beauty retail: 20 scenarios for 2020

#1 INGESTED BY AN E-TAILER #2 EATEN BY EDITORS #3 SUNK BY SUBSCRIPTIONS #4 SWALLOWED BY A SMARTPHONE

#5 SURPRISED BY A SMELLPHONE #6 PUT AWAY BY PINNERS #7 SURPRISED BY A VANISHED MIDDLE CLASS #8 BOLT DOWN BY BLOGGERS #9 PUSHED ASIDE BY STORYTELLERS

#10 SHOVELED DOWN BY A SEARCH ENGINE #11 INHALED BY GOOGLE NOSE #12 CRIPPLED BY SHOPKICKS

#13 HAD FOR BREAKFAST BY AD BLOCKERS #14 MUNCHED BY THE BETTER EMAILER #15 LAID ASIDE FOR A NEW LOVE IN THE SOUTH

#16 GOBBLED DOWN BY THE ELDERLY #17 DEVOURED BY A ‘YOUTILITY COMPANY’ #18 POLISHED OFF BY PERSONALIZERS #19 PACKED AWAY BY AN EXPERT

#20 FINISHED OFF BY FRAGMENTATION

#9 PUSHED ASIDE BY STORYTELLERS #10 SHOVELED DOWN BY A SEARCH ENGINE

#14 MUNCHED BY THE BETTER EMAILER #15 LAID ASIDE FOR A NEW LOVE IN THE SOUTH

#19 PACKED AWAY BY AN EXPERT

2020 beauty retail

Futurology?

Imagine your beauty store in a future scenario��featuring the likes of M&A or IPO...

... Who – or what – would be most likely��to have put its teeth in it by 2020?

20 - more or less likely* - future scenarios �� *We’re optimists, not fatalists...

#1 INGESTED BY AN E-TAILER

Favorite Online Channels for Personal Care and Beauty Purchases*

Source: L2Thinktank, Digital IQ Index Beauty 2013, *North America

“According to a 2012 Forrester survey, 30% of online buyers begin researching their last online purchase at Amazon, double that of Google. (...) Product searches on Amazon have increased by 73% in the past year.” “Amazon also has more attractive shipping policies than existing competitors, including Sephora.com and Beauty.com, ...” http://www.amazon.com/b?ie=UTF8&node=7175545011; http://mashable.com/2013/10/10/amazon-luxury-beauty-store/; Source: PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014

#2 EATEN BY EDITORS

Amazon’s recent Luxury Beauty Store launch features 25 brands, how-to content and inspiration, as well as the ability to shop by category or collection.

http://www.amazon.com/b?ie=UTF8&node=7175545011; http://mashable.com/2013/10/10/amazon-luxury-beauty-store/; Source: PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014

http://www.thedrum.com/news/2014/05/21/grazia-magazine-launch-e-commerce-fashion-store

Source: Contently, State of Content Marketing: Retail, 2014

“In retail more than any other industry, aspirational branding drives long-term success, and telling original stories is becoming the key to stoking those aspirations.

It’s not just about being in Vogue anymore��—it’s about being the new Vogue. That’s what luxury retailer Net-a-Porter is doing with its new magazine, Porter, which hit newsstands this spring with a star-filled masthead, Giselle on the cover, and Uma Thurman inside.”


http://sco.lt/8L0bRp

“When it was first announced that pioneering fashion e-tailer Net-a-Porter was planning to launch a glossy physical magazine called Porter, there was no shortage of sceptics. Though Net-a-Porter was one of the first luxury retailers to elegantly integrate content and commerce — shortening the path between inspiration and transaction, and allowing them to more effectively engage and expand their audience and generate additional revenue by selling advertising — many wondered why an Internet-based company would launch a print product at a time when competition for readers and advertising dollars remains fierce. Indeed, some industry insiders suggested that, …”

“Consumer brands are treating retailer.coms as media channels." Source: L2Thinktank, Digital IQ Index Beauty 2013

#3 SUNK BY (A) SUBSCRIPTION CHAMPION(S)

Source: http://adage.com/article/cmo-interviews/l-oreal-attacks-fast-growing-e-commerce-space/244015/

#SUBSCRIPTION REVOLUTION “A host of L'Oréal brands -- including Kiehl's, Lancome, Clarisonic, Armani and YSL -- have in the past year worked with subscription-commerce-software provider Order Groove to increase their auto-replenishment business. The idea is more to lock in loyalty than tap the subscription craze started by Birchbox and emulated by many others.

Source: http://adage.com/article/cmo-interviews/l-oreal-attacks-fast-growing-e-commerce-space/244015/

http://mashable.com/2014/04/21/birchbox-raises-60-million/

Birchbox’s got 800.000* subscribers paying for its “magical mix of content and commerce”

#4 SWALLOWED BY A SMARTPHONE

Sources: Contently, State of Content Marketing: Retail, 2014; L2Thinktank, Digital IQ Index Beauty 2013; Nielsen, THE DIGITAL CONSUMER, FEBRUARY 2014

“Mobile shopping gives marketers opportunities to reach out throughout the consumer’s purchase journey from start to finish.” (...) “Four out of five (beauty) consumers are using their smartphones to shop.” (...) “Mobile devices accounting for 20 percent of sales and nearly 40 percent of traffic on Black Friday in 2013.” (...) "72% of Beauty sites are mobile-optimized, up from 50% in 2012."

#POCKET-SIZED BEAUTY SHOPS

Beauty Mobile Site Adoption

Source: L2Thinktank, Digital IQ Index Beauty 2013


Beauty Mobile App Adoption

“Although mobile site adoption has ballooned year over year, mobile app development ��has stagnated with the exception of a 6% increase in iPad-compatible apps. 40% of beauty-

exclusive iPhone apps have received fewer than 10 ratings on iTunes and 60% have ��a three-star or less rating.”

Industry Growth vs. E-Commerce Growth


Vast majority of beauty brands* have e-commerce capability

Source: PM-Digital, Trend Report: *Makeup and Skincare Brands Online, January 2014

Source: Nielsen, The Digital Consumer, February 2014

Comparing Activities Among Mobile Shoppers

#iBEACONS “iBeacon holds tremendous promise for the retail industry by providing a more customized approach to in-store shopping Source: http://archive.wired.com/insights/2014/05/retails-next-big-bet-ibeacon-promise-geolocation-technologies/

#SHRINKING SHOPS By 2020 IPXL’s ‘downtown’ shops might as well have made way for parks (where the mobile consumer would rather spend its Saturdays)

#5 SURPRISED BY A SMELLPHONE

See e.g.: http://www.bbc.com/news/technology-26526916; http://www.digitaltrends.com/mobile/oscar-mayer-iphone-device-wakes-smell-bacon/#!QH23Y

#6 PUT AWAY BY PINNERS

“75% of retail product pages include a Facebook share button, ��but only 22% do the same for Pinterest, despite the fact that��

��

Pinterest drives more sales and ��new customers than Facebook.”

“Pinterest is basically a viral marketing machine.”

—Christopher Ratclif, Econsultancy

Sources: Contently, State of Content Marketing: Retail, 2014; "PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014

(...) During the first three weeks of the 2013 holiday season, ��Amazon led the industry by averaging more than 16,300 pins ��

per week, and pins reportedly ��

tripled online retailers’revenues ��on Cyber Monday 2013. Pins are only becoming more effective, ��

since Pinterest now allows retailers to embed metadata ��into rich pins, including real-time pricing.

While some retailers have struggled to keep up with ��

the skyrocketing value of visual content, others are capitalizing ��on the trend.”

Sources: Contently, State of Content Marketing: Retail, 2014; "PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014

Product features and reviews, how-to videos, testimonials, forums, and

social media as a whole plays a larger role in the beauty industry because of the community

people depend on to make their purchases. ��

This is why Facebook accounts for 6% and YouTube accounts for about 5% of traffic to makeup and skincare sites, with Facebook fans in the millions and

YouTube subscribers in the hundreds and tens of thousands. Source: PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014

Source: Nielsen, The Digital Consumer, February 2014

What about Instagram? "79% of Beauty brands are now present on Instagram, up from just 29% in 2012” (...) "Featuring user generated photos at the point of purchase boosts conversion up to 7%." C Source: L2Thinktank, Digital IQ Index Beauty 2013; L2 Intelligence Report Instagram, February 2014

Source: L2 Intelligence Report Instagram, February 2014

Beauty Brands and Retail Brands on Instagram February 2014

#7 SURPRISED BY A VANISHED MIDDLE CLASS

Source: Irina Barbalova (Euromonitor), The Multi-Faceted Evolution of *Global Beauty, IN-COSMETICS 2014

“Mass Sustained, Premium Drops in 2013”*

Source: THOMAS PIKETTY, CAPITAL; whynationsfail.com

By 2020 IPXL’s middle class audience might have substantially shrunk...

#’MASS CLASS’ IN 2020?

#8 BOLT DOWN BY BLOGGERS

“L'Oréal recently ��launched Em, a prestige ��cosmetics brand from YouTube beauty blogger Michelle Phan, who's endorsed Lancome for the past three years. Em will be sold primarily direct to consumers via Emcosmetics.com, and will have ��a standalone flagship store ��in Manhattan.” Source: http://adage.com/article/cmo-interviews/l-oreal-attacks-fast-growing-e-commerce-space/244015/

(Michelle Phan’s ‘Life Palette’) Source: http://youtu.be/gB5-wp_cm_8

#9 PUSHED ASIDE BY STORYTELLERS

“Transparency is trending. As consumers’ appetites for interesting content and more sustainable lifestyles are simultaneously on the rise, retailers are jumping on the

opportunity to tell unique stories about their products.

The leader in this space – in the fashion industry, for example - is Zady, the 9-month-old startup that sells “clothes with a conscience,” and publishes a

captivating, in-depth story about every item on their site. Everyone from Timberland to relative newbies like Sweden’s Nudie Jeans have embraced this product-

storytelling strategy. ��

��And outdoor clothing retailer Patagonia recently went all in with a 27-minute film

that actively encouraged consumers to reuse their products instead of buy new ones on Black Friday.”


Dove's Real Beauty Sketches: "Most viewed viral beauty story in history.”

Read more: http://www.fastcocreate.com/1682823/the-story-behind-doves-mega-viral-real-beauty-sketches-campaign; http://www.capturetheconversation.com/strategy/visual-storytelling-the-key-weapon-to-content-marketing; http://adage.com/article/digital/dove-s-

sketches-viral-ad/241792/; image from: http://cdn.blogosfere.it/styleandfashion/images/61286-Florence-original%20(Large).jpg

#10 SHOVELED DOWN BY A SEARCH ENGINE

"More than a third of Beauty consumers research online before purchasing.” “Google/Millward Brown found that almost half of beauty purchasers do not know which brand they will buy when they start shopping.” “Search engines drive nearly 40% of clicks to makeup and skincare sites. Google alone accounts for 30% of referrals (nearly 10x as much as Bing).

Sources: PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014; L2Thinktank, Digital IQ Index Beauty 2013

“Search accounts for at least 1 of every 4 visits to every beauty brand in this set. (Especially) smaller makeup and skincare sites are heavily reliant on visits from search. “

Sources: PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014; Passport, STRATEGIES TO SUCCEED IN THE FAST EVOLVING PREMIUM BEAUTY MARKET, September 2013

Sources: PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014

The two individual keywords “cosmetics” and “makeup” each account for more search clicks than any brand term. �� Top search keywords fall into three categories – products, concerns, or searches for promotions.

http://mashable.com/2014/03/19/google-facebook-dominate-mobile-ads/

À propos...

#11 INHALED BY GOOGLE NOSE

& NOSE

#12 CRIPPLED BY SHOPKICKS

#INSTORE REWARDS “Shopkick, the system being used by Macy’s, Target, Old Navy and others, works on a reward system – you get “kicks” for completing actions, even basic ones like walking into store. It also sends you special offers and promotions, which if you take up, you can get more kicks. The kicks are redeemable for retailer gift cards and other products.”

http://www.powerretail.com.au/multichannel/ibeacons-future-retail-technology/; Contently, State of Content Marketing: Retail, 2014

Disclaimer: “According to Skyword, retailers that pack their mobile apps with “sales-driven copy” will likely experience high abandonment rates. On the other hand, those with engaging, consumer-focused content build loyalty, drive long-term traffic, and hold onto consumers even as their habits change.”

Source: Irina Barbalova (Euromonitor), The Multi-Faceted Evolution of Global Beauty, IN-COSMETICS 2014 À propos: brand loyalty is weakest for fragrances...

#13 HAD FOR BREAKFAST BY AD BLOCKERS

#14 MUNCHED BY THE BETTER EMAILER

“ The future of commerce is being more intelligent about what your customers want ��

and taking a one-to-one approach to sales.” —Ryan Bonifacino, vice president of digital strategy "for Alex & Ani in Inc.com

“Email accounts for nearly the same ��web traffic (12%) to makeup and skincare

sites as does social media. ��

Source: PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014

Brands such as Avon, La Mer, Estee Lauder, L’Occitane and Philosophy all have more than 15% of traffic to their sites come from various email services. Email gives makeup and skincare brands the opportunity to reach mobile connected consumers on the go – making it a natural fit in an all encompassing content marketing strategy.

#15 LAID ASIDE FOR A NEW LOVE IN THE SOUTH

“Future revenues for fragrances to be found South of the Mediterranean...” Source: Irina Barbalova (Euromonitor), The Multi-Faceted Evolution of Global Beauty, IN-COSMETICS 2014

#16 GOBBLED DOWN BY THE ELDERLY

“The 55+ age group ��accounts for the largest ��share of visitors to ��makeup and skincare ��brand sites.” Source: PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014

#17 DEVOURED BY A ‘YOUTILITY COMPANY’

‘The new utility companies’. There’s hardly a better selling point for a product than utility, and now retailers are using content to become useful themselves. Nike has become an essential part of cardio routines with the Nike FuelBand and Nike+ Running app (...). Walgreens has similarly tapped into customers’ needs with an app that functions like a virtual pharmacist with pill reminders, a prescription refill scanner, health resources, and live chatting with actual pharmacists.

By making their content useful, these brands are managing to become a daily presence ��in the everyday lives of consumers.


http://fashionista.com/2014/01/the-7-coolest-beauty-apps-and-sites-right-now#5&awesm=~oFrfgxqcazuj85

“Consumers turn to product reviews, forums, and social media to help guide choices. This is demonstrated through the popularity of tools such as YouTube, where customers can view product features and how-to videos.” Source: PM-Digital, Trend Report: Makeup and Skincare Brands Online, January 2014; http://www.therichest.com/buzz/15-beauty-gurus-that-made-it-big-on-youtube/

Source:s Irina Barbalova (Euromonitor), The Multi-Faceted Evolution of Global Beauty, IN-COSMETICS 2014; Mintel, MIXOLOGISTE, MINTEL BEAUTY & PERSONAL CARE FORECASTS - MIXOLOGISTE AS KEY BEAUTY TREND FOR 2014

By the way: consumers increasinly seem to expect multi-benefit/ hybrid beauty ‘youtility’ at product level

#18 POLISHED OFF BY PERSONALIZERS

"Brand experimentation ranging from live video chat and robust loyalty and autoreplenish programs to

sophisticated personalization ��tactics and digital-first integrated media campaigns have

headlined the Beauty sector.”


“Beauty is a ‘Selfie’”” Irina Barbalova (Euromonitor), The Multi-Faceted Evolution of Global Beauty, IN-COSMETICS 2014

#19 PACKED AWAY BY AN EXPERT

(...) Sephora is not only the leading chain of perfume and cosmetics stores in France, but also a powerful beauty presence in countries around the world.

To build the most knowledgeable and professional team of product consultants in the beauty industry,

Sephora developed "Science of Sephora." This program ensures that our team is skilled to identify skin types, have knowledge of skin physiology, the

history of makeup, application techniques, the science of creating fragrances, and most importantly,

how to interact with Sephora's diverse clientele.

Owned by Louis Vuitton Moet Hennessy (LVMH), the world's leading luxury goods group, Sephora is highly regarded as a beauty trailblazer, thanks to its unparalleled (...)

assortment of prestige products, unbiased service from experts, ...

Sephora.com

Impact of Content Types Across Purchase Process

Nielsen & InPowered, THE ROLE OF CONTENT IN THE CONSUMER DECISION MAKING PROCESS, MARCH 2014

#20 FINISHED OFF BY FRAGMENTATION

How consumers spend ��media time each month ��(hh:mm)



Connected device owners usage while watching tv

2020 beauty retail