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Italian Beauty Industry Weighs in on Coronavirus Impact

Brands and retailers are already witnessing drops in sales and in-store traffic in the first week the epidemic hit the country.

MILAN — As Italian Prime Minister Giuseppe Conte on Thursday called for the country to begin to get back to normal in the midst of the coronavirus outbreak there, the nation’s beauty industry is beginning to assess both the short- and long-term impact of the crisis.

According to preliminary data released by the Italian association of cosmetics companies Cosmetica Italia, in 2019 sales of the Italian beauty industry grew 2.3 percent to 11.9 billion euros compared to the previous year, with exports increasing 2.9 percent to 5 billion euros. The association initially forecast similar growth in the first half of 2020, but the coronavirus crisis might affect the prediction.

“The evaluation on the impact of the coronavirus on the industry can be done only on the middle-term and only once we calculate the decrease of the demand in the retail channel in terms of orders to suppliers,” said Cosmetica Italia’s president Renato Ancorotti. “The beauty industry is good for our country and even in the past, in moments of uncertainty, it proved to be able to react positively.”

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As more cases were diagnosed — there were 650 as of Thursday — a general stalemate hit areas that are crucial for the Italian economy, led by Milan.

“Our retail sales data have been heavily impacted in these first days,” confirmed Edoardo Bernardi, general manager, Italy of The Estée Lauder Companies.

“We have seen an impact, indeed. Italy, which is our largest market, is down 30 percent [in terms of sales] since last Saturday,” echoed Italian leading cosmetic brand Kiko Milano’s ceo Cristina Scocchia.

“Hong Kong is also down 50 percent since January, compared to the same period last year. We are a global company and not all markets will be affected equally; so far our overall global results are still positive thanks to the good performance of the rest of Europe and the Middle East,” she specified.

Both companies’ sales received a boost from e-commerce. “Online sales continue to perform positively, with good levels of increase,” said Bernardi, while Scocchia revealed that even in this situation Kiko’s e-commerce “has continued to evolve positively with a double-digit growth rate.”

The coronavirus crisis might therefore boost online beauty sales, which last year grew 22 percent to 470 million euros compared to 2018. Yet e-commerce only accounts for 4 percent of the Italian beauty industry’s total sales, where mass market and perfumeries are still the prime channels.

“We see much more traffic on our web and social platforms, probably due to the smart working format that many companies have adopted this week. Often this increased traffic translates in increased sales but it’s still too soon to understand if this trend will be confirmed in the next days,” said Romano Brida, ceo of Bullfrog, an Italian men’s grooming brand and barber shop chain.

“In the immediate aftermath of the coronavirus spread in Lombardy we noted an impact in terms of traffic in our stores, especially in the ones located in the most touristic areas of Milan,” continued Brida, adding that “appointments in our barbershops have dropped, especially in those close to tourist areas or frequented by working men.” In particular, the executive mentioned the prime Bullfrog unit in Milan’s central Via Dante, which is one of the nine stores the company has in the Lombardy region.

“It’s hard to calculate the damages because we don’t know how long this panic among the population will continue. Our most exposed stores have lost 50 percent of their income in the first days of this crisis, but the rest are in line with our expectations,” continued Brida.

If some beauty players can bank on e-commerce sales to endure the moment, a range of retailers are finding the situation harder to deal with.

“Starting from last Friday, traffic in our stores dropped sensibly, especially in northern regions and in malls at the beginning, but also in the rest of Italy starting from Monday,” said Fabio Pampani, ceo of Douglas Italia. “The decrease rate in traffic even exceeded 50 percent in some cases and the growth of online sales doesn’t counterbalance the heavy slowdown of the brick-and-mortar channel,” he added. To wit, the perfumery chain’s strength is its stores, as it currently counts 530 doors across Italy and which contributed to the 428 million euros in revenues the company registered at the end of September 2019.

Augusto Mazzolari, founder of one of Milan’s grand beauty emporiums bearing his name, shared the same concerns as “sales have decreased even 50 percent in store, but also our online sales have been impacted.

“We’re experiencing a traffic slowdown not only in terms of Italian customers but most importantly, of tourists,” said Mazzolari.

For now, beauty companies are trying to evaluate the evolution of the epidemic day by day and study how to overcome the crisis in the short term, as executives all agreed on the unpredictability of the situation.

Bernardi said the company is studying strategies to stay close to customers and their evolving needs in terms of consumption habits. On a corporate level, the company didn’t close its Italian offices but “has encouraged employees — with a very high participation — to work from their homes, and we’re planning a temporary relocation of our shipments from the Italian warehouse to other international hubs.”

Kiko also implemented plans to assure business continuity at both its headquarters and retail-wise. “Our priority is the safety of our near 8,000 employees and to guarantee that we operate in compliance with all health measures taken by the respective governments,” stated Scocchia.

“First of all, we invited all our employees not to panic and not to communicate panic to our customers,” added Brida. “We strengthened our hygiene procedures which we normally follow in our stores and barber shops and, as many other companies in the area, we’re limiting any travel for our staff, favoring smart working and video conferences. For those working in our stores, we are studying a rearrangement of shifts to favor a minor load of work so we can lighten the work structure during these calm days and refuel our energies for when the demand will increase again in the next weeks,” he said.

The same approach was promoted by Fabio Franchina, president of the Framesi professional hair product company based in the outskirts of Milan. “We’re focusing on rearranging our activities so we could recover what we have lost and we are recharging our energies to improve our performance when this situation will be behind us,” he said.

Still, Franchina said that over the past week, hair salons registered a 10 percent drop in business, especially the ones operating in northern Italy. This might impact the positive sales this channel registered in 2019, when they grew 2 percent to 590 million euros, and the 1.5 percent increase initially forecast for the first half of 2020.

Yet for Franchina the biggest damage so far was linked to the education and training of hairdressers. “Many classes have been impeded and we don’t know if they will be recovered. As for now it’s difficult to calculate the loss but if the situation won’t be restored in the short term, it could impact by a couple of percentage points our 2020 revenues.”

As reported, the coronavirus also caused the leading Cosmoprof Worldwide Bologna beauty trade show to postpone its dates. The fair was originally slated to run from March 13 to March 16 and will now be held from June 11 to June 15 in Bologna, Italy.

The new timing will contribute to a challenging month for the Italian industry, as Cosmoprof will be quickly followed by Milan’s International furniture and interior design trade show Salone del Mobile, which also postponed its dates from April to June 16 to 21, overlapping with Pitti Immagine Uomo in Florence and Milan Men’s Fashion Week, kicking off on June 20.

“I think Cosmoprof did the right thing to postpone its dates. June is not the ideal time, but I’m sure organizers will find the way to present the Italian cosmetics industry at its best,” concluded Franchina.

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