The local cosmetics industry has been particularly hard-hit by the COVID-19 pandemic. The solution is to look – and support – local.
Like many industries that have relied on importing raw materials and exporting products, the cosmetics industry has been particularly hard-hit by the global pandemic. Theresa Möller, executive director of Cosmetic Export Council of South Africa (CECOSA), believes that in order for the industry to grow in 2021, its focus needs to shift to localised supply chains.
Finding opportunities in a crisis
While exports continue to be impacted by the global pandemic, there is always an opportunity if you look for it. “It makes sense to look to local markets and the African continent, which will ultimately drive growth across our economy,” says Möller.
Like many industries reliant on importing raw materials and exporting their products to global markets, the biggest impact on the cosmetics industry has been because of supply chain challenges. “Many local cosmetics manufacturers import the raw materials they use and the packaging of their products,” explains Möller. “Without these materials, there’s nothing to make and therefore nothing to sell.”
Short-term and long-term solutions
When Covid-19 first arrived on South African shores, the cosmetics industry responded quickly, with brands pivoting their manufacturing to produce hand sanitisers, face masks and cleaning agents. Many also offered free beauty services for frontline response workers.
“We’ve also seen brands offering discounts online of up to 40%, competing with specialty beauty-product and department stores to capture promotion-oriented consumers in order to move unsold products,” says Möller. “These were the short-term shifts, but we expect a number of long-term changes to the industry as a whole.”
Leveraging market shifts
As with all change, a number of trends are emerging that have been directly impacted by the pandemic. Understanding and responding to these shifts is critical for businesses that want to remain relevant and competitive.
“There will always be fluctuations in the market based on trends,” Möller explains. “Right now, people are wearing masks. Eye-cosmetic sales increased by 150%, month on month, during lockdown. We believe this will continue for the foreseeable future. Consumer spending and point-of-sale data recorded that sales of luxury hand soap were up 800% in 2020.
“Similarly, the sales of skin, nail and hair care products were up 300%, sales for nailcare products increased by 218%, hair colouring increased by 172% and bath and body products by 65%.
“The lesson is to take the current realities of your consumers into consideration. What do they need? What are they considering essential (such as eye makeup and home hair colouring products)? What is no longer essential? These trends shift, but as long as you are paying attention to your market, you can adjust your business model and product focus accordingly.”
Möller’s advice for all businesses across different sectors is to carefully evaluate what consumers are going to consider important for the next 18 to 24 months. “Safety is going to come first, so are you communicating how and why your products meet that standard?” she says. “In our industry ingredients are important and we need to be communicating this, but there will be something similar in every industry – what do your customers need to know?”
Delivering value and supporting local
The most important pivot will be localising supply chains, however. “We have needed to take a step back and consider two things: how do we keep our local economy afloat, and where do future opportunities lie?
“The answer is simple. Right now, it’s critical that we all support local. We are working with Proudly South Africa to drive this initiative, both within our industry and across other sectors. The economy requires us to all continue trading, but we must prioritise each other. There will continue to be international opportunities, however, and businesses that can deliver products based on strong supply chains will be able to leverage these opportunities.”