Retail dive: Beauty takes it all

At a time where retailers are scaling back on their physical operations, the beauty sector is posting impressive sales-in-store results thanks to highly performant products and exceptional in-store experiences. Let’s uncover beauty’s best-kept secrets

The laws of attraction

For the last few years, demand in the beauty sector has surpassed many other categories, with Hana Ben-Shabat, expert in consumer goods and retail practice at global management consultancy AT Kearney, speaking of a ‘renaissance period’ for beauty. While the fashion category remains the most important at 46% of total sales in 2017, the perfume and cosmetics category posted a substantial +17% progression of its in-store sales from 2016 to 2017, compared to +5% for the fashion category.

Retail experts attribute these results to the beauty sector’s capacity to grasp and maintain its customers’ interest thanks to added-value in-store experiences. To achieve this, over the past few years beauty retailers and brands alike have been investing heavily in augmented reality (AR) technologies.

The virtual mobile try-on app is considered the ultimate AR application and various international beauty brands, such as Lancôme and Sephora, have developed their own versions. Customers can test the colours of lipsticks, blushers and other beauty products digitally. Another option is the in-store AR mirror used by several cosmetic giants, including MAC. A number of beauty retailers have also launched their own social media platforms, where loyal customers can exchange their opinions about products and engage in beauty-focused discussions.

The beauty industry has clearly understood the opportunity that digital represents and is taking active measures to build fan bases and help customers test out products before making a purchase decision, with one goal in mind: increasing sales.

In parallel, beauty retailers and brands are experimenting with innovative store concepts. Such locations go beyond simple retail spaces and have evolved into studios. In these more intimate environments, dedicated beauty advisors are at hand to provide tailored, more personal consultancy services, to create lasting customer relationships.

Still considering store concepts, some cosmetic brands who established their presence online have launched brick-and-mortar boutiques to great acclaim. As adoring fans assemble on opening day, these brands are betting high on the physical retail experience. To unlock sales, these disruptive showrooms appeal to all five senses or to real-life perceptions. In November 2017, make-up brand Glossier released its debut fragrance in a concept store featuring an infinity mirror room and hidden sliding panels – the ultimate beauty funhouse.

Beauty contest: who’s who in the product world

Europe remains the go-to place to shop everything beauty in 2017, with France, Germany, Spain and Italy gathering more than 40% of global tax free sales.

In Asia, while the popularity of Korea’s K-Beauty sector has increased around the globe, Japanese branded cosmetics still retain their reputation as high-quality products. APAC tourists flock to Japan to purchase products designed for Asian skins, UV-blocking and skin-lightening creams in particular. Shinji Yamada, former spokesperson for Japanese cosmetics giant Kanebo, has noted that Japanese cosmetics are perceived more favourably than those made in China. The Nikkei credits the cosmetics sector for the rebound in tax free sales of goods in department stores in 2017.

Unsurprisingly, Asian nationalities remain the champions in this category, with Chinese, Taiwanese and Indonesian shoppers accounting for 48% of global sales in 2017. Sales to Chinese customers progressed by nearly +50% from 2016 to 2017.

On replicating this trend

The beauty sector is an experiential category at heart, blessed with customers eager to experience very hands-on forms of shopping. It is therefore no surprise that new technologies have encountered so much success in stores and have driven sales upwards.

Fashion retailers can also benefit from these new technologies to replicate this success. For Jason Goldberg, SVP of content and commerce at digital transformation agency SapientRazorfish, this is not about adding tech for its own sake. Goldberg suggests retailers need to be more strategic with their tech investments, looking to solve genuine customer issues with digital innovations – rather than adding to the field of unsuccessful, gimmicky apps.