L'Oréal suspends 2020 guidance; Catch.com.au reports 233 per cent lift in health and beauty sales; eBay waives fees for current and new sellers; and electrolytes set to be new skincare trend for 2020.
L'Oréal suspends 2020 guidance
What a difference a turbulent few weeks can make. In February, L'Oréal remained confident it could still outperform the global beauty market this year. But following a 5 per cent drop in first quarter sales, the world's largest beauty player has re-scheduled its annual general meeting from April 21st to June 30th and suspended its 2020 guidance due to "a lack of visibility".
Yet few companies illustrate the divide between the two major sectors of the beauty industry - prestige and mass - more clearly than L'Oréal. Mass and masstige products form the bulk of beauty sales by a huge margin - here and overseas. L'Oréal Paris is the world's number one beauty brand and one-in-four makeup products sold in Australia bear the name Maybelline New York.
During the COVID-2019 crisis, the major retailers of mass and masstige brands - pharmacies and supermarkets - remain open as essential businesses and are also leading online retailers in Australia and worldwide. Even in the normal times, they are Australia's number one and number two beauty retailers through major chains such as Priceline and Chemist Warehouse.
The 5 per cent drop in sales for L'Oréal in Q1 is also far less than the declines forecast for Sephora - about 10 per cent - and its parent company, LVMH, the world's largest luxury goods company - 20 per cent.
According to Bloomberg, the financial media powerhouse, the stability of L'Oréal's mass market brands such as Garnier, L'Oréal Paris, Maybelline and more tend to insulate the company from economic shocks. More so, as many analysts are predicting that consumers may switch to lower-priced skincare, haircare and cosmetics brands during the COVID-2019 outbreak.
L'Oréal is also seeing very positive signs of recovery in China, in addition to a lift in e-commerce sales which already accounted for 13 per cent of its global sales prior to the current crisis. The renewed emphasis on healthy skin could also benefit key brands such as La Roche-Posay, CeraVe and Kiehl's.
Catch.com.au reports 233 per cent lift in health and beauty sales
As Australians practice social distancing and are working from or staying at home more, online retailers are reporting major surges in sales. Not surprisingly, online grocery sales rose over 45 per cent to early March, reveals Roy Morgan Research. Online retailer, catch.com.au, has also experienced a significant uplift in site activity over the past month.
Last year, Wesfarmers, whose subsidiaries including Bunnings, Kmart and Officeworks, bought catch.com.au for $230 million. The company is run as an independent business unit, but benefits from being under the leadership of Ian Bailey, Managing Director of the Kmart Group. Health and beauty sales are always a major activity for catch.com.au across mass and prestige brands and the online retailer has reported that sales have soared 233 per cent over the past few weeks.
Revenues from household goods are up 290 per cent and sales of pantry goods, including pasta, noodles and rice, have increased 234 per cent. Like supermarkets, catch.com.au and other major marketplaces have introduced purchasing limits on high-demand goods such as wipes, soap and sanitisers.
eBay waives fees for current and new sellers
While some beauty brands such as Glossier have built a cult following by selling directly to consumers, other indie companies have looked to bricks-and-mortar retailers and haven't relied or don't have the capacity to switch to e-commerce. Last week, Douglas, the largest perfume and cosmetics chain in Europe, granted access to its online marketplace to retailers and brands to fast-track their online business more rapidly and expand their reach. The beauty giant has also taken the opportunity to expand from beauty and fragrance to accessories, jewellery, home decor and lifestyle products.
In Australia, eBay is also supporting smaller brands and retailers through an initiative called - Always Open on eBay Australia. The online marketplace is allowing eligible existing sellers to defer fees for 30 days and is removing listing fees until June 30th to allow them to add more products at no added cost. New sellers who wish to open an eBay store will have selling fees waived for three months to establish and grow their online presence.
Electrolytes set to be new skincare trend for 2020
Beauty is a definitive trend-driven industry. Indie brands and multinationals are constantly on the lookout for the next big thing at all times. As far as hydration is concerned, the darling of the past few years for mass, dermo-cosmetic, cosmeceutical and prestige brands alike has been hyaluronic acid.
Most of us are familiar with electrolytes through thirst-quenching sports drinks and mineral waters. There's also widespread awareness of their mineral components - potassium, magnesium and calcium. They conduct electricity when mixed with water and this helps the cells to regulate water balance in the body.
Electrolytes are being tipped as a major skincare trend for 2020. Not only do they help to hydrate the skin, they also boost the performance of other hero ingredients such as vitamins and ceramides.
Moisturisers and hydrating masks are obvious candidates for electrolyte-infused skincare, but they are also being used in concealers and primers. Another major benefit is that they help to boost the skin's barrier functions.
The prime job of potassium is to reinforce the skin's barrier by working with lipids in the skin to produce more balanced hydration. Calcium is a well-known humectant and attracts and holds moisture to the skin's upper layers. It also plays a crucial role in the formation of new cells. Magnesium has three major benefits - energising skin cells, improving hydration and speeding up the skin's natural shedding cycle.
Snippets from the Wires
- Perfumes are central to the growth of L'Oréal's Luxe division. Last year saw a swathe of major releases such as Lancome Idole, YSL Libre and Valentino Born in Roma. The multinational has completed the acquisition of the Clarins Group fragrance division, including designer brands Mugler and Azzaro, which delivered revenues of US$356.4 million in 2018.
- Shiseido's sales have rebounded strongly in China. The Japanese giant's online business in February exceeded the same period in 2019. The company plans to upgrade its relationship with Alibaba, the Chinese online titan, to offset a predicted decline in its US and European sales during the COVID-19 emergency.
- Trust the Koreans to be nimble. Sales of popular makeup items such as foundations and lip colours have declined 30 per cent since the beginning of the COVID-19 outbreak. One of the major reasons was the wholesale wearing of face masks. Many South Korean beauty brands are shifting their focus to skin issues caused by wearing face masks for hours. Influencers are making tutorials on how to highlight the eyes better and which hat to choose to maintain a stylish appearance. Kolmar Korea, a leading cosmetic and pharma company, is launching long-lasting sunscreens, cushion foundations, lipstick and powders that will stay put in the face of increased perspiration caused by wearing a face mask.
