Thriving amid adversity: The resilience of the health and beauty industry in challenging economic times

Consumer spending habits ebb and flow, especially in today’s challenging economic landscape where the impact of the cost-of-living crisis remains prevalent. Despite this, the beauty and personal care (BPC) industry which consists of products such as skincare, haircare, makeup and grooming (to name a few) remains resilient – reminding us of the staying power of the ‘The Lipstick Index’.

The ‘Lipstick Index’, coined in the early 2000s recession by Estee Lauder’s Leonard Lauder, suggests that lipstick sales could serve as an economic indicator. The theory was built on the idea that during times of economic uncertainty, consumers would maintain a need for luxury items shifting from buying expensive items to purchasing smaller affordable products like lipstick to treat themselves with.

Despite the focus on lipstick, the theory has been adapted to fit around current trends. As nail art grew in popularity in 2010, the financial marker became the ‘nail polish index’. Then, during the Covid-19 pandemic with the adoption of wearing face masks, it evolved into the ‘mascara index’ and sales of lipstick took a back seat as our eyes became the focus and, with that, eye makeup sales increased.

Clearly, beauty and personal care remain a priority for many as consumer spending increased to an estimated £11.3 billion in 2023 despite external influences. As advances in technology and the accessibility of real-time consumer data rapidly transform the way retailers operate and react to consumer trends, it will be interesting to see if beauty products continue to be a top choice.

How consumer behaviour changes in times of uncertainty

In times of uncertainty, many consumers turn to personal care or DIY at-home beauty treatments; continuing to spend money on favoured beauty products such as soap, bath and shower products but saving on their overall monthly expenses. As well as this, in 2023, beauty and cosmetics shoppers buy online across all product categories more often with 42% of beauty & cosmetics e-shoppers buying something online more than once a week. In comparison, online shoppers who only buy from other product categories only account for 32%. Whether it’s something small like a new lipstick or DIY laminate brow kits, the beauty industry often bucks the trend when it comes to times of financial struggle thanks to the ‘treat yourself’ mentality.

The ‘treat yourself’ mentality is the idea that one should reward or indulge themselves in something desirable or enjoyable, often as a way of coping with stress or celebrating personal achievements.

This approach to self-care can involve splurging on material items, experiences, or food, and is often associated with consumer culture and a focus on instant gratification. For example, the beauty industry benefited from positioning fragrances as an affordable luxury as consumers looked to treat themselves amid a challenging economic climate. Being able to spot these trends and patterns within ‘consumer buying behaviour’ will help retailers weather the storm when it comes to times of uncertainty.

Retailers that keep their customers happy, keep them. Being able to spot consumer trends can make or break a customer’s loyalty when it comes to the repeat purchasing of beauty products or the potential that a brand might discontinue the wrong item. Retailers can add value to this experience for customers through the order fulfilment process, especially within luxury fulfilment, by delivering products in high-end packaging and creating an enjoyable unboxing experience, keeping customers coming back for more when they need an additional pick-me-up.

The impact of big data on future decisions

With the advances in technology and the accessibility of real-time consumer data, it has become much easier for retailers to respond to consumer demands and ensure that beauty and cosmetic sales do not take a hit. And, economic uncertainty makes it even more important for companies to concentrate on what they can control.

By combining search terms submitted via websites, data gathered from purchases and returns information, retailers can create a clear picture of items in high demand. The data gathered allows retailers the opportunity to maximise sales by focusing on the items that are seeing the most interest, this could be down to the colour, versatility, and other variations. This can make it easier when it comes to reordering and making decisions regarding inventory.  Operating this way can reduce costs when it comes to warehouse space and logistics costs, reducing the amount of stock held and possibly reducing returns.

Big data can also guide retailers to make future business decisions. When times are tough, it is even more important for retailers to invest time and patience into their data processes. As consumer trends shift, retailers should ensure they are constantly learning from their customers and meeting their needs and expectations. And, since we are starting to see retailers ramp up promotions because of the drop in sales in other areas such as retail, businesses can make informed decisions based on their own consumers and not just industry data.

Tailoring marketing strategies and product offerings to meet customer needs

Many consumers will often repeatedly return to the same retailer for their staple lipstick or mascara, but any retailer can fall victim to a loss of brand loyalty when they ignore zero-party data and fail to compete with other retailers offering better deals. Especially during times when price-conscious consumers are shopping more carefully, the idea of finding bargains becomes a big focus – especially when some retailers are offering better discounts on products than others. As a result, this can lead to consumers seeking out dupes or looking elsewhere in the process to save money through the use of discounts.

To help retailers compete with others and save a possible loss of consumer loyalty down the road, retailers can utilise big data to evaluate popular lines, trending products and order volumes. An example of this is zero-party data being collected during the online shopping experience, along with any aftercare services such as returns or complaints. Although a tedious aspect of a business and customer relationship, retailers can learn a lot about their customers from the returns process and ultimately boost customer satisfaction.

By keeping a close watch on spending habits, influencer trends and economic projections – companies can tailor their marketing strategies and product offerings to meet the needs and preferences of their customers. The beauty and cosmetics industry continues to demonstrate this with its ability to remain a constant and important part of consumer spending despite external factors.