The beauty of sustainable packaging15 December 2020
Cosmetics company Mary Kay takes sustainability and innovation very seriously, with more than 1,400 patents for products, technologies and packaging designs in its global portfolio. Although the global beauty industry has particularly suffered the effects of the pandemic, as companies have been forced to shift away from reliance on physical stores and demand for make-up products has fallen while people work from home, Mary Kay has been taking steps to preserve its unique selling points and cut costs by being more efficient with its packaging. Matthew Rogerson talks to Deb Gibbons, COO of Mary Kay, about the direction the company is taking.
Mary Kay has sought to empower not only its customers but also its employees, independent beauty consultants and women around the world through its online business model and efforts to support female entrepreneurs. The company’s business model bypasses retailers and sells directly to consumers through beauty consultants around the world; this model has evolved in recent years, relying more on digital interactions with consumers, online orders and home deliveries – a shift that has become even more important in recent months.
However, the impact of the Covid-19 pandemic and the uncertainty that followed has been felt across the beauty industry, and Mary Kay was no exception. According to GlobalData’s Covid-19 Impact Market Model, the cosmetics and toiletries industry is forecast to see a decline in sales globally as a result of the pandemic. Indeed, Mary Kay is projected to witness a loss of $706.7m in 2020.
In Asia and North America, the company’s two major markets, revenue is expected to decline by $296.5m and $230.1m, respectively. While North America is Mary Kay’s home market, Asia normally accounts for more than 50% of its revenue. The signs of recovery from coronavirus in Asia have, therefore, been a promising development for the company. At the same time, however, the US has quickly become a danger area with the highest number of cases in the world – more than 1.2 million cases were recorded between 26 October and 9 November 2020. Multiple state-wide lockdowns and a lack of coordinated central effort, combined with civil unrest, have placed a strain on this revenue stream. The company has taken strategic steps, including deciding to exit Australia and New Zealand to focus on the core region of Asia, but continued pressure in the US has hindered progress.
Maintain an edge
The company relies primarily on skincare and make-up sales, with only a minor presence in the personal hygiene segment. The make-up market has been adversely impacted by the pandemic, as lockdown measures have reduced demand for such products. However, Mary Kay’s direct selling business model, which has adopted a significant degree of digitalisation in recent years, may give the company an advantage over some of its competitors that rely on retail stores and beauty salons for their sales.
The company’s operational response has particularly focused on providing a rich customer experience to its clients. Mary Kay’s business model centres around offering personalised products and advice, which rely heavily on customer interaction with its beauty consultants. It is imperative that the company focuses on advancing these aspects while investing in its current workforce, in order to get closer to its customers, at a time when maintaining a personal touch is both challenging and more important than ever.
While beauty companies around the world have felt the heat as Covid-19 continues to spread, Mary Kay is likely to be in a position of relative advantage compared with its competitors once this crisis period comes to an end. Although its business is not as diversified as some other companies in terms of geographic spread, its overdependence on China may in fact save the company from suffering huge revenue losses. China is at the heart of Mary Kay’s operations in Asia: almost its entire business in the region depends on Chinese sales. This has served the company well, as China was also one of the first countries to emerge from the pandemic – and seemingly in relatively good economic health, in comparison with western Europe (where Mary Kay only has a marginal presence, accounting for about 2% of sales in 2019).
Additionally, the company’s skincare product lines are likely to benefit from consumers indulging more in their beauty rituals as people working from home make the most of their new-found free time. This also gives Mary Kay’s beauty consultants time to interact more with their clients over virtual communication channels and build stronger relationships with them, which is another boost for the company that should work in its advantage in the post-Covid world, too – strengthened consumer relationships should result in increased sales when the cosmetics market recovers. The company’s online business model and lack of physical stores, something that could have been viewed as a hindrance in the past, have given Mary Kay a significant edge over its competitors in the market, many of which are suffering losses as a result of temporary or permanent store closures.
The company’s investments in digitalisation in recent years are expected to pay off – particularly in China, where consumers are well known to be tech-savvy. Providing digital assistance for shoppers, as well as a wealth of online tools for its consultants, has helped to improve the customer experience and is expected to yield favourable results. At the same time, Mary Kay has altered its product offering amid the pandemic, in order to respond to changing consumer demand. In March the company started dedicating a proportion of its manufacturing capabilities to the production of hand sanitiser.
The first batch was donated to Baylor Scott & White Dallas Foundation, the largest non-profit health care organisation in Texas, the company’s home state Mary Kay has also donated hand sanitiser to low-income communities in Mexico and front-line workers in Asia, and worked alongside international humanitarian agency CARE to supply antibacterial hand gel to 63 developing countries. Green is the new pink Sustainable business practices are an important part of Mary Kay’s philosophy: the company has planted more than one million trees around the world as part of its ‘pink doing green’ initiative, and its headquarters and global manufacturing facility both run on 100% renewable energy.
The same goes for the packaging side of the business – Mary Kay uses environmentally friendly packaging, including a refillable compact that has been on the market for more than three decades and packing peanuts made from corn and potato starch. It was also one of the first companies to implement an extensive recycling programme, which includes product-line packaging, paper, plastic, corrugated cardboard, ink cartridges and aluminium. At its global headquarters in the US, Mary Kay’s independent beauty consultants are advised to return their recyclable colour refill cases and fliptop caps, and the company will plant a tree for every ten empty packages returned to them. In China, meanwhile, consultants and consumers are encouraged to use its environmentally friendly bags.
In February 2020 Mary Kay became a member of the Sustainable Packaging Initiative for Cosmetics (SPICE), joining other major brands such as Chanel, Coty and Estee Lauder. SPICE, founded in 2018, aims to improve the environmental performance of the entire packaging value chain by bringing organisations together to share knowledge and experience and work towards collective goals. The company is constantly striving towards sustainability, as COO Deb Gibbons highlights. “Our global manufacturing facility in Dallas is a zero-landfill site and has achieved a 20% decrease in water consumption,” she says. “Our distribution centres in the US and China use packing materials that are 100% biodegradable, with four facilities now powered by 100% renewable energy and a number of our product inserts printed on 20% recycled paper.
This is only the beginning, though, as we seek to continually improve, and ensure that we are not causing waste to end up on land or in the oceans.” This attention to excellence and care for the environment and social values underpin why, despite a tough year, Mary Kay is expecting to weather the pandemic. With a sales force that has a much deeper connection and interaction with the client, even digitally, and an understanding of what the customer wants, the future looks bright for this cosmetics powerhouse.