By and and and  on October 24, 2008

 

The European beauty industry is waiting to exhale.

As stock exchanges all over the continent continue to seesaw, beauty executives are striving to get a clear picture of the impact the worldwide economic malaise will have on spending on beauty products, particularly in the run-up to the crucial holiday period.

Even before the weakening of the global financial system, beauty unit volume sales in the bellwether French market were down for the eight months through the end of August. Executives in Italy say their market is too volatile to forecast. Experts in Spain detect a definite cooling there.

“The buzzword for the coming months and the next couple of years is ‘unpredictability,’” said Remy Gomez, president of Beauté Prestige International, a division of Shiseido.

“We don’t know what the future holds and everything that once felt safe isn’t,” added Michelle Feeney, chief executive officer of tanning brand St. Tropez. “I lived in New York during Sept. 11 and in some ways it feels like that.”

“The economy is so unpredictable at the moment who can [say] what’s going to happen over the next few days, never mind the next few months?” said Tim Nancholas, strategic insight director at market research firm TNS Worldpanel. “Things are happening in the economy that we’ve never seen before. You’d have to be crazy to make any firm forecasts.”

“Everyone is just holding their breath,” said Nancy Flavin, a Paris-based consultant.

As well as wildly fluctuating stock indices, blanket media coverage of the collapse of banking stalwarts and looming recession are weighing on consumers’ minds, making it difficult to judge how their spending habits will evolve.

While executives asserted the beauty industry is somewhat buffered from a downturn in consumer spending given that fragrances and cosmetics are a relatively inexpensive treat for shoppers who are cutting back on bigger ticket items, others believe all consumer goods will be impacted to varying degrees by a reduction in disposable income.

“We cannot escape the downward trend in consumer spending habits,” said Gérard Delcour, president of Groupe Clarins’ international division. “We cannot escape being in the economy.”

“I’m not that positive about prospects for the beauty sector,” said Eva Quiroga, an analyst at UBS in London. “We have to wait and see if consumers’ weakening purchasing power is going to take its toll. At the moment it’s a volume issue, people are still using products that they already have at home. When it comes time to buy new stuff we’ll see if value is an issue and if they’re willing to pay higher prices. Christmas is going to be very, very tough.”

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