The Resilient Economics of Cosmetics

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The Resilient Economics of Cosmetics

The cosmetics industry is undoubtedly a force to be reckoned with; steadily rising from a revenue of $41.56 billion in 2004, to projections as high as $60.58 billion in 2015. Even during the devastating economic recession of 2008, the cosmetics industry continued to thrive- in fact, the industry in general experienced a profit increase; despite the poor state of affairs of the national economy. This was also the case in The Great Depression. Historical patterns have shed light on an interesting anomaly. Even during times of financial hardship, the cosmetic industry's customer base saw their products as a necessity. The cosmetics industry is doing something extraordinarily well, and perhaps others could take note in order to achieve similar levels of success.

The trend of increased cosmetics sales during times of economic turmoil has been dubbed “the lipstick index”; a term coined by Leonard Lauder, the chairman of the board of Estee Lauder {although it applied to cosmetics in general, not only Estee Lauder}. He suggested that since people were unable to purchase more expensive items like dresses and other accessories, that they instead transitioned towards budget-friendly alternatives like lipstick and nail polish.

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Cosmetics companies have been developing and introducing new products for the past decade or so, and at an affordable price point.  One of the most significant shifts is the movement towards green/eco-friendly cosmetics, which are healthier for both the human body as well as the planet’s biosphere. Additionally, cosmetic products can be found in a massive variety of retail outlets that are accessible to the masses, not to mention the internet’s e-commerce. Another fact about the cosmetics industry that is somewhat unusual compared to the rest of the market- it is a primarily a homegrown trade, with most of the companies originating in the United States. Sure, imports from Western Europe {France in particular} and other nations abroad are still common- but even collectively, those only constitute around ten percent of the market.

Adopting an eco-friendly approach to a product, especially one that was around long before the environmental concerns became evident, is no small task. All of the business practices, techniques, and materials had to be questioned in light of the new information. However, many of those in the cosmetics industry remained undaunted and pledged to be environmentally responsible while still growing and expanding. Some of the truly environmentally-responsible cosmetics products contain beneficial ingredients that also require a lesser amount of water than conventional cosmetics. In fact, wasting water is one of the greatest problems in general; so there are inventive cosmetics manufacturers that have created shampoos and body washes that are easier to rinse out, and therefore use less water. As a whole, the cosmetics industry’s eco-friendly innovations center around the abandonment of potentially toxic chemicals/ingredients in favor of healthier components, and a dedication to reducing the waste of water. A good rule of thumb is to know what works best for you- including awareness of any allergies or dermatological needs, read the ingredients of a particular product, and selecting an item that suits you in light of that knowledge.

Recent figures indicate that hair care products occupy 22% of the cosmetics industry overall, followed by color cosmetics at 18%, skin care at 15%, bath and shower items with 13%, fragrances claim 9%, men’s grooming and oral hygiene products with 7% each, sun/nail/baby care combined constitutes 5%, and deodorants generate around 4%. In terms of corporate hierarchy; household names such as Procter and Gamble, L’Oreal, Unilever, Avon; and Johnson and Johnson are leading the pack. Aside from the aforementioned eco-friendly and ingredient conscious movements, trends include a growth in anti-aging products and a focus on serving an increasingly diverse array of target demographics.

Enduring through economic difficulties is an extremely difficult task. Many companies met their end when they were unable to find success and make a profit during the recession. Consequently, it is important now more than ever to discover the companies and the industries that are achieving unprecedented levels of success. Cosmetics is such an industry- and it is interesting to learn how and why they survived. It is obvious that they operated efficiently; and most of all, they offered a product that transcended financial barriers and limitations.

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Sources

http://www.slideshare.net/lovee911/economical-analysis-of-cosmetic-industry

http://www.economist.com/node/12995765

http://www.huffingtonpost.com/2012/07/05/beauty-product-spending_n_1652479.html

http://www.learnvest.com/2011/10/your-guide-to-green-and-safe-makeup/

http://www.elephantjournal.com/2014/07/a-guide-to-buying-safe-eco-friendly-cosmetics-monica-wells/

http://www.accuval.net/insights/industryinsights/detail.php?ID=120

 

 

 

 

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