How is the COVID outbreak affecting the Philippine beauty industry?
Photo by Nicole Quindara, modeling by Mariana Angel
I started a group chat with fellow beauty entrepreneurs about a year ago, and it’s usually what we use to coordinate lunches and sometimes discuss the retail landscape as well as challenges in the industry. We have had very different conversations though once the lockdown bore down on all of us - we were in distress. With malls closed down and even Lazada and Shopee non-operational (except for essential products), plus limited delivery service, it has so far been a three-week nightmare.
The Philippine beauty industry is estimated to be worth over $3 billion (or PHP 152 billion), and is expected to grow at 4.9% annual growth rate to reach $4.2 billion (PHP 213 bn) by 2023. Filipinos have had more disposable income in recent years, which allowed us to purchase beauty products beyond the basics.
The Philippines is also considered the social media capital of the world. We spend 4 hours a day on social media alone; the worldwide average is just a little over 2 hours. Because of this, social media has also served as both a great educator AND equalizer - Filipinos are aware of beauty trends, products, and techniques as they come out, and this has given local brands a fighting chance against more well-established players in the industry.
We had a bright future. And then the pandemic happened. The insecurity brought about by the health crisis in terms of income has made Filipino customers cautious about non-essential purchases like cosmetics and skincare. This is not going to end when the Manila lockdown is lifted on April 14; according to a risk management report I’ve received, businesses will feel the brunt of the financial impact of the pandemic until September. We have to be ready for the lockdown to be extended past April 14, and for communities to be selectively locked down in the coming months.
Some malls are already advising tenants that they may tentatively open by the end of April. This means hundreds of millions of lost income for local beauty businesses, and the effects will be felt by their employees, supply chain, and lessors. However “frivolous” beauty may appear to some, it is a $3bn industry, and it needs to survive. The question is how it can adapt in these times in order to do so.
I don’t think everything is lost. While many beauty brands’ sales still depend heavily on retail locations, most of them have already started investing heavily on e-commerce platforms in the last two years. Some brands are already making 30 to 50% of their total monthly revenue online even with dozens of brick-and-mortar locations. That’s huge! Filipinos have become more comfortable shopping online with user-friendly apps and COD options as well as mobile payment platforms like Paymaya and Gcash. It is reported that in 2018, Filipinos spent US$4.7 billion on online purchases alone. Beauty purchases are just a small percentage in that pie, but when I went to Digicon last year, Lazada reported that beauty is one of their fastest growing segments in the platform.
While customers aren’t in a buying mood, their attention can still be engaged by relevant, intelligent, and sensitive content that they may find valuable or at least entertaining in the midst of this pandemic. As more brands try to move product online, it will be tougher to stay top-of-mind in an even noisier space.
My prediction is that as malls re-open, foot traffic will be slow to build up. Beauty businesses (and beauty freelancers) should use this time to work on their e-commerce AND content strategy. Both will help sustain the business at least until things go back to “normal”. Of course, smart cash flow management in the meantime is key to survival as well.
If you have questions or wish to discuss this further, feel free to email me at liz [at] projectvanity.com.
Sources:
https://www.globaldata.com/cosmetics-toiletries-industry-in-philippines-forecast-to-be-worth-us4-2bn-in-2023-says-globaldata/
https://www.cosmeticsdesign-asia.com/Article/2019/10/22/Shiseido-looks-to-the-Philippines-3bn-cosmetic-industry-to-drive-further-growth-in-SEA
https://datareportal.com/reports/digital-2019-ecommerce-in-the-philippines
https://aseanup.com/insights-trends-e-commerce-philippines/
https://janio.asia/sea/philippines/who-are-philippines-online-shoppers/
