accelerate top line initiatives".

Social distancing to push media consumption 60 per cent higher

Across the board long-term habits are changing because of social distancing. Visits to supermarkets have increased, more people are ordering meal delivery kits and bottle shops are experiencing Christmas season levels of spending. As more people work remotely or are confined to their homes, Nielsen analysts expect media consumption to jump by 60 per cent.

But the usual suspects - binging streaming content, watching movies and keeping up with the news on social and legacy media - have been joined by other uplifts in consumption. According to a US report from Catalina Marketing, other categories that help people to pass the time have also been given a shot in the arm. Book sales have increased 42 per cent and magazine sales have risen 8 per cent over the past two weeks.

Games, puzzle and toy revenues have surged 23 per cent and 22 per cent, respectively. YouTube viewing is also up, where beauty tutorials attract millions of eyeballs. And the oldest form of after-dark recreation in the home has produced a 25 per cent - ahem - rise in condom sales.

Snippets from the Wires

  • L'Oréal has come out swinging in the fight against COVID-19 in Europe. The world's largest beauty company has donated one million euros (AUD$1.85 million) to its partner non-profit organisations, in addition to providing hygiene kits. La Roche-Posay will up its production of hydro-alcoholic gel production to provide partner hospitals and pharmacies with hand sanitisers free-of-charge. Mass market skin and haircare brand, Garnier, will provide its European food distribution partners with complimentary hand sanitisers as well.
  • With more Australians turning to e-commerce, parcel delivery has always been a bit of drawback. But, according to CouriersPlease, 72 per cent of online shoppers believe that parcel delivery has greatly improved over the past three years. Nearly two-thirds credit parcel tracking as the cause of the confidence lift.
  • Companies who manufacture fragrances, such as LVMH and Hermes, have adapted their production facilities to make hand sanitisers. The reason being that fragrance contains alcohol and the key component of hand sanitisers is an alcohol content of 60 per cent. In the US, the UK and Australia, a growing number of craft distillers are also making the switch from making spirits such as gin to anti-bacterial gels.
  • Planet Organic, the UK health and beauty retailer, has acquired rival As Nature Intended, which also has a considerable beauty business. The buyout and new shop openings will make the merged company the largest speciality organic retail group in the UK.

Image source: The Beauty Fridge