According to Allied Market Research, the cosmetics market is expected to reach $390.07 Billion, Globally, by 2020. With its ability to reinvent itself using emerging technology and an array of entry price point products in its arsenal, it’s beaten the recent global financial crisis of 2008 and is continuing to go from strength to strength.
In the past, the cosmetics industry has been very much a physical retail experience with sales assistants at department stores ready with samples geared towards pleasing the senses to encourage a sale. However, investment in technology by larger cosmetics companies has led to a digital transformation in the industry while still allowing emerging brands to flourish at the same time.
These significant changes indicate that technology is now a core part of the industry strategy and other industries should be keen to follow.
The in-store experience
Sales assistants have now become beauty experts and are on hand to give customers on the spot tutorials, advice and even make-overs to build brand authority on products to increase sales and customer loyalty.
Data capture cards have been replaced with loyalty schemes where customer information is captured at POS tills during the transaction. These best practices can now be seen in almost any stand-alone cosmetics store, but new developments have now been implemented and the face of customer interaction has changed yet again.
In collaboration with Image Metrics, L’Oréal Paris launched its Makeup Genius app in 2014 which uses facial mapping technology to turn the front-facing camera of a smartphone into a virtual mirror. This allows the user to virtually try on products in real-time, save the user’s look and add the products to a wish list. Makeup Genius can also be used in-store to try on products before purchasing by simply scanning the product’s barcode.
This use of augmented reality has also been adopted by LVMH owned Sephora, where customers can use touch screen kiosks in its stores to use its Colour IQ service which helps customers choose the right product for their skin tone from a catalogue of thousands of shades.
The French cosmetics brand also have a designated area aptly dubbed ‘The Beauty Workshop’ where customers can sit at digital workstations and watch video tutorials of the latest makeup technique or have group beauty tutorials using a wide range of its products. This shift in customer engagement educates the customer about the brand while giving them all the information about the product and how to use it at the same time.
Sephora also tested and is continuing to develop the use of Bluetooth beacons in 20 stores. These small devices communicate with smartphones and tablets to deliver real-time marketing to registered users. Customers who opt-in for updates are sent personalized alerts when they enter a store. These alerts start with a welcome message and can follow up with store events, promotions or exclusive loyalty offers depending on the individual.
With ‘fast walkers’ being one of the main challenges, 80% of Sephora’s app customers agreed to opt-in for these alerts which show there is still a demand for the technology to be tested and developed to enhance an omnichannel experience.
Cosmetics companies large or small are able to collate a wealth of customer data to help drive their business. However as cosmetics and beauty products are so personal, gathering anything other than sales and consumer behavior data can be difficult, time-consuming and expensive.
Poshly, an American data company help beauty brands gather comprehensive consumer data by offering its customers opportunities to win beauty products in exchange for answering questionnaires. These questions range from detailed everyday beauty regimens to personal interests. Poshly then anonymize the data before sharing it with its partners for a fee.
With these detailed customer preferences, companies are able to make vital decisions from product development, marketing strategies and even identifying new markets.
We are also seeing the popularity of online retailers aimed at customers who are brand loyal, shop regularly online and want to explore new brands. For retailers like this, customer data is the linchpin to a successful sales model.
Subscription brands like Birchbox offer their customers sample sized products in their monthly subscription with the incentive to buy full-size versions on its site.
Coupled with a questionnaire about beauty preferences in the user’s account, Birchbox is able to collect a vast amount of customer data to feed into its personalized marketing strategy.
According to Google, 66% of beauty product buyers say YouTube influenced their purchases by helping them visualize how products fit into their lives. With this in mind, cosmetics brands are now following in the footsteps of fashion retailers by creating original content alongside their product mix to increase brand awareness and help with SEO.
FeelUniques editorial offering is perfectly positioned in the top navigation menu. Content is also well placed by recommended products at the bottom of the page with clear call-to-actions for the user to discover more beauty news, tips, looks and videos.
Feeluniques’ rich product driven content allows the customer to experience the company as a lifestyle brand as well as a place to purchase products. This approach is vital for a brand that doesn’t have a stand-alone store.
Both L’Oréal and Birchbox also offer a vast amount of content on YouTube which includes tutorials, celebrity campaigns, new product launches and more. Offering carefully curated content like this on a major platform has allowed both brands to engage with younger audiences and market their products and a new way.
A social media presence is key to any brand however, consumers are now using these platforms as a direct link to companies to voice concerns or complaints.
The cosmetics industry seem to have navigated the gauntlet in recent years by listening to customers, adhering to changing advertising rules towards transparency and promoting their brands with authenticity in mind.
Nyx Cosmetics and Sephora both have a huge following on social media platforms and are known for actively engaging with followers by liking posts and sharing reviews. This also allows both brands to take the opportunity to utilize their user-generated content. By sharing customers reviews and creating hashtags for users to engage with, both brands are able to showcase and promote their products and inspire and attract new users to their brand.
In 2014 Sephora partnered with eCommerce startup Soldsie which allows Instagram users to purchase products on Sephora’s Instagram account by leaving a comment on a photo with the hashtag #birchboxcart.
With companies increasingly developing new social commerce software, Instagram is now testing news ways to interact with photos to purchase products on its platform.
Many cosmetic brands are also very active on Snapchat offering curated content including behind-the-scenes celebrity shoots and new product teasers. L’Oreal were the first to test the social platform by creating and sponsoring its own ‘lense’ which used the same technology in the Makeup Genius app. After which, Benefit Cosmetics and Urban Decay soon followed allowing brands to deliver content to their followers to spotlight their products.
While Bluetooth beacon and current in-store technology are continuously being optimized for a truly personal shopping experience, mass customization is in growing demand and is the key focus for the cosmetics industry.
We’ve already seen companies such as US retailer Penrose that allow customers to create customized perfume fragrances, but the innovators seem set to come from 3D printing and digital makeup application.
Grace Choi’s Mink allows a user to 3D print eyeshadow, powders or lipsticks in any colour you can find online. From Choi’s first TechCrunch demonstration back in 2014, the FDA approved ink was printed directly onto a cosmetic substrate in an ink-jet printer dyeing a colourless powder in less than 1 minute. While MODA, the world’s first digital make-up artist uses an app to select beauty looks from the internet to then ‘print’ make-up directly to the users face.
While we can’t predict the next commercial emerging tech, it’s safe to say that personal recommendations from friends and in-store beauty experts still play a key role when it comes to consumer buying habits. However, stimulating the decision-making process with new digital innovations will be integral to the cosmetics industry’s continuous success.