Threats and opportunities for beauty brands
Retail is becoming increasingly fragmented and for the beauty industry, perhaps more than most. From dedicated stores for particular schools of thought, such as cruelty-free or fast fashion brands like H&M and retailers like ASOS launching own-brand beauty lines, to Instagram-only ranges and beauty box subscriptions, the number of ways and places to buy beauty are expanding.
And this is opening up both threats and opportunities for beauty brands.
Brands are being rendered less visible to target customers through parallel innovation in new technologies. Auto-replenishing technology (see Amazon’s Dash Replenishment Service) and home voice assistants – such as Google’s Home or Chinese firm LingLong’s DingDong, which uses voice recognition technology to action commands and answer questions – are serious threats to brands.
Once a user is locked in to a certain type of product – perhaps the only one which is compatible with their smart appliance – tempting them to explore new or alternative products will likely prove difficult. Now, voice assistants happily add items to shopping lists when we ask them to. Once they are granted the autonomy to order groceries for us based on past behaviour and preferences, control over which brands are selected is essentially handed over to an algorithm.
So how will this affect how people buy beauty? For beauty and personal care brands, we expect that many will favour auto-replenishment and will outsource to restock lower interest categories (shampoo, deodorant) and favourite items. This is especially true of those who have already found products that suit their needs and seek the convenience of never running out. Great for consumers but challenging for brands as space for discovery is squeezed.
48% of our global sample says they are interested in services that would automatically order and deliver household products now, but we see this expressed interest converting into actual usage relatively soon. 7% globally are forecast to be using such services by 2025 (taking into account when the technology will be widely available, among other factors) and a further 57% are interested. So the market for this globally is huge – 64% of global consumers are potential users.
Shopping is breaking free of all constraints – spaces and opportunities to buy and sell, both on- and offline, are expanding. This is a theme we track in our trend The Shoppable Universe.
Social media in particular is a new arena for retail. With the popularity of networks like YouTube, Snapchat and Instagram among beauty vloggers and make-up brands, consumers are already finding inspiration for looks and new products on social media. The home of tutorials, unboxing videos, backstage content, dupe-hunting and sharing swatches, the social space is an ideal one for cosmetics shopping. Foresight Factory’s most recent data shows that 29% of global consumers claim to have already purchased something via social media, with a further 30% expressing interest in doing so. And with shoppable functionality now integrated into both Instagram and Pinterest, and an explosion of shoppable video from brands on YouTube, we expect this proportion to grow quickly.
Dr Brandt used shoppable ads on Instagram Stories to drive sales of face masks via MikMak Attach, which connects social media ads to retailers’ e-commerce sites and allows viewers to purchase products without leaving the networks. The brand reportedly experienced an increase of 500% in sales over a 10 day period.
Chat services are another route to seamless, on-the-go shopping. 1 in 4 global consumers have bought a product or service via a chat messenger service, and a further 25% would be interested to do so. As explored in our trend Conversational Commerce, this isn’t simply about transactional interactions. This allows brands to casually chat with customers online, where they already spend much of their time interacting with friends and family. Customers are able to ask pre- and post-purchase questions about a product or receive recommendations and advice from brands – making this a more engaging route to retail, and a way to extend the brand-consumer relationship.
How to act
The world of beauty shopping is fast changing. How can your brand keep up, stay relevant and remain visible?
- The dawn of auto-replenishment is an invitation to think about whether your product will become self-replenishing, and thus how you can integrate into auto-replenishment services to ensure it gets bought.
- Respond to the always-on shopping mindset and open up opportunities both in real life and digital contexts.
- Consider how to use social media and chat services for pre-purchase engagement.
- And finally, think about post-purchase relationship-building and providing customers with fresh inspiration to encourage repurchase.