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Demand for beauty items appears to be holding up regardless of hundreds of millions of consumers who are not leaving their houses to battle the coronavirus pandemic.
L’Oreal, the world’s largest cosmetics company, claimed earlier in this month that first-quarter sales in China improved 6.4% in the same period in 2019, regardless of the nation’s coronavirus forced closure, which forced the economic growth to grind to a halt.
China’s economic growth has shrank for the first time in decades, leading to concern that development would slow dramatically.
The firm, whose sprawling beauty empire covers many of brands across skincare, haircare, make-up, and perfumes, claimed that worldwide sales slid 4.8% over the 3 months to March.
” However, as the example of China has revealed, the existing circumstance does not call right into question consumers’ strong hunger for charm items, which continues to be undamaged,” it stated in a declaration.
L’Oreal said that online sales have increased in China, with demand for skin care and haircare products improving during the lockdown. Demand in other categories recovered strongly as the country started resuming activity in certain industries, putting sales on track to increase by double-digits in the 2nd quarter.
Investors are betting on a speedy financial recovery from coronavirus, as businesses like Starbucks to Volkswagen reveal strategies to reopen factories as well as shops. Lessons from L’Oreal’s can raise those hopes.
“The experience in China is extremely interesting and extremely informing for other components of the world,” chairman and also CEO Jean-Paul Agon stated on a call with experts. “What we have actually seen in China is a pretty quick recover of the intake of appeal items.”
“The experience in China is very interesting and very telling for other parts of the world,” chairman and CEO Jean-Paul Agon stated on a call with analysts. “What we have seen in China is a pretty quick bounce back of the consumption of beauty products.”
The return in make-up sales has been even more steady, he cautioned, as using a face mask decreases need for those products. Still, he stays confident that consumption will return.
“It’s not a demand crisis, it’s a supply crisis. Consumers are really eager to buy all types of beauty products but they just can’t do it because the stores are closed,” Agon added.
Sales of budget-friendly high-end products – which can consist of everything from nail gloss, hair dye and mascara, to premium chocolate and confectionary – tend to carry out well throughout economic downturns, as customers look for satisfaction from small indulgences, according to a 2013 Euromonitor International record.
L’Oreal’s online sales surged during the very first quarter, jumping 67% in China and 53% worldwide to account for nearly one-fifth of team sales.
Use of skincare as well as hair care products, particularly hair color, has been resilient due to the fact that women cannot visit their stylists during lockdowns, Agon claimed. “What we are seeing everywhere right now, is that where salons are closed, sales in hair color are up 50%.”
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L’Oreal offers hair color as well as other customer items, under brands such as Garnier, Maybelline as well as NYX, in drug stores as well as pharmacies, many of which have actually remained open during lockdowns. This has helped to balance out harsher sales decreases in its professional offerings, which are sold in department srores and hair salons.
“I think personal care and beauty products will be stronger after the crisis because people will realize even more how important it is to take care of yourself,” Agon said, predicting a “rush to salons everywhere” when businesses are allowed to resume normal operations.
Still, beauty products could be the exception. Retail sales dropped 19% last quarter in China, according to data recently published, as lockdowns stopped customers from buying non-essential items from family products to new cars and trucks.
“We can only hope that the recovery happens gradually from May or June after a second quarter which will still be affected by the crisis, in particular in Europe and the US,” was quoted as saying last week.
The luxury goods firm, which owns Louis Vuitton and Hennessy relies heavily on Chinese consumer spending, however reported a 15% decline in first-quarter sales to €10.6 billion ($11.6 billion).