Coronavirus and the Cosmetic Business: Resilient From Recession
20/04/2020 by The Red Tree
Imagine just a few short weeks ago, the UK’s biggest upcoming fear within our industry was Brexit. Now overnight, retailers have closed their doors, once full clinics are empty, and buoyant brands and businesses have been left reeling over the global repercussions of self-isolation and lockdowns.
The confidence among my industry colleagues has suddenly fallen off a cliff edge, and the panic is palpable.
But remember, this too shall pass, though we may well come out the other side looking a bit different. A perennial optimist, I’d like to take a moment to inject some positivity into our profession.
It is often said we are ‘recession proof’. Why?
Perhaps it’s coincidence the last two dresses I purchased happened to fall well below the knee, or perhaps unconsciously I rooted my purchase decision in that old-timey adage of hemlines rising and falling in line with the stock market. Harking from the Great Depression of the 1930s, the ‘lipstick effect’ is the notion that as consumers economise on spending, we turn to entry-price products to cheer ourselves up. In the four years from 1929 to 1933, industrial production in the US halved, but sales of cosmetics rose . Pure proof of retail therapy, in each of the three past recessions of the early 1980s, early 1990s and early 2000s, the European personal products sector continued to outperform the broader market by an average of 100% .
Quickly, we have seen a renewed focus on hygiene. You may already have heard of LVMH diverting their manufacturing facilitates to hand sanitiser due to a global shortage of hand sanitising gel and donating these free of charge to the French public health authorities , but this herculean effort and pace has been replicated from large to small enterprises with aplomb.
The inimitable Sarah Brown of PAI Skincare has already got to work, releasing a hand sanitiser, appropriately named Acton Spirit, in just two weeks! Even better, they’re already distributing to local businesses and charities, schools, nurseries and the surrounding community as of the 19th March . Kudos for taking the community approach first and foremost.
When this is over, what’s next?
I predict we’ll see much more of a community and social purpose approach to business – we’ve been talking about ‘conscious consumerism’ for more than a decade, but I predict the coronavirus pandemic will finally turn the tables for a more integrative conscious capitalism. One of the big ‘faults’ of climate change is that the average man-on-the-street seems unable to imagine or fully comprehend the impact of this macro concept on their personal life. Coronavirus, I think, is a precursor to raising this understanding; a sign of things to come and how future resource wars can entirely disrupt our day-to-day lives.
Sustainability and biodegradability have already been incorporated, to an extent, into new brand and product development. We will now see more social purpose brands. This is the ultimate realisation of the sustainable development business model: people, planet, profit.
Naturally, we will see an ongoing and sustained focus on hygiene, the much maligned soap bar will see a renaissance – see the new ritualisation and ceremonialisation of washing one’s hands for a minimum of 20 seconds – as will hand sanitisers which will become, once more, widely used for some significant time to come. Predictably also, a commensurate rise in the sale of hand creams, as we all become more acutely aware just how drying and skin-damaging bleach and other household cleaners are.
I do not believe it’s anywhere near game over for the naturals sector either. In the long term, I predict we will see a continued and greater emphasis on holistic ‘health care’ rather than allopathic ‘sick care’. The idea being a ‘healthy’ body with a well-nourished immune system is less prone to disease, averting causes of illness long before they manifest, and strengthening our resilience when they do. Don’t believe me? Lest we forget estimates put somewhere in the region of 50-75% of the world’s pharmaceutical drugs as derived from plant-based herbal remedies! . Nature is science.
Our new normal
Alongside community-centric and natural health businesses, we will see emerging trends like ‘DTC’ and ‘genderless’ become more entrenched and universal. The personal care industry will be seen as more essential to health and hygiene and less flippant and superficial; future comparisons of the beauty industry will be made less as an accoutrement to the fashion industry, and more as the friendlier, and more accessible, face of the pharmaceutical sector.
There has been a rising trend for some time towards genderless brands and products, and less specific targeting to women (which is oh so often stereotypical and clichéd). This defeminisation will continue in everything from product design and development to brand marketing.
We are all going to be online even more than usual for a bit. Mercifully, we have the internet; can you imagine if the self-isolation directive had hit us in the 90s? When this is over, employment and business will be changed for ever. While high street stores close, they will place ever greater emphasis on their ecommerce channels, and going forward, this will become our predominant sales platform.
Things won’t go back to the way they were, so effective free sampling programmes and rapid no-hassle returns (including home collections) will become essential pillars of the online shopping environment. Online shopping is also tied to transparency; you cannot satisfactorily make a sensory purchase online if the profile is not adequately explained or full list of ingredients withheld.
This pandemic is unprecedented, but to my many friends who run their own businesses and fear for their future livelihoods, I want to say this: stay confident. Our industry serves a vital and valuable role in protecting the public’s health and hygiene, and it will survive even this pandemonium.
So, keep it clean, and keep up the good work.
See you on the other side.
Wren Holmes has worked for The Red Tree, the UK’s number one beauty brand consultancy spear-heading major projects and then joined a FTSE 100 company to develop the European holistic natural strategy for a new brand. She has since founded Brands Botanic Ltd, specialising in natural product and brand development. Her decade-long leadership of new projects have several hundred award wins.
- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3560124/ AND https://news.mongabay.com/2007/03/70-of-new-drugs-come-from-mother-nature/
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Any company entering The Beauty Accelerator™ competition must be based and registered in the UK.
The scheme by which investment into the winning brand will be made is the Seed Enterprise Investment Scheme (SEIS). You must be eligible for SEIS to enter The Beauty Accelerator but you do not need to be registered for SEIS. You can be in the process of applying for SEIS and receiving Advanced Assurance from HMRC, which is free of charge to obtain and certifies to investors that the criteria necessary to qualify for SEIS have been met by the company at the time of the application. You do however need to be SEIS registered at the point of investment.Click here For further information about SEIS
As is the case with all equity investments, the winning brand must be willing to provide equity stakes for both SFC Capital and The Red Tree. In addition, the winning brand might be required to pay a monthly fee for the duration of the 12 month period of assistance from The Red Tree. The size of the equity stakes for both SFC Capital and The Red Tree are unknown at this stage and will be based on the valuation of the business at the time of investment. The value of the monthly fee to The Red Tree will be determined by the scope of work required by The Red Tree and will be agreed in consultation with the winning brand. The equity stake, monthly fee and scope of work will be discussed in further detail with short listed brands during the interview stage.
Brands that applied for The Beauty Accelerator™ 2022 can apply for The Beauty Accelerator™ 2024.
Applicant brands should ideally have proof of concept – the business should ideally be in operation with at least one product currently retailing on the market, an existing website in operation and a number of months of trading.
Under exceptional circumstances, brands that are at concept stage will be considered.
There should be a team in place or a willingness to take on a co-founder at an early stage.
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The business should not be valued at more than £1,000,000.
All R&D should be completed as funds invested will only be used for marketing and commercial activity.
If you are short listed, you must be available to attend the virtual shortlist interview. It is likely that short listed brands will be required to attend more than one virtual interview.
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You cannot apply for or already be in the process of applying for another accelerator or incubator during the period December 2023 to December 2024.
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Confirmation of the winning brand is subject to SEIS eligibility confirmation, agreement on equity stake and The Red Tree fee, and completion of due diligence.
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