Beauty Retail Trend
We certainly haven't had excessive opportunities to show off fabulous looks and make-up in this pandemic year, but this does not mean that we have stopped taking care of ourselves, and above all that the cosmetics industry has stopped. Indeed, it is alive and well, and has experienced changes that, under normal conditions, would have taken much longer to materialize.
No less than others, the beauty market has been hit by the crisis caused by COVID-19. Sales in the first quarter of 2020 plummeted and many stores were forced to close. However, the industry has shown some resilience, responding quickly to change and new market needs. A large number of brands have temporarily converted production by distributing disinfectants, cleaners and offering free services to frontline workers.
Despite this shock, what are the forecasts for the cosmetics market? With an annual expansion rate of 4,75%, it is expected to grow from 483 billion dollars in 2020 to 511 billion in 2021 - to reach 716 billion by 2025. Make-up and Skincare the two leading sectors; the fragrance segment suffered most.
What happens in the Italian market
This very fast boost involved (and shocked) in the first place consumer behaviors and attitudes, women and men, who have significantly increased their level of digital interaction, strengthening the direct relationship with brands. To give a few numbers, in 2020 visits to digital beauty channels increased by + 34%.
The sense of advocacy of the value system that a brand or a retailer can offer through its online community, a phenomenon I would dare to say "natural" in these times of increasingly virtual sociality. An engagement, that of the communities, which starts from the bottom and is based on user generated content, on direct and transparent communication and on entertainment logic.
Finally, a slightly less mature phenomenon in Italy, that of the strong push to customization of the shopping experience.
Among the main services made possible by digital to manage omnichannel, the most used are undoubtedly click & collect and in-store pick-up (the 65% of retailers has active digital services for booking experiences or in-store pick-up) , the location of the points of sale and related products (the 93% of the brands makes the online store locator available) and above all the possibility to book appointments, visits and personalized consultations with a click, through an App or with a WhatsApp message (a consumer out of two used digital booking systems during the year).
As we have analyzed in recent months how Retail Hub, in this scenario the common element that emerges from all the interlocutors is the centrality of the consumer, linked to the countless possibilities of customizing services according to your needs. Not only the product, in short, but unique and exclusive services to satisfy the customer at 360 °: telephone and video consultations with the brand's experts, personalized promotions (the 64% declares that it wants to receive personalized offers from brands and retailers), the possibility of customize the service or product, perhaps testing it virtually through tools based on artificial intelligence and augmented reality. There are even those who have even decided to co-design an entire product line together with their consumers, based on their purchasing preferences and feedback from significant samples. This is the case of ProfumeriaWeb, which currently has its line of products as a top seller on E-Commerce.
Tendency to personalize not only products but also communications aimed at consumers. About 22% of E-Commerce sales are now generated by email marketing and marketing automation campaigns, confirming the effectiveness of personalized communications compared to mass communications. Quoting the words of Raffaele Cerchiaro di Jakala: “There is an overabundance of communication stimuli, so it is necessary to be able to communicate with the right frequency, the right messages, to the right consumers”.
Evolution of customization is the model subscription based, that is the world of pure subscriptions, already very popular in America and the UK, which is slowly penetrating the Italian market. We should not be surprised if in the near future there will also be a box of skin care, together with the deliveries of fruit and vegetables, water, wine and gin that we already regularly receive in our homes.
2020 was definitely the year of the Direct to Consumer brand. We are thinking not only of VeraLab, ClioMakeUp, Goovi, SkinLabo but of many other innovative Italian brands that have chosen to launch retail initiatives directly addressing the end customer, launching their own direct eCommerce (or their temporary stores) and exploiting the power of their image and the privileged channel offered by social media to communicate and interact with the reference community. This trend has already been present for several years in the countries that drive the cosmetics industry, the United States and Asia, where there are many successful brands that directly target consumers with their social commerce. Think of celebrities like Jennifer Lopez, Kylie Jenner, Kim Kardashian, Rihanna, none of the American stars are giving up on launching their beauty brand now. And, we can be sure, it will be a success (unlike when it was for Rihanna's own clothing line, which closed its doors a few months ago).
Consequently, the relationship between industry and retailer. In this scenario of forced changes, on the one hand they have strengthened their collaboration with joint initiatives and agile models that favor both, on the other we are witnessing a sort of hybridization of relationships and channels, in which retail becomes one of the possible media for the brand. In this sense, retailers offer not only products but become a place where it is possible to engage the consumer through increasingly fluid shopping experiences.
What will be the future of physical stores, the big open question remains, to which today it is difficult to answer. They will certainly change; they will probably be smaller and set up differently, they will transform from traditional sales spaces to places where it is possible to live a 360 ° beauty experience. Once again, putting the consumer at the center.
This year the brands present in Pharmacy, although sales in the cosmetics sector have nevertheless fallen, especially in the fragrance and makeup segments. This is testified by Caudalie, who has held up on sales also thanks to the active role of her online community and the high quality of personalization and customer care.
There is a certainty, in this sector more than others whoever knows how to seize the opportunity for change and innovation, perhaps by looking at cases of excellence beyond the Italian borders, wins. Without forgetting that we are the ones who have a primacy in terms of excellence in the cosmetic industry, to which almost all foreign brands resort.
If on the one hand we are faced with a rapidly evolving demand, on the other brands and retailers they must review the strategies and sales channels of their offer.
The beauty ecosystem still offers ample development space for i omnichannel services and for the definition of innovative business models. The most significant data is undoubtedly the growth in E-Commerce volumes, which in 2020 almost doubled (+ 48%) compared to the previous year. It is estimated that E-Commerce today impacts about 8% on the total beauty market. A growing share channeled to pure digital players, who choose to set up their business exclusively online.
- Reports Globe 2021, L'Oreal (2020)
- Statesman (2021)
- Jakala Observatory “The evolution of consumer purchasing behavior and sales channels in the Beauty sector“
by Massimo Volpe and Camilla Angelino - Retail Hub
Source: Kosmetica News