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2020 Shan Hai Jin - Beauty category insight

群邑智库 · 公众号 · · 2020-11-25 12:00

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Impacted by the Pandemic, the post-60s/70s have cut down their effective demand. Their usage of skincare and cosmetic products has not revived in short term, and customer attrition has continued. They prefer offline shopping and domestic goods, and combination of advertising through various channels remains an effective strategy. However, their online shopping behaviors differ by tier. Elderly consumers in Tier 1&2 prefer to buy products online after trying out the products in physical stores, while these in Tier3&4 have little access to offline stores and tend to believe in celebrity endorsement, online comments and Daigou (a business of buying products on behalf of other consumers).

Beauty Category Priorities in Consumer’s Mind

The COVID-19 Pandemic in 2020 has created a special environment that the market experience a "shut down and restart" in a short time. By observing the recovery pace of various industries, we as marketers can clearly see the consumption priorities of various industries in the mind of consumers, so as to help us deeply understand the difference of inelasticity in various industries.

According to monthly total retail sales of social consumer goods release by the National Bureau of Statistics, beauty products as a quasi-inelastic need category enjoys sales rebound since April, just followed the food and beverage category. Along with domestic epidemic situation eases gradually, beauty category rebound growth rate is accelerating, up by 3.2% till Aug, meanwhile overall product retail consumption down by 8.5%. Therefore, we know that the priority of beauty category is just after food and pandemic boosted categories.

Next, we need to further understand the structural impact of the pandemic on beauty consumptions in various city tiers and generations. According to the data from 2020 Shan Hai Jin, nationally speaking, the consumption proportion of beauty products in the household income declined slightly (from 2.5% to 2.3%). That is to say, in the context of Shan Hai Jin, 2.3 RMB will be spent on beauty products in every 100 RMB household earnings in 2020.

Comparing different tier of cities, Tier 2 cities have been greatly impacted by the pandemic, and the consumption share of other basic diet and pandemic boosted categories has increased, while the share of beauty products consumption has declined. Then for different generations, consumption share of post-90s generation drops significantly because of reduced demand and the share of post-80s keeps stable. Surprisingly, the share of post-60s/70s increases, which is probably mainly caused by the penetration shrinking and that will be further looked into in the following analysis.

Market Structural Transition under COVID-19 Pandemic

From the above, we observed that the change of consumption share is not consistent between Tiers and Generations. In this way, we find that there are structural differences in the impact of COVID-19 this year. therefore, in order to easily understood, we deep dive into four mixed groups: (Tier1&2*post-80s/90s, Tier3&4*post-80s/90s, Tier1&2*post-60s/70s, Tier3&4*post-60s/70s) and taking skincare products category as example for further analysis.

First of all, we show the year-on-year changes in the annual/monthly purchase/usage rates of the four groups of people, in order to facilitate our understanding of their behavioral changes. Two main findings can be seen from the data trend in the bar chart below:

No matter for short-term or long-term, young users would keep using the skincare, and usage behavior enjoys fast recovery in the post-pandemic period. However, from the perspective of purchase rate, we observes that the long-term purchase rate is stable, while the short-term purchase rate rises sharply. This fully indicates that skincare category is the inelastic category in the normal life state for post-80s/90s and the pandemic only have temporary impact on them.