With the fallout from the British vote to leave the European Union (Brexit) still to be established, what the decision means for the beauty and personal care industry remains to be seen.
Mintel’s senior personal care analyst, Roshida Khanom, has given Cosmetics Design her view on the likely trends for the industry in the face of the change, in light of past consumer behaviours and the immediate impact of the vote seen so far.
According to Khanom, consumers generally reduce their spend in time of uncertainty - so we could see a resurgence of savvy shopping, particularly in sectors that are considered staple personal care items (e.g. soap and shower gel).
“Mintel data shows that times of economic recession bring a decline in consumer confidence, with consumer data showing reduced spend in some beauty and personal care sectors during the last downturn,” the analyst explains.
Consumers are likely to ‘trade down’ in times of economic uncertainty, Khanom notes, often switching to own-label varieties.
Luxury and ecommerce on the up
Khanom expects the luxury sector to enjoy a boom driven by tourists tempted by the sharply decreased value of the pound. The drop in exchange rates will also help boost exports for UK-based brands, as they become cheaper for businesses and consumers outside the UK.
If trends are in line with the last economic downturn, luxury is also likely to remain popular with domestic consumers, despite the savvy shopping elsewhere.
“Consumers continued to spend on small ticket luxuries to lift their moods whilst the economy remained uncertain. Fine fragrances, colour cosmetics and facial skincare showed growth as consumers indulged in little luxuries,” Mintel’s expert explains.
The market is also expected to see a boost to online shopping, as shoppers stock up on their favourite foreign brands in a bid to avoid the potential of rising import costs.
Long term: little change
Mintel predicts there is likely to be little change long term, however, as the UK will look to continue to trade with Europe and exported goods will still have to be compliant with EU legislation.
“Few companies are likely to welcome the complications involved in producing products to two different sets of quality standards, meaning that even products intended for the domestic market will be likely to be produced to EU standards,” Khanom predicts.
One longer term shift, however, could be that the UK market may well no longer be seen as a ‘stepping stone’ for international brands looking to tackle Europe, and brands may opt to position themselves in other countries first.