Jan 6, 2020: Elisabeth King reports on this week’s business news

Retailers buoyed by Boxing Day sales of $2.3 billion; the four mega-trends for 2020 beauty; direct-to-consumer beauty sales continue to soar; and Kylie Skin to debut in Europe.

Retailers buoyed by Boxing Day sales of $2.3 billion
Pre-Christmas sales were weaker than expected but were quickly off-set by Boxing Day revenues of $2.3 billion. The figure predicted by the Australian Retailers Association (ARA) was spot on. Every year Boxing Day crowds seem to expand, and this year's crowd certainly did not disappoint, noted Russell Zimmerman, ARA Executive Director. "Boxing Day is only the start of the sale period, and we anticipate this shopping spree to continue for at least two to three weeks".

A huge stimulant to after-Christmas spending was the upsurge in sales of gift cards this year. Once viewed as the coward's way out of gift-giving, experts noted that for many people they have become the preferred option to unwanted gifts. Prezzee, the major online gift card seller, reported a 246 per cent increase in sales during December. Myer also revealed that gift card purchases had surged significantly. While Chadstone, Australia's largest shopping centre, enjoyed a sales upswing of 20 per cent in gift card sales.

The ARA and Roy Morgan Research have predicted that post-Christmas consumer spending will reach $18.7 billion – an uptick of 2.8 per cent over 2018. NSW is expected to lead the pack with sales of $5.9 billion, followed by Victoria at $4.9 billion and Queensland at $3.8 billion. Food, household goods and hospitality are the top three sectors, but fashion, footwear and accessories are expected to deliver the fastest growth of 3.4 per cent to $1.5 billion.

The four mega-trends for 2020 beauty
New year predictions pre-date reading sheep's entrails as the medium for the message. Even today when social media platforms analyse data based on what people are talking about, this is not a guaranteed indication that they will take action or buy anything. Among the wacky and lazy lists for 2020, a few gems do stand out, though. UK-based GlobalData, a leading analytics and consulting firm to many of the world's largest companies and government organisations, has taken the mega-trend route for its forecast for 2020 beauty, rather than what lip colour shade will predominate over the next 12 months.

  • Anti-Pollution - Many dermatologists poo-poo anti-pollution claims. But consumer concern and dangerous pollution levels in so many of the world's cities are propelling anti-pollution claims back into the spotlight, says GlobalData. In Asia, anti-pollutions claims are no longer a side benefit and have become an expectation in skincare and makeup. Leading products such as Maybelline Urban Cover liquid foundation, for example, promise anti-pollution and sun protection.
  • Cannabis Cooling - At the start of 2019 big money was being spent on CBD-based (cannabidiol) skincare and startup brands. But many issues continue to stymie the trend from legal to regulatory concerns. Consumers are still interested in the trend, says GlobalData.  But brands are steering away from the hero ingredient approach, preferring to single out the anti-inflammatory and hydration properties of CBD within multi-benefit products.
  • Back to Basics - The natural look has been a major factor in scaling back on makeup and skincare purchases in Western countries for some time. De-consumption has also been propelled by the desire to consume less "stuff". According to GlobalData, this minimalist approach to skincare, haircare and makeup will continue to prompt consumers to choose essential products and avoid using too many products. The Skip Care trend originated in South Korea and more Asian beauty brands are focusing on multi-benefit products, driven by efficacy and increased sustainability in the beauty supply chain.
  • 360 Degree Well-Being - More consumers, especially Millennials and Gen Zers, are worried about stress, anxiety and feelings of fatigue. The well-being category has long shifted its emphasis from natural and chemical-free skincare, haircare and makeup. Beauty products and supplements focusing on mental and emotional well-being will continue to proliferate in 2020, says GlobalData.

Direct-to-consumer beauty sales continue to soar
Direct-to-consumer (DTC) sales aren't restricted to online-only brands and retailers. Many of the big beauty players have seen their revenues soar by selling directly to customers. In its 2018 annual report, L'Oréal ranked the increase in online beauty sales as the number one factor contributing to the continuing growth of the global beauty market,  and 13.5 per cent of the multinational's worldwide sales are now attributed to e-commerce.

According to a new survey by Diffusion, the US communications agency, 40 per cent of Americans have made a purchase as DTC consumers. Health and beauty is the number one category, representing 35 per cent of purchases. The major reasons for the consumer switch from traditional retail is cost, followed by fast delivery and easy returns.

The trend has become so entrenched that an increasing number of online-only brands and businesses are rolling out pop-up stores to test the waters for permanent physical outlets or to increase revenues by attracting new consumers who are unaware of their online presence. Cult US skincare brand, Glossier, launched seven pop-up stores in Nordstrom stores in the US in December and beauty subscription company, Birchbox, opened 500 temporary locations in Walgreens drugstores in the run-up to Christmas.

Kylie Skin to debut in Europe
Coty's majority acquisition of Kylie Cosmetics and Kylie Skin for US$600 million made global headlines in November. Globalising the brand from its US roots and fan base is the most urgent priority to maximise the investment and Coty are wasting little time. Kylie Skin will debut in Douglas, the German beauty chain with 2400 stores across 26 countries, in the Northern Hemisphere spring.

Douglas is Europe's largest perfume retailer, turning over US$3.90 billion a year. Six products from the 16 SKU range will be available online or in-store – Foaming Face Wash, Walnut Face Scrub, Face Moisturiser, Eye Cream, Vanilla Milk Toner and Vitamin C Serum. The retailer has enjoyed a huge surge in online sales over the past few years and a third of its turnover in Germany is through e-commerce, boding well for a digital native brand like Kylie Skin.

Snippets from the Wires

  • US indie brand, Milk Makeup, is noted for its clean formulas. Founded in 2015 and boasting 80 SKUs, the skincare and makeup division of the Milk Group is ranged in Sephora in the US, Canada and leading European markets including Germany and Spain. AmorePacific, one of South Korea's big two cosmetic titans, has taken a minority stake in Milk Makeup to debut the brand in its home market and other Asian countries.
  • WGSN, the UK-based trend forecaster, has released a report titled - Meet the Power Punks. The study pinpoints the financial and corporate power of Gen Xers aged 40 to 54. At the peak of their earning years, they have more money to spend than Millennials and Boomers in the UK and they are also key influencers of their Gen Z children.
  • China is expected to announce US$10 billion in sales of imported cosmmetics for 2019. According to South Korea's Yonhap News Agency, South Korea and Japan are running neck-and-neck, representing 25.5 per cent and 25.2 per cent of cosmetics imported by China. France ranks third with a share of 18.7 per cent.