Top marketers from CoverGirl, L’Oréal and Zenyum on the secrets of cosmetic sales success
With brick-and-mortar retailers closed for business and masks the accessory du jour, cosmetics and personal care brands everywhere struggled to sell. But even while lipstick went out of style, beauty brands still managed to grow –thanks to digital innovation, a novel focus on specific product segments and new investments in commerce and CX. Future 50 inductee Aaron Ting of Zenyum and fellow industry experts explain how they made cosmetics cool during Covid.
Top cosmetics brands managed to make it – even as mask-wearing and restrictions on socialization abounded
In the early 2000s, Leonard Lauder, chairman of beauty behemoth Estée Lauder, coined the term ‘lipstick index’ in reference to the sustained sales of cosmetics – and especially lipstick – during financial downturns. In essence, the theory suggests that, historically, even when consumers’ spending power is dampened, they will still spend on modest luxuries like lipstick, fortifying the industry against market turmoil.
But in early 2020, as consumers the world over donned face masks, lockdown orders were implemented, and drugstores and department stores closed up shop, the cosmetics industry, like countless other sectors, was turned on its head. By the end of Q1, cosmetics sales were down 22% compared to 2019, according to market research firm NPD. Fragrance sales dropped by 13%. And things were only getting worse.
With consumers stuck at home – and covering their faces when they ventured outside – how did the world’s major cosmetics brands adapt? How did they sell beauty when fewer folks than ever were investing in their personal appearance?
Getting into specifics: clean beauty, skincare and eye cosmetics pick up the slack
While cosmetics sales on the whole have suffered, the impact across categories has been varied. With mouths hidden beneath masks, lipstick sales dropped significantly. But McKinsey data suggests that even in the first few months of the pandemic, sales of eyeshadow, mascara and other eye cosmetics skyrocketed by 150% while nail product sales rose by a whopping 218%. So, while the ‘lipstick index’ did not prove bulletproof, it’s clear that consumers still shelled out on products that allowed them to work within the constraints of mask-wearing and social distancing.
“Consumer trends in cosmetics, skincare and haircare have shifted throughout the course of the pandemic,” says Lex Bradshaw-Zanger, chief marketer at L’Oréal UK and Ireland. “For example, we saw increased interest in categories such as skincare, hair color and nail varnish during lockdowns.”
The brand, which leads the cosmetics industry in sales globally, also reported that dermocosmetics – an emerging category of products billed as beneficial for both appearance and the health of the skin – saw a sales lift of 2% in 2020 while other categories suffered. “At L’Oréal UK and Ireland,” says Bradshaw-Zanger, “we have remained agile in order to adapt to these trends and change the focus of our campaigns and media as needed.”
Other brands, like CoverGirl, have leaned into consumers’ growing demand for ‘clean beauty’ (it’s been reported that retailers like Sephora saw sales of products billed as ‘clean’ take off during the pandemic). In November of 2020, CoverGirl –which is among the largest brands to receive a Leaping Bunny seal for animal-friendly production practices from Cruelty Free International – introduced a new formulation of its beloved Lash Blast mascara. The product is vegan and free of parabens, talc, sulfates and formaldehyde. Smaller cult indie brands like Goop, Ilia, Youth to the People and Kjaer Weis are helping accelerate the shift to ‘clean’ and ‘natural’ beauty – which, according to Nielsen data, has been significantly outpacing the sale of products that aren’t marketed as such.
“Consumers today demand clean beauty and look to the brands they trust for healthy, natural product formulations,” says Stefano Curti, chief brands officer of consumer beauty at CoverGirl’s parent company Coty. “It’s our ambition is to create simpler, more sustainable products that meet the needs of socially and environmentally-conscious consumers.”
Tele-dentistry and other digital-first approaches gain steam
Zenyum, a Singapore-based DTC brand focused on teeth straightening and teeth whitening products, saw six of its seven major markets shut down for nearly half of 2020. Even so, the brand found innovative ways to evolve. “When fishermen can’t go to sea, they repair nets,” says the brand’s head of performance marketing and The Drum Future 50 inductee Aaron Ting.
Ting says that the brand homed in on operational and strategic improvements; it switched to a completely remote-first work culture and continued investing in building out its engineering, technology and product development teams. “We tried to see the opportunities in this difficult time and evolved the business,” Ting says. “Procedures like doing X-rays are essential to the safety of a good treatment, but can only be done when dentists are open. Many other parts of the consultation can now be done remotely though. With our app and tele-dentistry capabilities, we were able to ensure that our funnel keeps moving and our customers are ready once markets open.”
Other major brands focused on digitizing its marketing and customer experience efforts. “We now prioritize digital in our media mix, consistent with dominant consumer trends, especially for the key gen Z and millennial audiences,” says Curti. He points to a specific campaign by Marc Jacobs Fragrances, which hosted a fully-virtual event to launch a new product when it debuted its new scent Perfect in an online event in August, which attracted more than 1,700 consumers from 50 countries. Curti says the brand saw the limitations of the pandemic as a way “to connect with a much wider group of people on a global scale” through digital activations like these.
Others adopted similar tactics. Base Beauty, a New York-based creative agency that works primarily with cosmetics and wellness brands, put on its Virtual Beauty Events in May of 2020 with a selection of beauty influencers who shared tips, tricks and stories about various products on social media. The company was among the first to host live digital beauty events during the pandemic.
Meanwhile, Coty brands CoverGirl and Sally Hansen teamed with People Magazine to host a live beauty shopping event, which included streamed makeup tutorials, giveaways and exclusive offers. The event garnered some 100,000 views and drove record high click-through and engagement rates for both brands.
The e-commerce revolution is real
To cement the shift to remote and digital-first approaches, many brands invested more deeply in e-commerce – a channel that has already been swallowing up large portions of the retail market year-on-year.
Whereas cosmetics point-of-sale has traditionally been centered in drugstores and department stores, personal care purchases accounted for an impressive 7.39% of the total e-commerce market in the US in 2020. Cosmetics brands helped lead the charge on the shift to an e-commerce-first consumer goods market.
“Shifting our focus from in-store activations to e-commerce was key,” says Coty’s Curti. “The advantages of purchasing beauty online, such as the ability to compare price and availability and shop 24/7 with speedy home delivery, have outweighed the perceived barriers to purchase.” As one example of its efforts in the e-commerce arena, the brand launched a Spanish language pilot program on Amazon, which helped to drive over 70% of new households to Coty brands like CoverGirl and Sally Hansen.
L’Oréal notes similar success. The brand saw about 40% growth in its total online sales, and the business’ online sales now account for more than a quarter of the total. “Technology is reshaping the definition and experience of beauty, and at the same time, we’re seeing consumers make more informed purchasing decisions, which means the retail journey is being transformed,” Bradshaw-Zanger says. “This shift was accelerated by the pandemic.”
Another key trend accelerating the takeover of e-commerce is social commerce. Instagram’s shopping features are expanding seemingly day by day, cementing the platform’s status as a major player in the social commerce space. Increasingly, however, newer platforms like TikTok are integrating social commerce capabilities. Brands underneath the L’Oréal umbrella including Garnier and NYX Professional Makeup have recently started highlighting selected products for purchase on TikTok as part of a new commerce pilot on the platform. According to Bradshaw-Zanger, they are among the first international beauty brands to use the feature.
But for beauty and personal care brands, offering a convenient, seamless online shopping experience may not be enough to establish a competitive advantage. Supercharged by Amazon Prime’s free two-day shipping – and the growing cohort of online retailers offering same-day shipping and even same-day delivery –consumers now expect products to arrive at their doorstep in the blink of an eye. With cosmetics sales happening in digital shopping carts for the past year-plus, cosmetics brands were forced to optimize their supply chains to meet these demands.
Curti calls last-mile delivery “one of the hottest retail trends of the year”. He says Coty and its suite of brands partnered with delivery service startup GoPuff to launch its beauty category in August. By doing so, it was able to help get cosmetics products in consumers’ hands faster than ever. “The partnership brought the most iconic products from Coty brands CoverGirl, Rimmel and Sally Hansen to the platform, which delivers everyday essentials straight to your door in 30 minutes or less. Since our launch, nearly every major beauty brand has announced a similar partnership in response to consumers’ demand for instant, at-home beauty.”
What’s next: tapping into expanding Asian markets
As physical retailers open their doors and masks become secondary safety measures rather than enforced criteria for socializing and shopping, the cosmetics industry is poised for a major comeback. In fact, during a four-week period ending mid-April, market research firm IRI reported that lipstick sales reached $34.2m, representing a jump of more than 80% from the same period last year. So perhaps the ‘lipstick index’ is not failproof – but lipstick is assuredly en vogue once again. Anticipating similar trends across cosmetics segments, beauty and personal care brands are now strategizing their next moves.
Zenyum’s Ting is optimistic. “Self-improvement has risen to the top of [consumers’] personal agenda,” he says. “People took up new skills, new workout regimes and new beauty treatments.” He thinks that Zenyum’s offerings in particular may be more appealing than ever. “With the new trend of working from home and constant video conferences, people have become more aware of their look and their smile and are more willing to research, compare and invest time to get the smile they have been dreaming of.”
The company recently concluded a Series B funding round and aims to use this capital to accelerate expansion across Asia, diversify its product offerings and mature its tech stack so it can “be a true partner to dentists while building a category-defining company,” per Ting. And the brand may be especially well-positioned for growth as data suggests that the cosmetics and personal care market is growing in Asia – and in China in particular – faster than anywhere else. The Chinese cosmetics market is projected to reach more than $87bn by 2025, growing at a CAGR of 6% between 2021 and 2025.
CoverGirl and other Coty brands are also hoping to get a slice of Asia’s growing cosmetics pie. “If we look to the Asian market, where we saw the first signs of Covid-19 as well as the first easing of restrictions, as an indicator for what we might expect to see across the globe as the world bounces back, we can expect consumers returning to heavier makeup looks, including lipstick,” says Curti. He points out that last quarter, Coty saw cosmetics sales from its luxury brands soar in China. In particular, Gucci and Burberry cosmetic sales rose by 357% and 73%, respectively, compared to the previous year. The numbers suggest a rapidly-growing market – and new opportunities for brands in the region.
As for others, the next stage of growth will focus on appealing to new demographics. “With the rising middle class across [the Asia] region, and the increasing demand among the younger generation to want to look better and be a better version of themselves, the cosmetics sector is expected to grow exponentially in the coming years,” says Ting. “As shoppers are getting smarter and more tech-savvy, brands will need to put in more effort to stay competitive and build trust [and] loyalty among target audiences. Consumers these days are starting to expect products from brands beyond just functionality; they demand quality and safety.”