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CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL
BEAUTY
Comment The smart read Inside 2 Retail insights Travel retail
3 Tech bytes Netwatch 4 Trending Companies to watch
5 Data Around the world
6 Interview Avon chief beauty & brand officer James Thompson
8 Zoom in on Driving consumers to stores
9 In case you missed it
INSIGHT
The market has changed. So have we. Today we bring you our new-look Beauty Insight, which we hope will be your smart read to what is impacting beauty.
We have revamped our content to highlight key retail innovations inside and outside beauty; to pinpoint the latest developments in technology that you should be aware of; to spotlight tomorrow’s beauty trends and to uncover the brands and companies forging new business models. We look to bring you all of this in a bite-sized and easy-to-digest format. We have partnered with San Francisco-based Tribe Dynamics, which will provide us with
exclusive information about beauty trends on social media in each issue. We have put increased focus on travel retail and teamed up with the industry’s top data providers and marketing companies to deliver insights on the channel. We have put the focus on making the layout clearer and easier to read. The content is more interactive with multiple links to our website for further reading on the subjects covered in each issue. We have implemented many changes, but what will stay the same is our commitment to
providing independent commentary and analysis that you won’t find anywhere else. We continue to stress our strong international outlook and our focus on delivering clear, to-the-point information, rather than corporate spin. This revamp is part of our effort to stay on the pulse of the market so you can too.
This effort includes the launch last year of our news digest This Week in Beauty and our 1-minute news video, our reinforced news coverage on our website and our print arm, which includes our magazines, guides and travel retail specials. We welcome your comments and feedback.
#182
www.bwconfidential.com - Beauty Insight - January 22-February 4, 2019 #182 - Page 1
The leading publication on the international beauty industry
Oonagh PhillipsEditor in [email protected]
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INSIGHTINSIGHT
Comment Retail insights & Travel retail
Tech bytes & Netwatch
Trending & Companies to watch
Data & Around the world
Interview Zoom in on In case you missed it
Retail insights• Gamification could help improve footfall in brick-and-mortar stores. Platforms such as ‘Play & Buy’, launched this January by French retail tech company Dolmen, lets consumers sign up to in-store games online via Facebook Ads, Google Adwords or SMS, for a chance to win prizes, such as the contents of their shopping trolley. At checkout in the physical store, the customer finds out if they are a winner. Participating retailers in early tests reported an average-basket increase of 50% to 70%, a 40% conversion rate on Facebook ads and a 60% increase in new customers.
• Beyond the store. The trend to put products where consumers spend their time continues to gather steam. US-based fitness club Equinox debuted a Holiday Gift Giving Suite, which featured products from beauty and wellness brands such as Uma Oils and Welleco, while homewares store West Elm is adding its own-brand beauty collection to stores this January. And last year, co-working company WeWork (which just changed its name to The We Company) launched WeMRKT, a retail space in selected WeWork locations to stock drinks, snacks, gifts and health and wellness items.
• Automated selling. Intel presented an entirely automated convenience store at this year’s Retail’s Big Show event in New York. Intel partnered with Artificial Intelligence (AI) start-up Cloudpick to create the store, which uses computer vision, machine learning and Internet of Things sensing technology. The store has unmanned checkouts with payments by QR code, automatically manages inventory and can predict customer traffic.
Travel retail
NPD Travel Retail shares the key drivers for purchasing make-up in duty free
Who is the cosmetics shopper? The cosmetics buyer is 78% female, +14% versus the general beauty shopper male-female split. Why are they buying?• The perception of quality was the most-cited driver behind make-up purchases. Some 37.1% of beauty buyers look at quality, which rises to 41.9% for cosmetics buyers.• Being reputable is the second most important motivator for purchase. Some 25.8% of cosmetics buyers would buy based on the reputation of the brand. Powerhouse brands are an important way-finder for consumers in store.• Price comparisons were the third most important motivator for purchasing for cosmetics buyers. Some 23.1% of cosmetics buyers gave this reason for buying.• Some 8.5% of cosmetics buyers say they buy after “seeing a product and remembering I needed it”. The impulse factor indicates the importance of clear signage and merchandising in color. • Cosmetics buyers are strong advocates for duty free. Some 74.4% of cosmetics buyers agree that “duty free guarantees quality” and 74.4% say that “duty-free shops have the best bargains”.All data comes from NPD Travel Retail’s Segmentation Study. For more information click here.
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Comment Retail insights & Travel retail
Tech bytes & Netwatch
Trending & Companies to watch
Data & Around the world
Interview Zoom in on In case you missed it
Tech bytes
• Walgreens Boots Alliance is testing ‘smart’ refrigerator and freezer doors in stores, which can target shoppers with personalized advertising. Provided by tech company Cooler Screens, the doors can double as billboards that display ads to customers on approach and change according to shoppers’ perceived age, gender and the weather.
• Voice assistants are set to be less about just countertop boxes as they become more integrated into different devices and everyday items, such as TVs and cars. LG said its 2019 smart televisions would be compatible with Google, Amazon and Apple’s voice assistants. Samsung is also preparing to integrate third-party assistants into 2019 TV sets.
• Suning unveiled an update to its augmented reality-powered ‘Magic Runway’, which lets shoppers try on outfits by adopting different gestures. At the CES, the Chinese retailer presented its ‘smart stylist’ function, which can detect users’ age and gender to recommend outfits. The technology is set to be used at New York Fashion Week this fall.
• Robots are becoming a bigger part of retail. JD.com’s new delivery bots use facial recognition to deliver parcels to customers’ doors and its drones can make deliveries thanks to a virtual reality headset. The Samsung Bot Retail robot can give customers advice on what’s in store, while Dutch retailer Ahold may extend its robot called Marty to more stores. The robot informs store staff about out-of-stock items or spills.
Netwatch
San Francisco-based Tribe Dynamics shares exclusive data about beauty trends and brands making waves on social media
Ciaté London sees increased engagement from holiday activationsCiaté London did not rank among the UK’s Top 10 Earned Media Value (EMV)-driving brands, but its December total of $646.7k EMV represented a 143% month-over-month change, outpacing the Top 10’s average 8% increase. The brand enjoyed growing enthusiasm surrounding its
holiday activations. Ciaté London continued its #MiniManiMonth tradition, creating an Advent calendar of 20 miniature polishes for 2018. The campaign inspired content from bloggers including Nicole (@spangleynails on Instagram), who created a total of 77 posts about her #MiniManiMonth nail art and powered $170.5k EMV as the brand’s top ambassador. Ciaté London’s cosmetics offerings featured in holiday giveaways run by bloggers such as Yemani Bailey (@yemani_elise) and Lauren Ellis (@laurenfellisx).
Tribe Dynamics is a San Francisco-based software company that helps beauty, fashion and lifestyle brands drive and measure digital earned media at scale. For more stories and rankings of top brands and products in international beauty, check out Tribe Dynamics’ December Tribe Top 10 report here
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Comment Retail insights & Travel retail
Tech bytes & Netwatch
Trending & Companies to watch
Data & Around the world
Interview Zoom in on In case you missed it
Trending
Companies to watch
Just Add Beauty. Founded in 2018 by beauty editor Samantha Freedman, Just Add Beauty is a B2B service that matches fashion brands with beauty products to encourage shopping across categories. When a fashion player joins Just Add Beauty’s community, the platform suggests a curated edit of beauty products for customers shopping for apparel online. The platform’s clients include fashion retailers such as Own The Look and Oxygen Boutique, and beauty partners include nail polish brand Kure Bazaar, organic cosmetics company Kjaer Weis and natural skincare brand Malin+Goetz.
Summer Fridays. The skincare brand created an online buzz in 2018 with its Instagram-famous debut product, the Jet Lag Mask face mask. The brand continues to draw attention thanks to its millennial-friendly communication style, packaging and product offer, reminiscent of digital beauty brand Glossier. Launched by Marianna Hewitt and Lauren Gores in 2018 as a direct-to-consumer, social-media-first brand, Summer Fridays is now stocked in retailers including Sephora and Cult Beauty.
TON Cosmetics. This cruelty-free, direct-to-consumer color cosmetics brand is currently focused on lipsticks. Founded four years ago by sisters Maria and Vicki Barillo, the brand aims to ‘decode the beauty world’ for its customers, and helps shoppers find shades of lipstick through a quick online test featuring questions around skin tone. The brand currently carries three lipstick collections—Nudes, Reds and Pinks—each offering nine shades.
There is set to be more demand for digital detox to counter the
omnipresence of tech and the effects of today’s always-on, always connected
society. Enter solutions such as Seraphin (from Baracoda), a ‘digital curfew’ platform, which transforms a smart
phone into a nightlight and sleep tracker and provides a daily report on the user’s
digital detox.
Following the popularity of K-beauty and J-beauty, A-beauty
or Australian beauty is now trending, boosted by interest in
clean and natural products. A new crop of Australian skincare brands are highlighting the value of farm-to-face ingredients, such as honey,
macadamia and essential oils.
Neon is set to be one of the hottest beauty trends for 2019, with celebrity
influencers including Cardi B and Kylie Jenner among those
contributing to a boom of bright hair, nails and eye make-up on
social media.
While beauty and health companies are using technology to better their products, more tech companies are looking to
get deeper into healthcare and wellness. One example is Apple, which in a bid to offset its reliance in the iPhone is looking even closer
at apps, wearables and other devices and services to track and
enhance health.
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Comment Retail insights & Travel retail
Tech bytes & Netwatch
Trending & Companies to watch
Data & Around the world
Interview Zoom in on In case you missed it
Data
Around the world• Faced with a slowing economy, China’s government is to cut value-added taxes in some industries and provide rebates in a boost to spending. China’s central bank also injected Rmb570bn ($84bn) into the country’s banking system to promote lending. The measures followed news of declines in exports and imports. Worries over a Chinese slowdown and the trade war with the US sent shares in a string of luxury companies downward last week.
• The prospect of a no-deal Brexit following the rejection of UK prime minister Theresa May’s deal by the country’s politicians has added more uncertainty for business, fueled anxiety over how companies will cope with a hard Brexit and stoked fears over the impact on consumer confidence. Other European countries have also voiced concern, with the French employers’ organization telling companies to prepare for the worst and the German industry federation comparing the Brexit situation with “staring into the abyss”. In beauty, an article in The Guardian suggested cosmetic products could contain unsafe ingredients after the UK leaves the EU, an argument that was refuted by the UK’s CTPA (Cosmetic, Toiletry & Perfumery Association).
• Also in the UK, retailers continue to have a hard time. Debenhams’ sales were down 5.7% like-for-like in the 18 weeks to January 5, 2019, and the retailer’s chairman and ceo were ousted from the board by SportsDirect’s Mike Ashley. While John Lewis Partnership’s Christmas sales were up, the retailer still expects profits to fall. And in December, online retailer Asos issued a profit warning following what it called a “significant deterioration” in trading in November, causing its shares to slump 38%.
Men’s beauty
• Men’s beauty is increasingly top-of-mind in the US, according to digital think-tank L2. From October 2017 to October 2018, male-modified internet search terms increased 18% year-on-year in skincare, 17% in color cosmetics and 13% in fragrance.
• While there may be a buzz around men’s make-up—as seen with the launch of Chanel’s first color-cosmetics line for men—interest in the category is lower than that for male skincare and fragrance. For top-volume search terms, just 0.1% of color cosmetics and 0.4% of skincare feature male modifiers, compared with 12.3% for fragrance.
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Comment Retail insights & Travel retail
Tech bytes & Netwatch
Trending & Companies to watch
Data & Around the world
Interview Zoom in on In case you missed it
Which areas are most in need of a revamp? If you were to set up a business today you would use the Avon model as a blueprint, but take it into a more contemporary expression and way of operating. Direct selling, social selling, advocates and influencers are disrupting every category. And you also have to remember that we have got 90% brand recognition around the world. We see innovation, speed to market and being on trend as important. We have
quite a few examples of this. We initiated a project at the end of last year called Molten Metals that took us about three months to do. We launched Lip Tattoo in the UK with a 23-week turnaround time, which is half our historical rate. We developed a fragrance called Aura with a Mexican vlogger in 20 weeks, taking a digital approach to a new and younger audience. We launched a version of our Far Away fragrance, focusing it on Europe, and as we optimized it for a particular region and because of the way we launched it, the fragrance performed 26% better than our previous fragrance launch. We launched a K-Beauty line, which was the first purely digital launch in Russia. We are innovating in new areas, we are doing things differently, and much faster. What have been the results of this so far? We are reaching younger consumers and consumers at different price points because all of these lines are commanding prices that are almost 10 times more than traditional Avon products, so this is shaking up the range and how we are perceived.
Is the strategy to go more upscale?The phrase that we use is about using tiers of price, so it is about providing a greater range of offers.
Avon ceo Jan Zijderveld said that the company had been slow to pick up on trends. Are there areas or new categories you plan to focus on?The examples I gave have started to address that. We are adopting ways of getting at trends more quickly, whether getting marketing ready more quickly so we can go to market faster, and using digital assets. We are going to be the digital social beauty company, and that will help us get to market quicker and reach more people. Our ceo talks about opening up Avon. That means reaching more customers, improving value tiers and growing different categories, geographies and channels. Rather than say we want to be in category x or y, we want to be leading the trends.
Does the company need more brands to reach today’s consumers?We have a lot of brands and offers already. The question is: Have we optimized our approach to the regimes, the needs, the occasions and the price points, and do we have the right architecture and hierarchy to address that? We need to operate across more segmented price points and possibly a more segmented consumer base. But I would be surprised if we end up thinking that we need many more brands.
”Avon chief beauty and brand officer James Thompson
We have six million representatives, who are not just representatives, but also micro-influencers and advocates. That is a powerful advocacy model that very few companies could ever match
“
Interview Avon chief beauty and brand officer James Thompson
James Thompson joined Avon last year after 24 years with drinks company Diageo to spearhead the beauty brand’s rejuvenation. He tells BW Confidential how he sees the transformation of the company
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Comment Retail insights & Travel retail
Tech bytes & Netwatch
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Data & Around the world
Interview Zoom in on In case you missed it
We are going to be the digital social beauty company and that will help us get to market quicker and reach more people
“
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How are you shifting to a social-selling model? We have six million representatives around the world, who are not just representatives, but also micro-influencers and advocates. That is a powerful advocacy model that very few companies could ever match. We sell online in over 20 markets, and we are making a $300m investment in infrastructure, digital and commercial initiatives to support all of this, so it is a real transformation. We have an e-brochure in over 50 countries and core metrics like revenue and unique visits to counters are growing every month. We are now focusing on unleashing the power of these six million beauty entrepreneurs
by giving them the tools and the incentives to be online beauty experts and product advocates. We have a personalized beauty app to help them become real beauty advisors. It is about reframing the power of our model and making the transformation from representatives to beauty entrepreneurs and micro-influencers. We are the third-largest word-of-mouth marketer in the world in beauty, so we have
a good base to start from and we have a remarkable training program and set of tools. Part of our job is to make it easy for these entrepreneurs and influencers to do their job. Give them things that are easy to sell and compelling, help them with the stories that help their customers understand what they have got. Digital transformation is through the innovation pipeline, the quality of the marketing and the quality of the training.
Given that the number of your representatives are declining, are your training and digital efforts helping recruit representatives?People are delighted with what they have heard about us and they have just seen the tip of the iceberg. This is a journey that we have been on relatively recently and we are moving very fast, but it is going to take time. I think we will find ourselves recruiting representatives across a broader spectrum of society, which will energize the brand.
How do you see e-commerce developing as a result?E-commerce sales are growing and we want to do that in a way that is assisting our current model. It would be reasonable to hope that at some point in the next few years our e-commerce sales could to grow to about 10% of our turnover. E-commerce will be incremental to our current sales.
Do you see social selling becoming a more important channel for beauty?The winners in the future will be those that have a strong evidence-backed range, can launch products quickly and on or ahead of trend and that are digitally supported with a strong advocacy base. Avon has already started to, and will check all of those boxes.
Does Avon need a multichannel distribution strategy, similar to what you have in China with boutiques and e-commerce? That depends. In China, these boutiques are as much an opportunity to distribute as they are showcases. Touchpoints may differ market by market based on regulations and country preference. [Brick-and-mortar] is already important in places like
China, but there is no plan to change our strategy fundamentally in that respect. n
”Avon chief beauty and brand officer James Thompson
s Avon’s new K-Beauty line
Interview
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Data & Around the world
Interview Zoom in on In case you missed it
Zoom in on: Driving consumers to stores
WSL Strategic Retail ceo & chief shopper Wendy Liebmann“Shoppers go to physical stores for a variety of reasons. ‘I want it now’, because [the product has] run out or because they saw it on Instagram, is still a viable reason to go to the store despite the fact that in an Amazon world you can often receive your lipstick tomorrow at your door. ‘I want to be dazzled, and to feel and touch and try’, is another reason to go to the store. And lastly, the efficient trip: ‘I’m doing other
things, and will pick it up while I’m there’. The best way to satisfy beauty shoppers is to organize [the experience] with her trip in mind. [In other words], why is she here today and how can I provide what she wants? For example, for the quick trip, product assortment may not change, but how it is organized would: What are the essentials someone might want to replenish in a hurry? Think about price in the same way: How can I make replenishment easier, [such as] offer a subscription for frequency or a special [buy six get seven]. Give beauty advisors tools so they can check out the shopper in the aisle without having to wait in line or at the counter. And, if she’s in a hurry find ways to show her the latest, newest items quickly. You need to know you shopper well, and understand what we call her ‘shopping life’ to be more prescriptive about selling her beauty.”
Retail Prophet founder Doug Stephens“The key question that retailers need to answer is what experience can we deliver in
our stores that is impossible to deliver online? The challenge is to design a customer experience that is so enjoyable and memorable that it supersedes the value of the product itself. In many cases, it simply requires that retailers think beyond the product itself to tell a deeper story. If you’re a jewelry retailer, can you tell a deeper story about craftsmanship, design and romance than Amazon? For the effort
customers put into getting to the store and shopping it, they’re getting little back and in most cases the causes are basic. Poor inventory management, shoddy sales associate training and broken customer service practices all contribute to creating a poor customer experience. Retailers have to ensure that simple things like this are being done well. Only then can they move on to tackling the next-level customer experience issues. Failure to deliver against basic customer expectations is what Amazon thrives on.”
The Lion’esque Group chief pop-up architect Melissa Gonzalez“For beauty brands there are three key areas to drive consumers to stores: Education,
experiential and intelligent merchandising. What separates one product from the next often starts with brand story, beautiful imagery and well-written informative content. The online experience is visually captivating and aspirational. Brands need to continue that conversation in-store. Beauty is also experiential. When consumers walk into a store, they want to touch and experiment, but they would also love to be taken
on a journey. Perhaps it’s a journey into a gorgeous vanity room or a smart mirror to test products via augmented reality. A key element is ensuring the right products are available at the right time. Brands need to use online data to make informed decisions about what customers in specific geographical areas want to purchase.” n
Three retail analysts reveal what brands and retailers need to do to get shoppers into stores
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CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL
In case you missed it
L’Occitane to acquire Elemis
Dufry reorganizes, looks to M&A
Sears accepts chairman’s bid for bankrupt retailer
Avon launches two-hour delivery service in Brazil
Bloomingdale’s opens revamped beauty floor in NYC flagship
Shiseido Travel Retail opens new Singapore office hub
Arcade Beauty leads funding round in digital vending machine specialist
AS Watson’s targeted e-marketing drives sales for Maybelline and Jeffree Star
Alibaba unveils centralized program for brands
Coty makes executive changes
Neiman Marcus debuts high-end cannabis beauty products
Consumer goods industry launches global alliance against plastic waste
Miu Miu launches new fragrance
Go to bwconfidential.com for full stories and daily news updates
The leading publication on the international beauty industry
BW Confidential 17 rue Louis Rouquier, 92300 Levallois-Perret, France [email protected] Tel: +33-(0)1 74 63 49 61 www.bwconfidential.com ISSN: 2104-3302 Publisher: Nicolas Grob [email protected] Editorial Director: Oonagh Phillips [email protected] Journalist & Copy Editor: Katie Nichol [email protected] Journalist: Monica Defrances [email protected] Contributors: Sophie Douez, Alex Wynne, Renata Ashcar, Mayu Saini, Corinne Blanché, Naomi Marcoulet, Kevin Rozario, Tina Milton Subscriptions 1 year: Beauty Insight (20 issues) + Print Magazine (4 issues) + This Week in Beauty + Daily News + Collector’s Guide + Beauty & Travel Retail Special Edition: €549/US$769 [email protected] Advertising [email protected] BW Confidential is published by Noon Media 513 746 297 RCS Nanterre Copyright © 2019. All rights reserved. Reproduction in whole or in part without permission is strictly prohibited.
In the next issue of BW Confidential’s Beauty Insight to be published February 5, 2019:
What the BA of the future will look like
PLUS: • The latest retail and tech news • Interview • Travel retail data • Beauty trends • Social media insights
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