If you look at the numbers, the financial chaos sweeping the globe hasn’t yet had much impact on the the personal care industry. Although its fourth quarter sales were down, overall L’Oreal managed a very respectable sales growth of over 5% in 2008. The outlook for 2009 is not as rosy, but it seems very unlikely that any company in the sector will be asking any government for any bail outs.
Speaking to some of my friends in the industry I pick up almost a sense of complacency. They point to the ‘lipstick effect’ – lipstick is an affordable treat you can have guilt free if you can’t afford something bigger. I have been through a couple of recessions before and I have to say that in the past no matter what the economy is doing it has been pretty much business as usual. And so far, none of the companies I am involved with seem to have been affected very much yet in this recession.
So am I happy? Not really. I think this recession is different to ones I remember, and that they are a poor guide to what is going to happen next. I think that as the squeeze gets worse inevitably the way we buy beauty products is going to change. Nothing is going to be unaffected. With less money in people’s pockets they are going to have to buy less often, switch to lower cost brands or change their purchasing habits completely. What are people going to do. I heard an intriguing story from someone who follows supermarket spending closely. It seems that so far people have not really switched their food purchases to lower cost outlets or to lower quality food items. In fact the opposite is the case. Sales of pre-packed meats are down. But sales across the delicatessen counter are up. It seems that people are buying only what they need. Buy one get one free offers, the mainstay of bargain hunters for years, are being shunned. People want discounts, but they don’t want to buy stuff they might not use.I found this interesting.
Does this, I wonder, suggest that rather than switching brands people are going to simply buy smaller quantities of their current favourites? I didn’t have any data, so I thought I would try out Twitter to see if folk on there could give me a clue. I asked the question “If you are short of cash, would you rather buy a cheaper personal care product, or a smaller pack of your normal one?”
To my delight I got a whole load of answers really quickly. Here they are in full:
priiacosmetics – Smaller pack- I won’t comprise with ingredients just to save a few $$$
PrimProper – smaller pack of my normal one.Dont like to change my favs!
brandbase – I am going easy on my faves… I try to buy the larger size for shampoo, etc but am using less
VickyCO – smaller of my normal stuff
therootlist – I’d go online and see if I can find it for a discount first. I’ll buy in bulk if it’s something I love…(hint)
imascientist – My soln to this dilemma has long been to have a Boots card and save the points so that if skint I can still treat myself
Makwanaayuexpressions – ..I would buy smaller pack of my normal personal care products
SimplyHomestead – def. smaller pack. Not going 2 compromise
CountryMeadow – / Smaller Pack! I dont like products made w/cheap ineffective ingredients.
davemunger – If it’s non-essential I’d do without. If essential, I’d do without something else. Smaller packs not good for saving $
Moonpoppy – – definitely a smaller pack of my normal one!
kbshimmer – Smaller pack of my normal one!
As you can see, if nothing else it shows that people are already thinking about the subject. The option of going for smaller packs seems like a popular one – though there are some people going completely oppositely and responding by buying in bulk to save money. But for me the most interesting thing is that people obviously don’t want to compromise on quality even if they have less ready cash. This may change of course: nobody seems to know how this financial crisis is going to play out and there may be more surprises in store. But at the moment my advice to brand managers is bring out or promote smaller packs. At the same time, offering deals on bulk buys might pay dividends too. Don’t cheapen what you are actually making – consumers still want products that give them the benefits that they are used to.
There are signs that premium brands have worked this out already. L’Oreal have been telling the trade press that they plan to launch a 20ml version of a Viktor & Rolf perfume that will retail at €35, as opposed to €98 for the traditional 100 ml size. Artful Teasing are bringing out a 20ml version of their popular hand lotion. I am sure others will follow. In the meantime I will be watching the shelves and the price tags in my local chemists and supermarkets with interest.
Thanks again to all my Twitter friends who made this post possible.