As if the past few years haven’t been challenging enough, the beauty industry is facing another major challenge on the horizon: inflation. Big brands like Proctor & Gamble have been raising the prices of grooming, skin care, and oral care products because inflation rates are taking a hit on the company’s profits. Colgate-Palmolive, Kimberly-Clark, and other beauty brands are following suit, especially as the prices of raw materials, packaging, and transportation continue to shoot up.
The entire beauty industry must adjust accordingly to survive the steadily rising inflation rates. So if you want your business to power through the inflation, here’s what you need to know:
The State of the Beauty Industry in 2022
The inflation rates in various countries are reaching record highs, consequently affecting the performance of various industries. According to NielsenIQ, the beauty industry is dealing with a 10% average unit price increase every year, with colour cosmetics and nails, facial skincare, and haircare taking the lead. These price increases are undoubtedly shocking, but it’s been caused by a decline in promotions, premium offerings, as well as changes in product mixes. These price increases will definitely take a toll on financially-constrained consumers, which is why businesses need to adjust their business strategies for inflation.
Inflation Survival Strategies for Beauty Businesses
Manage your business expenses
It’s hard to ignore the rising prices of raw materials, packaging, and transportation, especially if it’s taking a bite out of your profit.
Since these factors can affect the quality of your product offerings, you and your team need to adjust your financial management based on the recent trends. AskMoney, which has several guides for money management during inflation, recommends performing audits and refinancing loans so that individuals can properly manage both their personal and business finances. By assessing your business’ financial needs and performance, you can reduce costs on utilities and other expenses to maintain your products’ quality.
Develop a pricing strategy
If you need to cover more operational and manufacturing expenses, it’s time to adjust the pricing of your goods and services.
Considering the rising costs of labour and raw materials, Unilever has increased its prices by 4.1% in the third quarter of 2021. Unfortunately, it is estimated that the inflation rates will continue to worsen this year, thus hiking the prices of cosmetics and personal care items globally. Though you may risk losing consumers by raising your prices, this may be a necessary move so that you can maintain the performance of your staff and the quality of your products.
Stay up to date with the industry
You can survive inflation and develop innovative strategies in the process by staying updated with industry trends.
It’s definitely not a wise idea to copy your competitors’ top-selling products and services, but you can learn a few best practices by keeping up with the industry. To illustrate, Beauty Business Journal provides strategies and wisdom that can help you in marketing, e-commerce, and other aspects of your business. By reading about the best practices of your competitors, you can leverage various online tools, get investors, and boost your brand awareness, even during inflation.
It can be tough to find a compromise between the rising prices of goods and the demands of your consumers. As such, it’s crucial to arm yourself with information so that you can carry out the best survival strategy for your business.
