As the old saying goes ‘beauty is in the eye of the beholder’ and for consumers looking to purchase beauty products today their eyes are more likely than ever to be fixed on a screen.
- The pandemic has accelerated consumers’ openness to buying beauty products they trust online
- One beauty analyst believes there will be a shift back to stores as consumers prefer to try before they buy
- Brands are embracing augmented reality as an alternative to trying products in store
The pandemic’s impact on the beauty industry cannot be underestimated, as beauty halls – formerly thronged with makeup enthusiasts – remained shut for long periods.
Sampling became logistically impossible as hygiene requirements were put in place even after stores reopened. Even the types of products customers were buying transformed – long spells at home meant more customers were opting to purchase eye creams rather than eyeshadows.
Historically, beauty shopping has had a lower online penetration rate than other sectors, but the pandemic has accelerated consumers’ openness to purchasing a host of beauty products in this way.
A GlobalData survey conducted in the first quarter of 2021 found 55% of UK spend across the beauty and grooming category took place online, despite many operators such as Boots and Superdrug qualifying as essential retailers during lockdown and remaining open.
There’s been a flurry of acquisitions in the online beauty space in light of this shift, with Sephora acquiring premium online player Feelunique in July and The Hut Group snapping up Cult Beauty for £275m in August.
While shoppers’ beauty-buying habits are changing, expectations from some powerhouse cosmetics brands of how their products should be displayed and sold are staying put – as demonstrated by etailer Boohoo’s plan to open a Debenhams beauty hall in a bid to keep major beauty brands on side.
Against this backdrop, how can beauty retailers adapt to best serve their shoppers and brands post-pandemic?
From exclusivity to accessibility
Mintel global beauty analyst Sam Dover believes there will be “an inevitable shift” back to stores for beauty shoppers as the tech equivalents of ‘trying’ products online – be it through augmented-reality trials or virtual consultation – often does not match the experience of trying the products physically.
“Consumers expect these [experiences] to be highly functional in order to convert them fully from in-store trials,” says Dover.
“It works for things like lipstick, but when it comes down to the nuts and bolts of buying a new foundation, you don’t really know how that product is going to look on your face. I don’t think those technologies are quite sophisticated enough to truly replicate that experience in store.”
One senior executive at a high street beauty retailer echoes this view: “Some of the gimmicks around virtual try-on and things like that probably will take off, but they haven’t yet really,” he says.
For this reason, the executive argues that while top-up shopping for tried-and-tested beauty products is likely to migrate significantly online in the long term, testing out new products and access to in-person advice is an experience for which shoppers will still want to head to a store.
Beauty halls are evolving by creating alternatives such as touchless sample dispensers or offering sanitiser before customers can access samples.
In some outlets, consumers can still request samples from brand representatives, offsetting frustration from purchasing the incorrect item online where it is harder to discern suitability.
Indeed, in the UK 33% of consumers who buy beauty and grooming products say the inability to test them in store during the pandemic has resulted in the purchase of products that are not right for them, according to Mintel.
Reinventing beauty retail
The growing interest online doesn’t mark the bitter end of the beauty hall – although its return in a world emerging from the pandemic may not be exactly as beauty aficionados would expect.
Flannels Beauty recently launched its beauty hall concept in Sheffield amid plans for further launches in Leicester and Liverpool, and Flannels head of elevation Michael Murray tells Retail Week that beauty retail is “ripe for reinvention”.
“We believe everyone should be able to enjoy and feel part of the world of luxury beauty,” he says, explaining the logic behind bringing premium beauty to high streets across the UK and not just London.
This example of opening regional hubs to grant beauty connoisseurs access to big brands is also a strategy executed by Harrods spinoff H Beauty, which now has branches in Milton Keynes and Essex.
“Gone are the days where you’ve got just a few main brands”
Senior executive, high street beauty retailer
The senior beauty executive says offering a plethora of brands in secondary locations that may not previously have stocked them has become one key way for bricks-and-mortar beauty to stand out from rival operators and attract spending that might otherwise have gone online.
“It’s become a very innovative area – gone are the days where you’ve got just a few main brands,” he says.
In the US, premium beauty brands are teaming up with big-box retailers to take advantage of the increased foot traffic to convenience stores daily.
Ulta Beauty is set to launch in 100 Target stores, while department store chain Kohl’s will open Sephora concessions in 200 of its shops this autumn.
This transformation from exclusivity to accessibility on both sides of the Atlantic looks set to continue.
Dover adds that Tesco now stocks indie haircare brand Monday Haircare, while Sainsbury’s has expanded its beauty offerings in its larger stores and Superdrug has announced the addition of four black-owned haircare brands to its product portfolio.
Boots’ new approach to beauty includes opening 30 smaller-format beauty halls in local stores in the UK and Ireland that will offer sought-after brands such as Drunk Elephant and Fenty.
The high street giant is seeking to strike a balance between a compelling in-store experience and convenience for increasingly online-savvy shoppers.
As well as offering next-day click and collect across 2,200 of its stores, the retailer has joined forces with Deliveroo to launch a delivery trial from 14 of its shops in key cities including London, Edinburgh and Nottingham.
Over 400 of the retailer’s products will be available via 20-minute delivery as part of the trial, including beauty products, medicines for minor ailments, skincare, and food and drink options.
It will come as no surprise that online players have noted an uptick in users during the pandemic – and these consumers have not disappeared as restrictions have eased.
For online players, the key to maintaining a footing in the beauty category comes down to personalisation, utilising data and social media to target the right consumer.
Cosmetic and skincare members club Beauty Pie expanded its ranges during the pandemic and now engages directly with its growing customer base to ensure the offerings are aligned with their expectations.
Beauty Pie founder Marcia Kilgore explains that as an online player, the company can analyse consumers’ shopping habits: “Until now, our membership system has been a little bit complicated, and has not always let members shop for everything they want. In a recent survey, a large majority of them said having monthly limits was holding them back.”
“Now that we are bigger and more experienced, we have more ability to forecast our inventory and more information about what members shop for regularly vs just once in a while, so we are able to experiment with this new style of shopping.”
The UK-based online-only beauty marketplace Beauty Bay saw increased demand during the pandemic, particularly in the skincare and wellness categories.
Chief executive David Gabbie says he was not surprised by the likes of THG and Sephora snapping up smaller online players that saw customer numbers grow during lockdowns.
He says: “It’s certainly been an interesting time. We’ve always anticipated there would be some consolidation in the sector.
“The industry has to be careful that we don’t end up with the same retailers all over again”
David Gabbie, chief executive, Beauty Bay
“It’ll create the opportunity of us being first to market [for brands] and having that point of difference for the brands themselves.
“The industry has to be careful that we don’t end up with the same retailers all over again. I think we have been through that period with department stores over the years and obviously consumers have turned away from that.”
“There still needs to be some individualism which I think, for us as a brand, that’s what we absolutely are.”
The sampling dilemma
Online outlets are not forgetting physical samples despite their virtual location.
Karan Gupta is co-founder of Odore, a self-described “all-in-one digital sampling platform” used by L’Oréal, Dior and Sephora among others.
Odore’s solution assists brands in different stages – from gathering data from consumers to picking, packing and fulfilling orders of suitable samples for these potential customers.
“Now we know the power of samples – you get your samples into the hands of the right customer, then they are four times more likely to buy and it’s the third-largest influencer when deciding to buy a new product,” explains Gupta.
He believes the future of sampling will use data, with brands sending samples directly based on captured information input by consumers themselves rather than randomly distributed in store.
He adds: “It shows the evolution of the industry, especially with the growth of ecommerce and due to the nature of beauty, they still need to try the product.”
Wendy Slattery, chief executive and co-founder of Irish startup The Beauty Buddy, echoes this. She is confident the online element of beauty purchases is here to stay.
The Beauty Buddy, which now has 70% of its user base in the UK and US, uses barcode technology to allow consumers to scan a product in store and immediately see reviews from fellow users, as well as influencer reviews.
The data analytics company, which aims to be the Trustpilot for beauty, has not neglected samples, creating its own sampling squad of active online users that are sent products from brands.
After consumers test and use the product, The Beauty Buddy hosts feedback sessions between the brands and the consumers. The company now has 45,000 users reviewing 100,000 products.
Slattery believes physical retail is here to stay despite increased interest in purchasing online: “It’s still a slow market to go online because what tends to be bought is a lot of skincare, a lot of replenishments of something you already know.”
When considering what the future of beauty looks like, it becomes clear that building the foundation for success will lie in addressing the full spectrum of consumer needs.
Physical locations are now once again poised to offer consumers opportunities to connect with the correct products for them, while online beauty players have gathered a stronger foothold in the market over periods of lockdown, promoting convenience.
Retailers that offer a connected shopping experience catering to both of these needs look set to benefit from this investment.