As COVID-19 uncertainty remains in France and across Europe, companies are taking stock of the social and economic impact of the past six months, and making necessary adjustments to succeed in these new circumstances.
Last month in Paris, Veeva’s in-house cosmetics industry expert David Egée hosted guest speakers Flavien Neruvy, Economist and Director of the Observatoire Cetelem, and Christophe Masson, CEO of Cosmetic Valley, to analyze the impact of the global health crisis on the cosmetics industry. The panel was attended by over 40 members of the media.
Exploring topics such as consumer trends, supply chain disruptions, and digital demand, this expert panel shared operational and marketing strategies to cosmetic companies succeed in this altered business environment.
"The question is not when the next crisis will be, because companies are almost permanently in crisis management, but what will it be? In addition to operational strategies and tools that meet the needs of different businesses, it is crucial for cosmetic industry organizations to improve their ability to evolve and adapt," concluded David Egée, Veeva's Cosmetics Strategy Director and former director of quality for Parfums Christian Dior.
Here are three major themes from the discussion.
Dramatic Changes in Cosmetics Industry from Suppliers to Production to Consumers
The discussion began with exploring how the pandemic has impacted the world of personal care and cosmetics at multiple levels.
Distribution was and continues to be brutally disrupted. Luxury brands, for which selective distribution and travel retail represent the main sales channels, were particularly affected.
Production was then hit by the lack of supply of raw materials as well as the variations in consumption imposed by shutdowns. The restrictions on travel and production forced manufacturers to temporarily interrupt factory operations.
Some brands managed to mobilize to participate in the collective effort in an emergency, notably by producing masks (for the luxury goods industry) and hydroalcoholic gel (for the cosmetics industry) - raising the question of risks related to quality or regulatory aspects for these improvised productions.
The product mix itself has been turned upside down during this period: the wearing of masks has led to a drop in the use of lipstick - 44% of women say they no longer wear lipstick, according to a recent study conducted by Slow Cosmetics - in favour of eye make-up, and hygiene products have been propelled to the forefront.
In terms of consumption patterns, shutdowns forced new channels for consumption. Online sales exploded, with 48% of French purchases happening online, including 19% for the first time. It is highly likely that these shifts will remain for some time, potentially changing the "in-person retail experience" indefinitely.
"Sustainable, Clean Beauty" Continues to Rise, Takes on Complex, New Meaning, in 2020
Veeva’s experts emphasized that this crisis heightened the need for "clean" products at the strictly sanitary level (without bacteria or viruses, despite the use of preservatives), which is often incompatible with "green" initiatives stressing sustainability and natural ingredients. How cosmetics companies will balance these competing and often contradictory consumer preferences is playing out in real time across organizations and brands.
One unexpected impact of the pandemic related to sustainability is the heightened appeal for both manufacturers and consumers of local products with short distribution channels: 48% of Europeans say they are more likely to favor local products than three years ago, and 43% think that encouraging the purchase of local products is a priority, compared with 39% in 2019, according to the latest figures from the Cetelem Observatory.
Will this lead more french cosmetics companies to shift to domestic production? When time-to-market optimization is a key issue, and requires a highly reactive supply chain, it’s an increasingly compelling prospect. “Made in France” is a compelling brand claim worldwide, and comparative labor costs are increasing elsewhere (especially in China), among other considerations. The local job market is under pressure, and factories are experiencing a shortage of technical skills that impacts all levels of production.
Keep It Simple
Consumers are also looking more closely at the origin of their purchases, calling for products that are more effective, but also simpler - both in terms of their composition and their use: lighter or even elimination of packaging, use of recyclable bottles, etc. are tending to become more widespread. The useful outweighs the futile, and the players in the sector understand that this trend, "clean beauty", or "green beauty", is set to continue.
Transparency: A Breaking Point Between Brands and Consumers
A third major theme of the discussion was transparency. Consumers are demanding, even more than before the pandemic, that their products are safe, ethically sourced and produced, and effective. They are paying closer attention to advertising and packaging claims, and expect claims to be clearly substantiated when challenged. All of this rolls up to providing greater transparency across the product life cycle, and responding quickly as consumer needs change (which they will).
Meeting this set of expectations continues to be a challenge for cosmetic brands, especially large global ones. That’s why more and more organizations are turning to cloud-based, purpose-built applications to manage advertising claims, quality, and regulatory compliance.
"Between regulatory authorities, the empowerment of social networks and influencers, and consumer protection associations, information available to the average cosmetics consumer has multiplied tremendously over the past decade," adds David Egée. "However, it is essential to correctly interpret this information: cosmetics manufacturers are regularly pointed out for the presence of substances in the composition of a product; however, if traces of impurities can sometimes be found, it is the quantity of a substance that makes it dangerous, and not only its presence.”
Learn more about Veeva’s cloud-based applications for the cosmetic industry, and consider attending our upcoming virtual Quality & Regulatory Global Summit to see how your peer companies like L'Oréal, Estée Lauder, L'Occitane and The Honest Company are facing these challenges. Register for this complimentary event today.