Beauty Players’ Growing Focus on Digital
The rapid development of technology in consumer electronics has not left the global beauty industry unaffected and companies are increasing focus on developing effective digital strategies to reach an ever widening technology-savvy consumer base. These strategies are targeting a range of operational aspects, from brand building to consumer engagement to skin analysis, and most importantly, online retail platforms, to capture new sales. Internet retailing is small but is the fastest growing channel in beauty and personal care, and the significance of digital strategies is growing beyond sales. There is no uniform approach amongst companies to exploit digital opportunities but there are frequent new launches of initiatives, delivering diverse results so far.
Estée Lauder’s digital drive: Consumer engagement, premium image building, e-commerce
In July 2014, Estée Lauder launched The Esteé Edit blog site for a personalised shopping experience. Particularly in the premium beauty segments, building brand equity is a primary objective and consumers’ blogging and reviewing iconic brands on this site can be a powerful brand-building tool.
The initiative differs from other brand content as it resembles a magazine, with posts in beauty and non-beauty industries. The company’s research shows that consumers trust peer reviews on these sites as much as personal recommendations and user-generated content is becoming more prominent for many brands, as the speed of information and opinion sharing is increasing. The site also works as an online retail platform for the Estée Lauder product portfolio.
In addition to The Estée Edit site, the company has allocated resources to implement brand-enhancing strategies across all online activities, to increase access to consumers ahead of its competition. Currently, 16 of its brands have their own marketing website but the aim to increase interaction between the brand and consumers remains a key objective for the company.
Avon: Direct selling in a digital marketplace
Avon, the world’s largest direct seller, has been through quite a lot of cultural and technological shifts. Adjusting its basic business model of door-to-door selling and personal relationships of its sales reps to the digital era is a challenge.
In October 2014 the company relaunched its e-commerce website to support its sales representatives, to blend online and offline sales. The company is arming them with digital content, such as tips and video interviews with makeup artists backstage at Fashion Week, which they can broadcast via Facebook, Twitter, Pinterest and Tumblr to connect with their target consumer base.
Avon has posted weak financial results in recent years; net sales and operating profit have been declining steadily since 2011 and it posted a US$52 million net loss in 2013. Avon will need to establish a foothold in the digital marketplace in order to reignite growth and exploit long term growth opportunities.
SkinBetter: Targeting the rising demand for customisation
Beauty product customisation is a growing trend to watch.
In October 2014, Allure magazine partnered with SkinBetter to launch a new app for skin analysis. The system works by analysing a photo of a consumer’s skin to identify wrinkles, spots, and redness and future problem areas. The app is available on www.skinbetter.com and www.allure.com and in the Apple App and Google Play stores.
Consumers need to upload a photo and answer a brief questionnaire about their skin. The photo is analysed using patented technology and the system provides customised product recommendations. Consumers will be able to shop by recommended product, skin concern, skin type, product type, or brand.
Currently the website features 19 US brands, largely pharma-positioned, such as elta MD SkinCare, dr Brandt, SkinMedica.
Given demand for customisation is on the rise in the beauty industry, brands’ presence on these websites can reach a wide new consumer base in search of the perfect fit for their needs. L’Oréal for example has an extensive portfolio of pharma-positioned brands, including Vichy, La Roche-Posay, SkinCeuticals, Innéov, Roger&Gallet and Sanoflore, which could benefit from exposure in such apps.
Long term prospects of digital activities
Technological developments influence the market environment beauty companies operate in and the industry is seeing a wide range of new approaches to how companies aim to take advantage, engage with consumers, build brand image and most of all, generate new sales. Companies are frequently launching new digital initiatives but so far it is too early to see a significant direct impact on their revenues. But it could soon be crucial to get digital strategies right.