Cost of living: How to adapt to the cost-conscious consumer

by | Nov 15, 2022

The NPD Group reports that sales of make-up products have declined by 20% compared to pre-pandemic levels. The insights company continues to cite ‘hesitancy to spend‘ as a key factor for less shopping this season.

How can you adapt to a more cost-conscious consumer to tackle economic uncertainty?

Earlier this year, the beauty industry hoped the ‘lipstick affect’ would propel business through the festive season despite unmatched economic uncertainty. Unfortunately the tell-tale economic theory doesn’t seem to be paying off.

The current UK market for prestige make-up products has been valued at £334M, a decline of 25% in comparison with the same period in 2019.

In it’s recent report, the NPD Group says: ‘Make-up sales have been particularly impacted by the shift to remote and hybrid working, a decline in tourism and an increase in reliance on products that multi-task such as lip and cheek tints and foundations with skincare benefits.’

L’Oréal’s Luxe division grew by 4.6 percent in this year’s third quarter. The Business of Fashion reports that this is the first time this category fell behind mass market SKUs. Speaking to investors, CEO Nicolas Hieronimus said that the lower price points are softening the economic blow to the group saying: ‘we also have Maybelline and L’Oréal Paris for those who can’t afford an expensive mascara.’

The L’Oréal Group isn’t the only one facing difficulties. Natura&Co, owners of Avon, The Body Shop and Aesop logged a net loss of $108M. Looking more specifically, net revenues dropped 6% to $1.68M but were up 2.2% in constant currency terms, proving the inflationary pressures on global markets.

Is every market being hit by a more cost-conscious consumer?

Customers aren’t cutting their beauty buys completely though, in fact it’s thought that they plan to spend an average of $760 on holiday shopping this year. What are they buying despite the rising cost of living?

Emma Fishwick, Account Manager, NPD UK Beauty explains: ‘There is an evident decline in sales of primers across all make-up segments including face, eye and lip, suggesting that consumers are skipping the “Prep” make-up step and seeking alternative methods through skincare products.

‘They maybe purchasing foundation products with in-built primer benefits or relying on one product at the end to keep in place such as setting spray.’

We must remember that the beauty market isn’t just makeup. In fact, all other categories are up vs pre-pandemic with bricks and mortar and e-commerce both in growth.

The skincare market is seemingly one of the most resilient markets with a recent UpCircle and YouGov survey showing that 25% of people are more concerned about the condition of their skin since before the cost of living crisis began. Also, 76% of people use skincare on a daily basis whilst make-up is used 9% less.

In order to keep up this momentum, it is important to adapt to cost-conscious consumers via money-saving initiatives, smart product design and alternative product solutions without having to sacrifice efficacy. 

You could increase the number of product reviews and transparency for better selling, provide resources to guide consumers through the cost-of-living crisis or producing all-in-one formats to not only cut back on consumers’ costs but production costs too.

Interested in how you might be able to implement these money-concious measures? Our upcoming webinar, in collaboration with WGSN, will help you to adapt to new-founded consumer hesitancy.

Sign up here

This insight webinar is only open to British Beauty Council Partner Members and Patrons.

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