"The beauty industry has been resilient in the past. Could this crisis have a different outcome?" The global beauty industry (comprising skin care, color cosmetics, hair care, fragrances, and personal care) has been shocked by the COVID-19 crisis. First-quarter sales have been weak, and there have been widespread store closures. The industry has responded positively to the crisis, with brands switching their manufacturing to produce hand sanitizers and cleaning agents and offering free beauty services for front-line response workers. At the same time, the industry’s leaders have a responsibility to do their best to ensure that their companies survive. The global beauty industry generates $500 billion in sales a year and accounts for millions of jobs, directly and indirectly. Lives come first, but livelihoods also matter. The short-term outlook for the beauty industry Beauty may be in the eye of the beholder, but there is little debate when it comes to the long-term attractiveness of the global beauty industry. Not only has it grown steadily, it has created generations of loyal consumers. Even though the economic magnitude of the COVID-19 pandemic on brands and retailers will be far greater than any recession, there are signs that the beauty industry may once again prove relatively resilient. Noting the uptick in lipstick sales seen during the 2001 recession, Leonard Lauder of the cosmetics company coined the term “lipstick index” to describe this phenomenon. The principle is that people see lipstick as an affordable luxury, and sales therefore tend to stay strong, even in times of duress. Where and how beauty products are being sold In most major beauty-industry markets, in-store shopping accounted for up to 85 percent of beauty-product purchases prior to the COVID-19 crisis, with some variation by subcategory. Even online-savvy American millennials and Gen Zers (those born between 1980 and 1996) made close to 60 percent of their purchases in stores. With the closure of premium beauty-product outlets because of COVID-19, approximately 30 percent of the beauty-industry market was shut down. Some of these stores will never open again, and new openings will likely be delayed for at least a year. The long-term impact of COVID-19 on the beauty industry Some changes resulting from the COVID-19 crisis are likely to be permanent. Here are two areas in which the pandemic could alter the beauty industry in fundamental ways: Digital continues to rise. Pre-COVID-19 trends will likely accelerate, with direct-to-consumer e-commerce, such as brands’ websites, shoppable social-media platforms, and marketplaces becoming more important. Across the globe, consumers indicate they are likely to increase their online engagement and spending. Beauty-industry players will need to prioritize digital channels to capture and convert the attention of existing and new customers. On the operations side, the use of artificial intelligence for testing, discovery, and customization will need to accelerate as concerns about safety and hygiene fundamentally disrupt product testing and in-person consultations. The pace of innovation accelerates. As the COVID-19 crisis has shown, the world can change quickly, bringing substantial shifts in demand. Sometimes, supply cannot catch up. Now, the need for speed is even greater. There is also potential for closer collaboration—among brands and retailers, in particular—through data sharing and inventory pooling. While the beauty industry may be in a relatively stronger position than other consumer categories, 2020 will be one of the worst years it has ever endured. We believe, however, that the industry will remain attractive in the long run. The COVID-19 crisis is likely to accelerate trends that were already shaping the market, such as the rise of the global middle class and the use of e-commerce, rather than mark entirely new ground. Consumers across the globe are showing by their actions that they still find comfort in the simple pleasures of a “self-care Sunday” or a swipe of lipstick before a Zoom meeting. Even before the pandemic, the definition of “beauty” was becoming more global, expansive, and intertwined with individuals’ sense of well-being. The COVID-19 crisis is not likely to change these trends—and in that, there is reason for hope.