2020 has been tough for the health and beauty industry, with the loss of bricks-and-mortar sales predicted to cause a 20-35% decrease in revenue. Whilst retailers will undoubtedly have to tighten their purse strings for the next fiscal year, consumers at least, are optimistic that their routines will return to normal post lockdown (89%). The uncertainty this has created however, means it is more important than ever for brands to expand their offering beyond the high-street.
The pandemic has acted as an industry trigger - catalysing many pre-existing and emerging consumer macro trends. Whilst new innovation and technology - coupled with the need to remain indoors has elevated many aspects of the digital shopper journey. We will explore just a few, including the rise of the subscription model, AI and AR advancements and the adoption of new e-commerce marketplaces.
The subscription eCommerce market has grown by more than 100% a year over the past five years and is set to reach £1billion by 2022. Brands like Dollar Shave Club and Beauty Pie have hugely proffered from this, despite their different models. Dollar Shave Club offers the same product on a regular basis, providing convenience and saving shoppers time and money (just think no one looks forward to buying a razor).
Beauty Pie on the other hand follows the same structure as those behemoths of subscription Netflix and Spotify – offering users a lot of choice, with premium access to members. With 80% of people in the UK currently using a subscription service, it seems to have moved from fad to fixture and provides a lucrative dimension to the shopper journey. Subscription works particularly well for sustainable or wellness products like vitamins and probiotics, as seen in Grove Co or The Nue Co., whilst perfectly lending itself to cosmetics, as seen with brands like Birchbox, Lookfantastic and Glossybox.
From subscriptions, we move to AI and AR advancements. Whilst shoppers have been confined to their devices, the need for brands to engage their audience and provide a digital replacement for the changing room has become more pressing. A trend initially started by L’Oréal’s WeChat App in 2019, has consequently taken off: the virtual try-on. L’Oréal saw consumer spending increase 7-fold where AR’s deployed, with the same conversion and monetary uplift being seen by their external partners, Facebook and Amazon. Many other brands have seen similar results, with Benefit’s YouCam Makeup app users 1.6 times more likely than non-users to buy beauty products and typically spending 2.7 times as much.
In-store, the virtual try-on is taking over traditional beauty halls. Stores like Harrods are already implementing these changes, through their new AR smart mirrors (Magic Mirror), which will enable shoppers to digitally try on the full range of makeup available. This tech will also be a great step forward for inclusive beauty, enabling consumers of all ethnicities and ages to feel represented – a marked change from last year, when 40% of women over 50 didn’t feel ‘seen’ by marketeers.
The most successful brands in the industry place an increasing proportion of their annual marketing spend on digital and diversify their offering across multiple marketplaces. L’Oréal – a brand renowned for having their finger on the pulse of consumer behaviour, spends 43% of an average $2.1billion a year on digital and recently moved their budget away from Google to Amazon, based on the insight that this is where 50% of people who have a product in mind will start their search.
Amazon and the social marketplace were already a phenomenon, but there is no doubt that COVID acted as an accelerant. Particularly with Facebook and Instagram’s new direct to consumer shopping platforms. The situation has also renewed interest in all things live. According to Fidji Simo, head of the Facebook App, the number of Facebook Live viewers increased by 50% from February to March.
TikTok’s latest ‘small gestures’ gifting feature also debuted amid the crisis. This feature allows users to virtually send promotional ‘gifts’ from brands to their contacts through the app and has been the latest influencer marketing revolution. NYX utilised this, allowing regular users to send a $5 gift card to their contacts via TikTok. Following their #ButterGlossPop campaign, NYX saw their following grow seven-fold.
The shopper journey is no longer linear. We are living in a world where we can shop anytime, anywhere. There are so many routes to market now that the most important thing for brands to do is to cut through the noise, through optimising and diversifying their offering. It is no longer good enough to just have a website. This must be coupled with an understanding of how to hone and navigate social and alternative marketplaces, dependent on the customer insight brand-to-brand, as a one-size-fits-all approach is now an altogether archaic methodology.
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