The economic downturn posed significant challenges to beauty and personal care players, but they now appear to be overcoming these as the economy shows signs of recovery.
In 2009, the top 10 companies’ combined sales in US dollar year-on-year exchange rates posted a little over a 1% decline, whereas in 2010, sales increased by nearly 7%. Companies’ strategies in response to the economic downturn can be broadly categorised into three areas – exploiting latest trends, increasing their presence in emerging markets, betting on innovation and acquisitions in order to increase sales and margins. Hair care is currently the second largest category of the global beauty industry; according to market research firm Euromonitor International, accounting for 18% of total global industry value sales in 2010. However, it has also been one of the hardest hit during the global economic downturn. After the fall recorded in 2009 of 2% as a result of relentless discounting, “buy one get one free” offers and consumer trade down, value growth in the category rose by 7% in 2010. This is broadly in line with the industry growth overall, but a decent performance given the relative size and maturity of hair care.
Latest consumer trends
The markets that were the hardest hit in hair care have been those where consumers already use a wider range of products, such as conditioner or styling agents as part of their grooming regimen. Nevertheless in this negative scenario there have been two main trends, the first one is the attitude to choose bigger formats, which offer a better value for money ratio and the second one, regarding the choice of many consumers for premium brands instead of salon. In addition, colorants and at-home perm kit sales have been thriving. Visits to the hairdresser were one of the first things to be cut from the budget of many consumers, and salons have been forced to offer discounts to consumers in order to maintain foot traffic – a tactic that has not entirely prevented many women from choosing to colour their hair at home. As a consequence, the colorants category, previously one of the less dynamic areas of hair care, according to Euromonitor, has transformed into a hive of new product development activity and renewed consumer interest.
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