2023.01.16
Cost of Living: Long-Term Beauty Strategies
Despite beauty being traditionally one of the more recession-resilient industries, the cost of living crisis is already causing consumers to re-evaluate their beauty and personal care purchases. Anxiety about the cost of living day-to-day is increasing, causing people to cut back on nonessential items or make intelligent swaps that deliver value on multiple levels.
In the UK, 87% of adults have reported an increase in their cost of living in 2022 (Office for National Statistics), while 23% of adults said they had found it very difficult or difficult to pay their usual household bills in the last month. In the US, just under half of adults said they think about rising prices all the time and 52% said they are under more financial stress now compared to a year ago.
As they struggle to make ends meet, consumers are spending less on nice-to-haves and nonessentials including travel, eating out, entertainment and subscription services, clothing – and beauty. 29% of US consumers say they are purchasing fewer beauty products to pay for rent, fuel, food and utility costs (EY). In the UK, a cost of living survey by UpCircle Beauty found that one in five UK shoppers are worried about being able to afford beauty products, and that one in four people have already either decreased spending or stopped purchasing skincare products entirely. And it's not just the basics. Avon UK found a similar shift in colour cosmetics, with one in 10 people reporting they have given up their make-up due to the high cost of living.
However, there is also reason for optimism. Global sales data indicates people are still spending on beauty and so far, the much-talked-about ‘lipstick effect’ – where people continue to invest in small beauty luxuries even in a recession – is holding true. Among the 14 discretionary retail spending industries tracked by NPD, beauty currently stands as the only industry with increases in unit sales. Even in hard times, consumers remain reluctant to give up their beauty and self-care.
What is clear is that, as the cost of living crisis worsens, beauty consumers will become increasingly considered about their product choices. Value will be defined by efficiency and smart choices as much as cost, and 'affordable indulgences' will need to balance pampering with practicality.
This report explores how the cost of living crisis is changing consumers' beauty choices, and how brands can meet their changing needs and ensure their businesses weather the economic storm.
Smart swaps: engaging the dupe mindset
In the midst of the cost of living crisis, having the option to make smart purchasing decisions and swaps will be vital. With saving money at the forefront of their minds, shoppers will adopt a 'dupe mindset', trading their beauty staples for cheaper alternatives with comparative results.
Dupe culture has surged in recent months, as consumers are forced to rethink their purchasing and make more economical choices. Accelerated by the cost of living crisis, dupes have gone from niche to necessity, with Google searches for “dupe” up 40% globally YoY as of June 2022 and with beauty searches driving the category overall.
Initially driven by influencers and younger consumers seeking affordable ‘hacks’ to cult luxury items, platforms such as Brandefy and Dupeshop have evolved dupe culture, turning it into an important sector of the industry and creating trusted spaces that allow people to compare and find alternatives based on their needs, values and budget.
However, as purse strings have tightened, a new extreme form of dupe culture is emerging, with cost-conscious consumers looking to ‘dupe the dupes’ and find even cheaper versions of drugstore and value products. Comparison tool SkinSkool reported a 300% increase in searches for products under $40 in the past three months, while L’Oréal entered Brandefy's top 10 list for most-searched brands alongside prestige and premium brands for the first time in September. Beauty blogger Emily Noel’s YouTube video Even Cheaper Drugstore Makeup – where she identifies dupes of drugstore products from affordable cosmetics brands for under $10 – has racked up over 40,000 views. This dupe mindset also extends to other beauty categories, most notably skincare, haircare and personal care.
How to action this: beauty brands will need to 'lean in' to dupe culture and
engage with this way of thinking. Whether beauty shoppers are being cautious and swapping prestige for masstige, or urgently seeking value basics, to retain their business brands will need to help shoppers make informed decisions or offer alternative solutions.
Start with efficacy. Value-minded consumers do their research, and while they want to spend less, they do not want to sacrifice safety or performance. Amp up messaging around product efficacy and include cost per usage data and shelf life info alongside results, before-and-after photos and community reviews.
The dupe mindset will also see product comparison become ingrained in the path to purchase and this will increase the need for ingredient transparency. Providing a full list of ingredients and active percentages will speed up informed decision-making and improve product visibility on comparison sites. Doers of London has partnered with ingredient platform ClearForMe to put scannable QR codes on all product packaging, allowing customers to understand the brand's ingredient choices and make informed decisions in-store and online.
Finally, adopt a ‘dupe mindset’ in range building to help combat hygiene poverty. Many of those worst affected by the cost of living crisis do not have the time or the resources to search dupe sites and compare ingredient lists to find affordable alternatives, and brands will need to provide 'dupes' for them. Take a ‘good, better, best' approach, adding affordable lines and alternatives to product assortments. In the UK, Boots' new everyday value range includes 60 skincare, haircare, feminine care, bath and body and dental essentials all under £1.50, and Superdrug has added a 136-piece affordable make-up collection, with the majority of the range retailing for less than £9.
Community and transparency: trusting the consumer
Despite increased financial pressures, trust and transparency will remain an important part of value-driven purchasing. With supply chain issues and rising manufacturing costs making price increases unavoidable, beauty brands will need to double down on community and be open about the challenges they are facing.
Over the past two years, all beauty categories have experienced price increases worldwide. In the US, 33% of SKU prices had increased as of April 2022, up tenfold from the previous April (DataWeave). In the UK, where inflation hit a record high of 11.1% in October, the cost of day-to-day beauty essentials such as shampoo, deodorant, moisturiser and toothpaste rose between 8% and 11% in the last three months (Office for National Statistics).
While some brands have increased prices quietly, others have taken a much more community-led approach, showing empathy and understanding for their customers' struggles and anxieties. Brands including Deciem and Allies of Skin made announcements that clearly explained pricing decisions and product changes in advance. US-based Deciem gave its customers two weeks' notice of its price rises to allow them time to stock up on their must-haves and favourite products at the original prices. When Singapore brand Allies of Skin had to increase its prices earlier this year, it posted an in-depth Instagram post explaining why, and brand founder Nicolas Travis addressed every comment on the posts directly with thorough and technical answers.
How to action this: trust your consumers with the facts. Consumers understand brands need to make a profit and will be more understanding of businesses that are open about the difficult choices they are forced to make. They understand supply chain issues are fluid – with environmental and geopolitical circumstances a factor – and that this means good quality ingredients are now more expensive.
Whether you are freezing or increasing prices – or changing formulas and packaging to avoid them – open communication and price transparency are a must. British skincare brand UpCircle has stayed ahead of its customers' concerns, reassuring them with a community-led cost of living strategy that set out its pledges for 2022, including freezing RRP and supporting hygiene poverty charities.
Brands that practice price transparency are also perceived as more trustworthy. Look to sustainable US skincare brands Dieux and Isla Beauty, which share full cost breakdowns of formulas, packaging, labour, payment processing, shipping and markup with their consumers.
Offset price increases by rewarding loyalty. Highlighted in Insight's Cost of Living: New Consumer Behaviours report, loyalty programmes are having a resurgence across all industries post-pandemic. In the 2022 Global Customer Loyalty Report, 62% of respondents said that loyalty programmes helped keep customers engaged during the pandemic and they will continue to be important as spending slows down. Add or update loyalty programmes to reflect shoppers' recessionary needs. These should offer a mix of transactional and nontransactional perks, with monetary rewards and coupons balanced by experience-based benefits. Tiered loyalty programmes that offer points to spend in-store, future discounts, refills or free shipping will be seen as money in the bank by frugal consumers. At the same time, member events and community promo days will boost loyalty and appeal to a broader audience.
The data collected from loyalty programmes can also be used to personalise experiences and create stronger community bonds. 80% of consumers are more likely to do business with companies that offer personalised experiences (Boston Consulting Group research).
Value meets values: planet and pocket-friendly solutions
The cost of living crisis will force many shoppers to choose between sustainability and affordability. Eco-conscious consumers are deeply concerned that their short-term economic choices could have long-term environmental implications, and they will be looking to brands to provide product solutions that mean they don't have to choose.
A global survey by EY found consumers are already prioritising affordability over sustainability to save money on essentials. In its cost of living survey, UK sustainable beauty brand UpCircle found a third of shoppers have sacrificed or have considered sacrificing their ethics and values when buying skincare and beauty products. Sustainability platform Edie found 67% of consumers said that the “high price of sustainable products is significantly putting them off from buying them” and found 65% of people wanted retailers and brands to do more to support sustainable shopping behaviours.
The good news – for brands and consumers – is that saving the planet and saving money often leads to the same solution. Many sustainable product initiatives actually save money as a natural side-effect, but the cost-efficient aspect is often overlooked or under-messaged. Amplifying this aspect alongside the eco-ethical benefits will show the 'true cost' of a product and allow consumers to balance their finances and their values.
Resource-efficient products are a good place to start, as rising utility costs are a major concern for families and households. Initially designed with the environment in mind, personal care formats that reduce or eliminate the need for water, and products that work at lower temperatures, will be valued by cost-conscious consumers looking to reduce their utility bills. Products such as Alterna’s Meltaway No-Rinse Micellar Hair Cleanser and Kao’s no-water-required 3D Shape Shampoo Sheets offer value and sustainability in one.
Cost-per-use and extended lifespans are other aspects of resource-efficient formats that should be messaged to eco-minded consumers feeling the pinch. Waterless and solid formats deliver a better cost per usage than their liquid equivalents and last much longer. UK hair brand nope’s plastic-free waterless shampoo and conditioner bars last three times longer than an
average 250ml bottle and offer an excellent cost per usage. Inclusev London’s Add Aqua Collection features water-activated powder-to-foam hand washes, body washes, cleansers and shampoos which deliver four times the number of washes of a liquid product.
How to action this: revisit the under-messaged, cost-efficient aspects of existing sustainable formats, no matter how small. The cumulative effect of small savings can add up to big gains for the pocket and the planet over time, and will help shoppers reconcile difficult choices. Don't overlook the less obvious savings sustainable formats offer. In general, solid and concentrated formats are travel-friendly and TSA-approved due to their smaller size and non-liquid form. This saves money by eliminating the need for secondary purchases of minis or travel sizes and further increases cost efficiency. Canadian sustainable zero-waste hair and bodycare brand Everist's products are three times more concentrated than traditional formats. The mini 100ml-sized tube is travel approved and delivers up to 12 weeks of applications. New closed-loop UK beauty brand We Are Concentrate's small but mighty Shampoo and Conditioner necessitates only a marble-sized amount of product and is fully travel-approved.
Adding life-extending accessories into product assortments will also appeal to 'values-meets-value' consumers. In the US, Fenty Skin's multitasking All-Over Cleansing Bar comes with a clever stand designed to help preserve and extend its life and maximise cost per usage, while UK solid skincare brand SBTRCT prolongs the life of its products even further with its absorbent, antibacterial, mould-resistant diatomite dish. Tools and packaging that ensure every last drop of product is used also have a new place here. Look to gravity formats or simple tube keys.
Finally, support consumers struggling to make sustainable and affordable decisions by rewarding them with discounts on future purchases via recycling schemes. In the UK, brands including Boots, L’Occitane and The Body Shop all participate in the British Beauty Council’s recycling scheme, which rewards shoppers for their eco-choices, while UpCircle gives its consumers who use its Return, Reuse and Refill scheme a 20% discount and a Freepost label.
Hygine for all: the need for family-friendly
As the cost of living crisis becomes more acute, so will the importance of family-friendly products. Emerging as a now vital micro-category within personal care and cleansing, products that can be used by all members of the household will be the gold standard in value, allowing families to reduce costs and maintain hygiene without sacrificing safety and wellbeing.
Rising costs worldwide are putting families and budgets under pressure, forcing many parents to cut back or sacrifice their own hygiene and self-care needs to prioritise their children. Families are now more pessimistic about their finances and are increasingly cautious about spending, with those with babies and young children disproportionately affected. Two-fifths of consumers in the UK with children feel regularly stressed about money, compared to a quarter without children, according to iNews. In the US, consumers aged 35-64 (81%) and 18-34 (77%) are most concerned about rising prices, according to data platform Momentive. Families are also experiencing higher levels of hygiene poverty. A 2021 UK survey by Boots and charity The Hygiene Bank revealed that 69% of teachers had observed children with poor hygiene due to their parents being unable to afford basic items such as soap, toothpaste and deodorant, and this is being further exacerbated by rising inflation.
Products that can be used by the entire household, regardless of age, skin type or gender, will offer a lifeline to families feeling the pinch. Family-friendly products – including two-in-one formats and multitasking hybrids – eliminate the need for multiple product purchases for different people and ensure everyone can feel clean and fresh without compromise. Many family-friendly brands take a 'cradle up' approach, starting with the needs of the most sensitive and delicate members of the family and working up. US celebrity beauty brand Honest Beauty by Jessica Alba has evolved from a baby beauty brand, expanding its bath and body collection with all family products and value packs designed for "adults, teens, toddlers or infants". As the name suggests, B Corp-certified Everyone's family-friendly products are formulated to save families time and money, and include items such as the 3in1 Soap, a versatile cleanser that works as a body wash, shampoo, bubble bath and even shaving gel.
How to action this: family-friendly also means family-sized, particularly important for high-usage everyday personal care items such as shampoo, conditioner and body washes. Delivering more volume for less cost, many brands are already providing supersized options for families squeezed by the cost of living crisis. Faith in Nature offers its Coconut Shampoo in a 5L size, the equivalent of 12.5 400ml bottles, while sustainable personal care brand Bathing Culture offer its concentrated body washes and bath products in an enormous one-gallon refill format. Extend supersizes beyond personal care, too: to combat sun care poverty, Supergoop! now offers its PLAY Everyday Lotion in four sizes to suit all pockets, including a family-friendly jumbo 18fl oz (532ml) bottle with a hygienic, child-friendly pump dispenser.
To maximise family-friendly appeal, rethink branding and
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