2022 fails to boost the beauty industry’s spirits

While various categories in retail industry such as clothing, footwear, quick-service restaurants (QSR), saw fair amount of growth in 2022 as compared to pre-Covid levels, beauty as a category saw least amount of growth during the year because of the impact of inflationary pressures, confirmed several industry players.

According to the Retailers Association of India, India’s retail industry witnessed a 19% sales growth in the period between April and November 2022, when compared to the same pre-pandemic period in 2019. The industries that did particularly well during this period were the QSR and the footwear industries, with a 30% growth compared to 2019, while the beauty, wellness and personal care industry only saw a 7% growth compared to the numbers that came out in 2019.

“Had there been no war like situation or inflation, there would have been more growth. People are happy to go out, eat out, but at the back of their mind they don’t want to over indulge, especially the lower income population. That is why the impact on discretionary products such as beauty. Meanwhile, footwear and QSR showed growth on the back of pent up demand and low base,” said Kumar Rajagopalan, CEO at RAI.

Giving an overall view of the retail industry in 2022, Technopak Advisors’ chairman and MD Arvind Singhal said that the year 2022 so far can looked in periods. From April till June, consumer durables, especially air conditioners, laptops, tablets, did well. June onwards, when there were no restrictions, people started spending money on travel. Clothing category got a good boost and then footwear. In the last four months from September, jewellery did well due to festivals.

However, the impact of inflation can be seen on fast-moving consumer goods industry which according to Singhal, includes beauty category as well. Both food and non-food grew in value but not much in volumes, he said.

While beauty as a category has been impacted by inflationary pressures and has shown least amount of growth this year as compared to other categories, many direct to consumer brands along with traditional FMCG companies like Hindustan Unilever, ITC still bet big on the long term growth prospects of the category.

At present, beauty is a fairly small category due to low per capita consumption in the country. According to Akshay D’Souza, chief insights officer at Bizom– a retail intelligence firm, companies are hopeful of the growth in the category that is expected to come in the long term and the high margins from it at present.

However, the year 2022 wasn’t the best year for beauty category and in fact within the FMCG segment, it showed de-growth during the year so far, hit by lower spending by consumers due to inflationary pressures, said D’Souza.

Going forward in 2023, similar growth trends are expected in retail industry as 2019 with no major fundamental change in consumer behavior except that if inflation continues, discretionary categories like beauty, FMCG would bear the maximum brunt, said Singhal