By Elisabeth King
How connected consumers have changed the Beauty Industry
At the WWD Beauty Summit in the US in mid-2017, Fabrizio Freda pointed out that when he addressed the conference seven years earlier Instagram didn’t exist. The President and CEO of Estée Lauder noted that today the popular platform boasts over 700 million users. “We’re shifting channels and preferences that are profoundly changing the industry and many of these changes offer enormous opportunities”. Younger generations are defining the culture with images of self-expression and 65 per cent of teens rely on social media to discover and select beauty products, he added. “In the US, women are spending 13 per cent more on foundation, 18 per cent more on concealer, 75 per cent of women use more than five makeup products every day and six mascaras are sold every minute. What we’re living through is not a moment in time, it’s the new reality”.
From Chatbots to Amplified Word-of-Mouth
Quantum leaps in technology from customer-service chatbots to virtual reality and 360 degree videos have become commonplace almost overnight. Parham Aarabi, Founder and CEO of ModiFace, whose app lets consumers see themselves wearing different makeup and hair colours under different lighting conditions, says the company works with 75 of the top 100 global beauty companies.
Brands such as L’Oréal-owned NYX now use product searches on their websites and apps as a form of market research to seek out development ideas and micro-trends. Smartphones have become ‘stores’ in consumers’ pockets as they research and purchase beauty products anytime, anywhere. Beauty brands also have to engage and build brand awareness through other connected devices such as tablets, e-readers, media players and more. Customisation has become one of the major buzzwords in the beauty industry and AI (artificial intelligence) is on the cusp of providing true personalisation.
Before the onslaught of social media, word-of-mouth was one of the most powerful influences on the path to purchase. It still is – only more so. According to a survey by The Benchmarking Company, 83 per cent of women say that positive reviews from “women like me” have become extremely influential, particularly when they involve clinical claims. Indie brands have gained enormous traction worldwide because they rely on social media to spread the word about their products and brand image without the need for massive marketing and advertising budgets. But major players are well to the fore. Maybelline New York, for example, with over 5 million Instagram followers, worked with major US influencers, Manny Gutierrez and Shayla Mitchell, to launch Colossal Big Shot Mascara in early 2017.
Virtual World
Apps have had a profound effect on how beauty products are trialed and sold. L’Oréal Paris launched Makeup Genius in 2014 and it has been downloaded over 20 million times. According to Guive Balooch, Global Vice-President of L’Oréal Technology Incubator: “By combining our knowledge of consumers and the science of colours with technologies for monitoring facial expressions, we were able to calculate the best possible algorithm capable of producing an extremely realistic colour-rendering in real time”.
It’s this gaming appeal of virtual reality that has electrified the beauty industry. Last April, Sephora’s hugely successful Virtual Artist app was given a makeover, adding more new shades and three new virtual tutorials for brows, contouring and highlighting. Coty launched a lineup of AR apps such as Clairol MyShade for hair colour and Rimmel Get the Look for makeup. YouCam from Perfect Corp is the major competitor of Modiface and works with over 100 brands, including Estée Lauder and e.l.f.
In an industry where service is top-of-mind, many brands use chatbots which showcase AI’s huge potential to promote personalisation on a mass scale. L’Oréal’s Facebook Messenger chatbot helps consumers to choose the right gifts. Estée Lauder’s Messenger chatbot matches foundations with customers’ skin tones. Dior Insiders answers queries and educates. Olay’s Skin Advisor program, especially built for mobiles, uses AI to analyse skin using selfies and recommends products.
Global Movement
L’Oréal was a pioneer in digital beauty innovation and remains in pole position. The French multinational made a strategic investment in Founders Factory, a digital accelerator, in mid-2016 to invest in five world-class beauty startups and co-create two new companies each year. In addition to Makeup Genius, other innovations from L’Oréal’s tech incubator include the MyUV Patch from La Roche-Posay, a stretchable sensor worn on the skin to monitor UV exposure and Style My Hair from L’Oréal Professionnel which allows consumers to try out new styles and colours.
But Western beauty companies have powerful rivals in the tech race. In China, Meitu is a photo-processing app that brightens the skin, conceals blemishes and widens the eyes and boasts 270 million active monthly users. By 2020, 50 per cent of all mobile sales will be made orally and Chinese giant Baidu has developed Deep Speech 2, which converts the voice to textual data.
The tech revolution in the beauty industry still has a way to go to reach the sophistication of AI used in self-driving cars such as detection, reasoning and optimisation. It’s just the beginning of artificial intelligence applications in beauty, says Asmita Dubey, Chief Marketing Officer for L’Oréal China. One thing is for certain, beauty brands will have to update their tech playbooks on a constant basis.
Think Global – Act Local is Key
L’Oréal’s Makeup Genius has been downloaded 800,000 times in Australia, says Christophe Eymery, Head of Digital and Media ANZ for L’Oréal. “On a per capita basis, that’s number three in the world. Innovative technologies are everything in today’s beauty industry because of the evolution of the consumer. A year ago, we launched a click-to-buy app exclusive to Priceline which has been very successful. Women like to make up their own minds these days and define their own beauty by discovering new products and trying before they buy. To be successful in five to 10 years’ time, beauty brands will have to join them on a continuing journey and be first-to-market with products such as the My UV Patch from La Roche-Posay and Color Lounge from Matrix, which showcases hundreds of shades and hairstyles”.
Buying the wrong shade of foundation is one of the biggest beauty regrets, says Eymery. “Lancôme Le Teint Particulier Custom Foundation launched in selected department stores in the US, the UK and now Japan. There are over 72,000 shades and the breakthrough formula is customised to each individual to match their skin tones. To me, it’s a ground-breaking product that shows how far we have come in true personalisation”.
L’Oréal’s investment in digital innovation is the highest in the global beauty industry, says Eymery. “I am very excited about our involvement with the Founders Factory in London. We are currently working with such exciting start-ups as Sampler which tests digital sampling and Riveter, which identifies products on digital platforms solely by images rather than words or descriptions”.
The Estée Lauder Companies have a strong focus on being consumer-led and this means that we need to communicate with our consumers in the channels that they prefer to use, says Terry Little, Managing Director, The Estée Lauder Companies Australia. “Overwhelmingly this is social media and so each of our brands maintains local accounts on key social platforms, such as Facebook and Instagram, and we actively market to consumers on these channels. We have been very committed to embracing digital innovation and have recently run campaigns on platforms such as Tinder, Snapchat and Spotify, which have really resonated with our consumers. A new area that we are currently embracing is Messenger Bots and we are having a lot of success in utilising these as a customer service and CRM tool”.
Estée Lauder is also embracing technology at our counters through the introduction of innovations such as digital shade matching tools, which ensures that our customers can determine the makeup shades that perfectly match their skin-tone, says Little. “We are also rolling out some virtual try-on technology at counters, which utilises the augmented reality app YouCam so that customers can try on a full range of lipstick shades within a matter of seconds.”
Since our launch in the Australian market three years ago, Sephora has had a terrific reception and we closed out 2017 with 13 stores, says Libby Amelia, Country Manager, Sephora Australia.
“In addition to our strong East-Coast retail footprint, our online business sephora.com.au functions as a huge player in our retail game, also allowing us to service our customers Australia-wide. The digital footprint continues to grow, with a large customer base now shopping both in store and through the digital platform”.
Technology is constantly updating and consumers are inundated with messaging and information, so our customers need their retail experience to allow them to try new things, experiment with trends, and explore new brands, says Amelia. “The focus is steering away from a beauty counter model and single-brand loyalty, to customers diversifying their purchase habits and shopping across the store, website and app, and this is an area where Sephora sees continued growth and opportunity”.
Last March, we launched the first beauty shopping app on the market. Within a day, Sephora Beauty Shopping ranked in the top five in the shopping category and has changed the way our customers shop with us online, adds Amelia. “We continue to excite our App shoppers with exclusives such as pre launches and unique offers. The Sephora App also enhances the loyalty experience, making it easier than ever for customers to engage with the Beauty Pass program both online and in store. Our digital e-commerce channel has also enabled us to expand our Australian offering to New Zealand, which is a really dynamic and exciting market for us”.
The beauty retail landscape is in a really buoyant position in Australia at the moment, says Amelia. “Now more than ever, more people are genuinely interested in, and investing in their beauty purchases. Sephora has recently introduced Afterpay as a payment method on the e-commerce platform, making it even easier for customers to experience the wide array of products and brands available. The next step is pushing out the technology to the brick and mortar stores”.
Sephora continues to improve the omni channel shopping experience through innovative developments such as Virtual Artist (an augmented reality tool that allows customers to virtually try on lip products before making a purchase) and Foundation Finder (a recommendation tool that helps customers find their best matched foundation shade). “In 2018, we will continue to improve these technologies and also roll out to stores. An online booking tool for in-store beauty services is also in the works,” adds Amelia.
Re-imagining the customer experience at our stores has been a major innovation focus, says Ann Donohue, General Manager – ANZ – Jurlique. “In mid-2015, the company embarked on a mission to update the point-of-sale system across all our concept stores. We wanted a more sophisticated one that would revolutionise our new store design and IT systems, in addition to providing more personalised care. A major part of the strategy was removing traditional POS terminals and countertops to create a more open and free-flowing space”.
Jurlique staff now use multiple iPad devices in-store to serve customers from anywhere and provide more relaxed consultations, adds Donohue. “Our new in-store point-of-sale system has allowed us to be where the customer wants to be. We can consult and complete a transaction and take customer details where they are most comfortable”.
We have been digitally forward at L’Occitane for many years, says David McConnachie, General Manager – Australia, L’Occitane en Provence. “We love the instant connection with our customers and followers on social media, as we have so much to offer them from eventing through preview launches and keeping them up to speed. We keep it simple through the correct use of hashtags, working with relevant influencers and listening to our community, of course”, says McConnachie.
We are always looking for innovative services to create theatre at counter and will be launching something very progressive this year, says Melissa Lyme, Marketing & Communications Manager, Elizabeth Arden. “Personalisation is very important for customers today. Currently, 60 selected Elizabeth Arden counters nationally are equipped with a Foundation Shade Matchmaker, a palm-sized skin tone reading device that provides precise, targeted shade suggestions based on a customer’s unique skin tone measurements. This innovative colour matching technology is not affected by different lighting conditions. Not only does this breakthrough make the matching of shades easy, it also helps to project an authoritative, high tech sales method to customers and allows beauty consultants to engage customers through the ‘fun factor’.
As a global beauty business, Trilogy has harnessed the growth of social media to keep our new and existing fans engaged and wanting to hear or see more from us, says Kristina Andreassen, Trilogy Digital and Social Specialist. “The social space allows us to have conversations with customers. There’s no substitute for listening to our authentic fans who use our products to help inform decisions around product development, marketing and how we behave as a business”.
Social networks have exponentially increased the power of word-of-mouth marketing, she adds. “People can now share their opinions and recommendations with their entire global network of friends and acquaintances. Trilogy has embraced new technologies to boost posts and target specific audiences by filters such as location, demographics and interests, along with a strong focus on investing in creative content”.
The strategy has enabled Trilogy to authentically grow our reach and audiences globally and bring new customers to discover the brand, notes Andreassen. “We specifically design and tailor striking social campaigns around communicating emotive brand values such as sustainability and the power of nature, rewarding loyal Trilogy fans and encouraging them to discover other products within our range, as well as bringing new customers to the brand. “The growth of mobile has also given Trilogy a chance to have a ‘shop window’ in the pockets of potential customers. “It’s a huge opportunity to reach audiences anywhere in the world, communicating our brand and giving our fans an avenue to purchase, provided our digital messaging and content is on point”.