Selfcare has been a staple of the pandemic for most, with more time spent indoors consumers have the opportunity to focus on their health and wellbeing. This has resulted in consumers rediscovering the convenience of online retail as all of their health and beauty needs shifted online.
The Health, Beauty, and Personal Care sector faced its challenges, yet still remained one of the most successful sectors to come out from the pandemic, with big names in the industry eager to get their hands on up and coming brands, Unilever recently announced their acquisition of ‘digital-led skincare brand’ Paula’s Choice, which was an internet skincare sensation during the pandemic.
The Health, Beauty, and Personal Care category is expected to see rapid growth and is set to add 305.2 bn USD in sales between 2021-2026. All the while, e-commerce sales growth of 12.1 % CAGR from 2021-2026 within this industry will proceed to out-pace store-based sales growth, therefore emphasizing the fundamental importance of suppliers developing their e-commerce strategy.
Over the next five years, the Health, Beauty, and Personal Care sector is set to see an increased CAGR growth of 5.3% in ecommerce sales, overtaking the Edible Grocery segment and perching itself just behind Household and Petcare goods.
A shift in purchasing behaviors
Staying indoors and practicing self-care seemed to be one of the only ways to pass the time throughout the pandemic. A recent review revealed 54% of consumers wear less makeup now than pre-COVID, indicating many consumers are now shifting their focus to skincare as their number one priority. As 56% agree, they’re more focused on skincare now than they were before the pandemic. People are spending more time at home, which means they may have more time to devote to things such as skincare and this beneficial habit is likely to continue even after the pandemic as it has now become a significant part of consumers' daily routines. These newfound COVID habits of self-care and skincare awareness are now a crucial part of consumer lifestyle that they don't want to move away from.
New habits amongst older customers contributed to a spike in online sales- primarily in anti-ageing products; with safety being the top priority, older customers who would traditionally do their shopping in-store have now become accustomed to shopping online. These new habits are a significant reason why there hasn't been a sudden influx of customers to match the opening of stores. As suggested by one of our Retail Analysts, we will see an unsurprisingly, slower transition back to brick and mortar stores.
Florence Wright, Senior Retail Insight Analyst, adds: “As shoppers cautiously ease back into pre-pandemic behaviors such as visiting physical stores, one of the key challenges for beauty retailers will be optimising their store networks to ensure shoppers feel safe, without losing the in-store experience.”
As pure-play retailers launch pop-up stores and select curated products from their online range, brands must prioritize a strong presence online to guarantee inclusion within in-store ranges. The newfound, current momentum surrounding e-commerce pushes must-have support from CPG’s. Store-based retailers depend on driving store traffic via innovative merchandising solutions, products, and digital technologies that excite and intrigue customers, enabling product discovery in-store while keeping a focus on customer safety.
Let’s not forget the innovative launch of P&G’s pop retail store in China, where they set to promote their SK-II skincare range. The augmented reality and WeChat mini-programs fought to immerse consumers in a six art anime series called VS. Meanwhile, customers outside the store joined in on the fun. They transported themselves into the animated world of VS via their phones. They too engaged in experiences and watched films alongside the consumers inside.
East London was home to Amazon's first physical hair salon, creating a space dedicated to beauty. Its 1,500 sq ft area led to the salon’s concept of hair care offers and styling services, including a perfectly picked product selection from their recently launched professional beauty store. All those attending required an amazon account to purchase products. The significance of this being, Amazon salon created the go-to place for retailers to trial the coming together of Amazon’s technology and health and beauty ranges, as Amazon had been working to enhance its online beauty experience through several partnerships with companies such as L’Oreal and their Modiface AR tool.
Target’s pharmacy click and collect orders had an uptick of 225% driven by the pandemic. It seems as though retailers are pivoting to treating individual stores as fulfilment centers making sure in-store availability is present. The seemingly never-ending development of store-based fulfilment options will place retailer supply chains under immense pressure- suppliers are expected to support and sustain this complexity by increasing their agility and responsive logistics capabilities, ensuring sufficient in-store stock positions.
Enhancing online content
For the majority of us, more time at home means more time to spend on our phones, which is why more than ever, online content matters. Images and visual content have become the forefront of online shopping, and businesses need to take that extra step to create compelling content for their consumers. While this can be difficult depending on the retailer, it is important that content is not just meeting the bare minimum. It has to be presented to the shopper the way they would want to see it. Therefore, it is crucial to keep in mind target audiences and how to effectively communicate messages effectively to the target audience.
“Targeting reviews within the last week is ideal, and that's because you know once the review starts to move out in time you're not aware, especially if you're ordering from somewhere like Amazon or from a big box store”-Natalie Stein, Retail Insight Analyst.
Ensuring ratings and reviews are up to date is crucial as they play a significant factor in consumers’ decision-making. Specific product features could have changed, for example, the formulation or the packaging; there’s a lot of different things that could impact the customer’s experience with the product to make it different from what somebody had three months ago. Brands should consider making sure that content both online ratings and user-generated is complete to better convey the product’s value.
“Ratings and reviews are incredibly important because they really do drive the perception of the product. Something that we've talked a lot about with our clients recently is just an overall push for recency to be important so getting reviews within the last month on a product and really targeting within the last week” - Megan Nieves, Retail Insight Analyst.
Megan also added, “updated and recent reviews reassure consumers that the same product is coming off of the same palette and is the same formulation. You know it has been stored in the same way. When it's a closer review, you can be confident that in theory, if I order it today and this review was left yesterday, then maybe I'm getting the same product that this person had. However, if I'm ordering it today and the last review is three months ago, things could have changed.”
Finally, we are seeing a lot of growth in terms of site functionality. Target recently launched a virtual beauty concierge, which allows customers to directly message for insight and direction into products they may like. Innovations like this are going to help improve the site experience and begin to make it feel more like the experience of in-store service levels when shopping online.
A growing challenge for brands is managing their trade spend across physical and digital formats. While the spending on online advertising continues to climb, in-store trade spending requirements are not decreasing proportionately. Additionally, the multitude of intermediaries (3rd party delivery social commerce) and Google seems to be an integral cog in the complex machine of digital commerce - they all, unfortunately, have their spending requirements, forcing brands to stretch their budget across many players. With the online beauty industry continuing to see growth, brands, and manufacturers that prioritize spending on their e-commerce business models may find that they gain the most in the coming years.