May 29 2020 Central Highlights

Retail, direct selling and e-commerce reinvent themselves to attend the new pandemic and quarantine times

In China, consumers came out of the quarantine eager for shopping - it's the retail therapy contenting embargoed souls.

But the spending spree resulted in a jump in brands sales, back in China. In Brazil, 12 million unemployed, a drop of 1.5% in GDP and companies closing their doors, it is unlikely that we will have a big movement on retail post-quarantine.

Especially because who needed beauty products, bought them online, by whatsapp, or through beauty consultants or resellers. So, going to a store to relax shopping, getting to know new smells and textures, should be a privilege for a few.

The pace of growth of some companies from January to March was abruptly interrupted and companies had to arm themselves quickly with digital resources in order not to lose customers and compete in the vast online world, where hyper-digitization developed in a dizzying way during confinement . And what seems to be happening is that brands have been strengthening digitally during confinement.

There is a high chance that e-commerce, social commerce and live streams on Instagram will become a new habit for consumers even after the containment measures have relaxed.

Direct sales, which have a strong tradition in the country and in a momentum of quarentine should mantain its strenght, especially in the cosmetics sector, since in 2019, more than 1.5 billion items of products and services were sold by direct sales in Brazil. Among the categories with the most adherence is cosmetics, reaching the 54.7%.

Since March 2020, when the World Health Organization (WHO) declared the coronavirus crisis to be a worldwide pandemic, personal routines have been totally altered and professional relationships have taken new forms, with isolation and the home office.

E-commerce and direct sales came into action with several options, especially for hand hygiene and hydration items, creating new habits. "I believe that alcohol gel is a habit that will last even when the epidemic ends," says  Adriana Colloca, president of ADVB - Brazilian Direct Sales Association.

Even before the pandemic, sellers of cosmetic brands by direct sale already promoted 'lives' on Instagram to promote new products. During quarantine they are more active than ever.

"Online sales are cheaper. In addition there are discount coupons and over R $ 300.00 it is possible to split the purchase up to 10 times. No retail store does that, "says Anne Kite, owner of a call center company and Natura consultant, who has been using 'lives' for a long time as a sales tool.

A need arises and with it an opportunity: online testers, increasingly crucial in the beauty area and one of the last barriers to buying cosmetics online, are emerging with force. Just to give an example of the possibilities, Benefit (LVMH) launched a specific program for consumers to find a suitable style for their eyebrows before making an appointment with Benefit Brow Bar.

The reinvention of retail

The pandemic highlights the need for retailers to reinvent their model. The general manager of creative company Centdegrés of China, Matthieu Rochette-Schneider told the website cosmetics design that the online and offline shopping experience should become more direct, creative, fun and inclusive. "I believe that soon we will see the birth of a new generation of retail. Retail brands are expected to follow the trend of increasing online activities.

"The store's new role will change as digitalization arrives. So, the more e-commerce, the more customization, the more CRM (Customer Management System), consumer needs tracking system), the store will be transformed. It is a gradual process and businessmen in the sector will have to understand this, "said Eduardo Terra, president and spokesman of the Brazilian Association of Retail and Consumption SBVC and director of BTR Consultoria, specialized in Retail, in an interview with cosmetics br in February 2020, a month before the global pandemic declaration. According to Terra, the store will have to integrate with e-commerce and the role of the seller and manager will also have to transform.

"Post-pandemic retail will basically have two characteristics: even with the reopening of stores, the reduction of the contamination process, until we have a complete solution, with mass vaccination and complete extinction of the virus, there will still be doubt about the processes of regular purchases, which should boost online sales for at least a year, " says the retail specialist.

He believes that, as a year is more than enough time for the online shopping habit will be incorporated. The retail specialist notes that, online sales are not limited to sales in the traditional way, by computer, mobile sites, but to sales via whatsapp and social networks. "They are here to stay and are being boosted at this moment for this health reason, but it must be incorporated into people's habits," he states.

Sephora China recently announced a partnership with Tmalll Global, Asia's largest open business-to-consumer (B2C) platform, to launch a concept store on the e-commerce platform. The retailer also announced digital ‘cloud shelves’ at Sephora’s physical stores that linked with Tmall’s concept store to create synergy online and offline, company said.

Industry experts, such as Rochette-Schneider or even Sephora, believe that retailing may recover after the pandemic, if they adapt to trends. "This is a turning point where what is at stake is the ability for retailers to reinvent their model and restore the experience," says the company.

In Brazil, Eduardo Terra believes that the recession is mainly medium term. "Brazil created a layer of income protection and short-term employment that is MP936 that prevented mass unemployment and the Corona Voucher that mainly for classes C, D and E has generated income, for the term of three months only.

To avoid a lasting crisis, especially in relation to the retail of cosmetics, he believes in a global look to consumers and brands: "First to seek opportunities and greater engagement with consumers and there it is brands reinventing themselves and repositioning some products, considering the trading down process. "

"For the ecosystems of franchisors, franchisees, shopping malls, store owners, there are the need of one to seek health from these systems, with credit, support, information, in short, collaboration, conversations, exchange of information, support for the process to survive."