Covid-19: impact on cosmetics market
Wpis dostępny jest także w języku: polski
Closed stores in shopping malls, consumers staying at home for all but essential reasons, and an economy headed for recession: the coronavirus crisis will deliver a serious blow to the cosmetics retail market in Poland in 2020.
Three scenarios for the market
PMR has drawn up three alternative scenarios for how the epidemiological situation might develop, and how this will affect cosmetics retail in Poland. The key assumption in which the scenarios differ is how long the curbs on social interactions and the operation of retail stores that the government has introduced to contain the spread of Covid-19 will last.
The restrictions, imposed on 14 March, are now officially in place until 11 April, and our most optimistic scenario assumes that that’s when they will be lifted. Our second scenario is premised on two months of restrictions. The third scenario assumes a two-month shutdown now, plus a second wave of the epidemic, and a return of restrictions, in the autumn.
Poles could spend less on cosmetics in 2020 than in 2019
Poles’ expenditures on most goods and services – particularly non-food products – have risen strongly and steadily in recent years, as household incomes grew on the back of a booming labour market and generous social transfers. But the coronavirus epidemic is reshaping consumer patterns in a major way. A substantial slowdown of the cosmetics retail market in 2020 is inevitable.
And a rapid recovery should not be expected. The epidemic will generate a protracted economic crisis during which consumers will be cutting back on non-essential purchases. They will be more deliberate in their shopping, and less motivated by impulse.
E-commerce will benefit. Who else?
How will particular distribution channels fare in 2020? According to our forecasts, e-commerce will be the standout gainer from the current situation. Its growth will not be as impressive as in the case of other non-food segments, though, where online is often the only available channel now.
Also positioned to benefit are large-format grocery stores, in which customers can find a comprehensive range of cosmetic essentials. As people try to stay at home and out of public spaces as much as possible, many will prefer to buy their cosmetics in the store where they shop for food, rather than having to visit another store.
Beauty supply stores to be a major loser
This is one reason why the cosmetics store channel will be hit particularly hard by the epidemic, according to our predictions. Although drugstores stay open, many consumers are moving their cosmetics shopping to grocery stores or online due to safety concerns.
The second reason, of course, is that cosmetics stores in shopping malls that derive most of their revenue from the sale of perfume and beauty products – including perfumeries such as Douglas or Sephora, and colour cosmetics stores such as Inglot or Paese – have been ordered to shut.
Only in the most optimistic of our scenarios will the drugstore/cosmetics store channel avoid a contraction in sales value in 2020.
Which product categories will benefit?
The epidemic will have a negative, and at best a neutral, impact on almost all major categories of cosmetic products. Only the category of body care and bath cosmetics could experience a short-term boost in sales value, due to the coronavirus-induced spike in demand for personal hygiene and handwashing products such as soap and antibacterial gel.
The analysis comes from a new report by PMR, “Impact of the coronavirus epidemic on the cosmetics market in Poland 2020.”
About the author
Retail Market Analyst
Analyst with over three years of experience in retail market. Areas of specialization: clothing and footwear market, cosmetics market and e-commerce.