Over the past few years, beauty and cosmetic brands have experienced tremendous growth on a global scale. What used to be an industry limited to physical stores has now adapted to the digital world at a rapid pace. Brands like L’oreal, Estee Lauder, Fenty Beauty, and Mac are now household names spanning different demographics.
The pandemic significantly impacted shopping habits. A large number of beauty consumers said they spent more money online shopping for beauty and cosmetic products during the pandemic.
Nigeria is a growing force in Africa when it comes to e-commerce. This is due to the high rate of internet penetration combined with a fast-growing youthful population accustomed to online shopping. In 2020, fashion and beauty accounted for the largest online spending in Nigeria. This sector was worth 1.82 billion U.S. dollars.
Beauty shop owners surveyed across Lagos, Abuja, Port Harcourt, Uyo and Kaduna states agreed that women have an increased desire to purchase products that will make them attractive, despite the hike in prices of these beauty products.
“They focus now on skincare products and ‘organic’ beauty products that have less chemicals,” some of the shop owners affirmed.
Some beauty products users who spoke to Nairametrics also agreed that they were more likely to buy skincare and cosmetic products even on a tight budget.
The widespread closure of physical stores during the lockdown caused a decline in profits for most big beauty brands due to the disruption in the supply chain. According to Brand Finance, the total value of the world’s top 50 most valuable cosmetic brands declined by 9%, dropping from $137.5 billion in 2020 to $124.8 billion in 2021.
However, with the e-commerce business witnessing strong growth, most beauty brands took their businesses online to cater to the growing demands of end-users. This shift led to a spike in their revenues. British multinational consumer goods company, Unilever, reported a 41.61% turnover in the Beauty and Personal Care segment of its business. The segment recorded €21.1 billion ($25.38 billion) in revenue, which was the highest revenue among its various business units. The company’s Beauty & Personal Care segment registered the highest revenues among its various business units.
According to Forbes, beauty companies are now worth as much as ever. Stocks of larger beauty conglomerates like Estée Lauder and L’Oréal have bounced back, reaching all-time highs and trading at impressive 7.5 (or more) times annual revenues.
Recently, pop music icon Rihanna’s cosmetic brand, Fenty Beauty was valued at a conservative $1.7 billion, making her a billionaire, according to Forbes. In 2018, Fenty Beauty generated $550 million in annual revenue. This goes to show how the beauty and cosmetic market is a thriving one, despite inflation, recession or even a global pandemic.