Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

Beauty

India’s beauty industry was booming in the past decade, growing faster than US and estimated to be worth $ 20 billion by 2025. The expanding urban population would throng expensive salons and spas for pampering themselves without feeling the pinch. The pandemic usurped the narrative of this unparalleled growth story and completely changed the industry norms.

Shift in product preferences

India’s cosmetics industry generating a revenue of $US 6 million and ranking 4th globally took a hit. Since people are working from home and large gatherings and events have been postponed indefinitely, sale of expensive cosmetics dropped, and consumer spend shifted to self-care and grooming products with a special focus on natural products. DIY skin-care kits are high in demand and sale of grooming devices like trimmers, have increased across online platforms like Flipkart, Amazon, etc.

Shift to online mode of purchase

Online sales of beauty and wellness products have been soaring in the past year with an unprecedented growth of more than 130%, according to a Unicommerce report. The claims are evident in the meteoric rise of online beauty retail startups like Nykaa, Purplle, etc. Consumers have migrated to online platforms for buying beauty products post Covid-19. According to a spokesperson from Nykaa, their order volumes have increased, personal care is high in demand and there is a gradual rise in demand for traditional beauty products like make-up. Nykaa is already experiencing a trade volume higher than pre-lockdown period.

Salon at home

The salon and spa experience is essentially touch-centric and hence people are reluctant to return. Despite many salons opening up with adequate safety measures in place, consumers are hesitant and have instead shifted to summoning beauticians at home through online portals like Urban Company. Mukund Kulashekaran, SVP Business, Urban Company said that they were experiencing five-fold surge in demand for men’s grooming services, while women-centric services revived up to 70 – 100% from pre-Covid levels. He added that the numbers vary regionally with lesser demand in metros and higher demand in Tier II and Tier III cities.

Is the future of salons at risk?

Salons offered a service that was all about making the customers not just look but also feel good. However, it is not an absolute necessity and hence people might avoid returning to salons for some time, until they start going out. Once people are back socializing and going to work, they will venture out to salons as well. Experts are of the opinion that consumers will avail beauty services at home for about a year but once the vaccine or cure is available, they will return to salons. Firstly, one year is a not adequate time to change consumer behavior completely and second, people love to be pampered and look gorgeous. So for salons, its more about weathering the storm and surviving until consumer confidence is restored.

Mergers and acquisitions

An executive from Goldman Sachs opined that globally, large companies are looking for opportunities to foray into new market and use technology to better their market position. Mergers and acquisitions are thus expected to grow in the industry. Few instances from India include – MaGlamm acquiring PpoXO, a startup led by Priyanka Gill and the latest is, Lotus Herbals acquiring the startup SoulTree fully.

Overall the picture is not bleak for India’s beauty industry. Yes, the cosmetics industry growth rate projection has dropped to 4.23% CAGR and several tectonic shifts have taken place, but all is not lost. Consumer demand is seeing a steady growth and services (although at home) are picking up. Businesses just need to think innovatively and act fast to meet changing customer needs, to survive the current phase.

To read the Business Insider article click here

https://www.businessinsider.in/business/news/covid-19-and-the-changing-face-of-the-business-of-beauty-from-sanitized-salons-to-diy-kits-and-acquisitions/articleshow/77972919.cms

References:

https://www.statista.com/outlook/70010000/119/cosmetics/india#market-globalRevenue

https://www.mordorintelligence.com/industry-reports/india-cosmetics-products-market-industry

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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