1 CHAPTER I BACKGROUND 1.1 Research Background The COVID-19 pandemic has had a major impact on various sectors, with the retail industry being one of the most affected. Beauty retail stores, in particular, have faced significant challenges as consumer behavior has changed drastically. The temporary closure of physical stores, coupled with the surge in e-commerce, has resulted in a substantial drop in sales for offline beauty stores. As the world transitions to the post-pandemic era, beauty retailers must adapt to these changes and look for new strategies to boost in-store sales. One promising approach is to implement techniques that trigger impulse buying behavior among customers, a strategy that has shown potential in various retail contexts. Pandemic-induced lockdowns and social distancing measures have necessitated the closure of many physical retail stores, including in the beauty sector. Yet in most major beauty industry markets, McKinsey and Company states that in-store shopping accounted for up to 85% of beauty product purchases before the COVID- 19 crisis, with some variation by sub-category, i.e. Baby Boomers, Gen X, Millennials, Gen Z. Online-savvy American millennials and Gen Z make almost 60% of their purchases in-store. Whereas with the closure of premium beauty product outlets due to COVID-19, about 30% of the beauty industry market was closed. Figure 1. 1 Shopping habits for cosmetics and skin-care products across age group (Source: mckinsey.com, 2020) Koleksi digital milik UPT Perpustakaan ITB : Hanya dipergunakan di area kampus ITB untuk keperluan pendidikan dan penelitian 2 The pandemic has not only affected where consumers shop but also how they shop. There has been a noticeable shift in consumer preferences and behavior, with a greater emphasis on convenience, security, and digital engagement. The study by Accenture (2020) also highlights that during the pandemic consumers are more likely to shop online due to convenience and reduced risk of virus transmission. The pandemic has accelerated the adoption of digital technologies, with consumers becoming more comfortable with online shopping, virtual consultations, and social media-driven purchasing decisions. This shift led to a drastic increase in online shopping, which became a major channel for purchasing beauty products. According to Accenture's survey, the major shift to e-commerce is expected to continue, with a 160% increase in online purchases from new or low-frequency users. In particular, in personal care items, during the pandemic, it increased to 13%. Figure 1. 2 Proportion of purchases made online by infrequent ecommerce users.