At a recent trade fair for the beauty industry, CosmoProf, it became clear that the beauty industry is in trouble. Beauty has traditionally been thought of as recession proof. Women always bought lipstick, even when the economy was bad. But this time around women aren't buying new lipsticks, or much of anything else.
Globally, sales are flat or have suffered slight decreases, and even regions once considered resistant to economic fluctuations, such as the Middle East, show signs of a downturn, said manufacturers and retailers at last week's Cosmoprof trade show here.
"The crisis is everywhere," said Jorg Bromsen, export director for Art Deco, the German market leader in color cosmetics with an annual turnover of $150 million. "The impact is huge. Even where clients have money, such as the Arabic states, instead of spending it, they're thinking more how to save money and how to invest it."
"The situation is dramatic," agreed Dario Ferrari, chairman of Intercos, during an interview in his expansive office outside Milan. "On one side, brands are facing an inventory problem. On the other, stores are without merchandise."
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"As the economy changes, values are changing," said James Heeley, who markets an eponymous niche scent line. "People want to know everything about a product — where it's made, what's in it. It's not how much we buy; it's what we buy. Quality products that have a real right to exist and a low cost structure will survive."
The new attitude isn't relegated to consumers alone. "The psychological problems are all the way through the supply chain," said Martin Trout, export manager, Middle and Far East-Latin America, of Morris Profumi. "People are afraid of spending money."
The situation is particularly acute with fragrances, Trout said. "Everyone from the consumer to the retailer has a stock of fragrances and is saying, 'Let me use this before I buy something new.'" To illustrate the problem, he cited a specialty store in the U.S. that he recently visited. "The shelves were half empty," he said. "I was shocked."
Trout, who has seen all this before, said in the 1991-1992 recession women stopped experimenting with bold colors and stuck to basics. They also cut back on the amount of makeup they used everyday. That really hurt sales and profits of the cosmetics companies. He predicts that women will stop using as much eye shadow, especially in unusual colors, but that they will continue to wear as much lipstick as they did before the downturn.
A lipstick, even from an upscale line such as Chanel, is always much less expensive than an eyeshadow quad, so we think he's onto something here. So, no fun, expensive eyeshadow for summer then. Still, you can always pick up an inexpensive lip gloss. That's a nice mood lifter.
