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CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL
BEAUTY
Comment Digital dilemmas Inside 2 Retail insights Travel retail
3 Tech bytes Netwatch 5 Trending Companies to watch
6 Data Around the world
7 Interview Parfums Christian Dior general manager travel retail Europe Floriane Pampiglione
8 Zoom in on The BA of the future
9 In case you missed it
INSIGHT
Digital has been credited with boosting the beauty market. At his New Year address to the press in Paris at the end of January, L’Oréal chairman and ceo Jean-Paul Agon said
that digital is helping to drive the market’s growth and is a boon for big brands and star products—contrary to what many had predicted. The NPD Group also just reported that online buoyed the prestige beauty market in the UK—online beauty sales rose 13% in 2018, while the overall market was down 1%. Despite this, digital still elicits a certain nervousness among beauty executives. Some
are still struggling to come to terms with the idea that an influencer can have more sway over a consumer than a branded ad campaign. Many are debating how they can satisfy consumer expectations in e-commerce, especially when it comes to issues such as quick delivery. Others, while welcoming the reams of new consumer data that can be delivered by digital, are having a hard time trying to manage and exploit it. Then there are the complexities involved in integrating new digital roles into organizations, not to mention the pressure to address and pour resources into relatively new areas, such as Artificial Intelligence. And almost all in prestige continue to wonder about the stance they should take on Amazon, just as the online giant continues to move further into beauty through its own cosmetics line, with segmented online storefronts like its Indie Beauty store and through its power as an advertiser. (And if Amazon ends up acquiring a brick-and-mortar beauty retailer, concern among the market’s players will reach a whole new level). Digital may be good for business, but it also means much uncertainty for the industry.
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The leading publication on the international beauty industry
Oonagh PhillipsEditor in [email protected]
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INSIGHTINSIGHT
Comment Retail insights & Travel retail
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Data & Around the world
Interview Zoom in on In case you missed it
Retail insights• Low-tech stores. As the race to have the smartest store continues, some retailersare doing the opposite. US-based grocery chain PCC Community Markets is reportedlyremoving all self-checkout kiosks to increase human interaction with customers.
• Retail Labs. Retailers are launching more ‘labs’ to study customer behavior and testnew services and technologies. US-based beauty retailer Cos Bar is set to open a lab totest new categories and brands in dedicated in-store and online spaces before introducingthem more widely. Walmart is said to be building another business at its Store No. 8incubator. Store No. 8’s projects include Jetblack, a personal shopping service using textmessaging, and Project Kepler for cashier-less stores. Meanwhile, the group’s IntelligentRetail Lab inside a New York store will use AI to improve customer experience.
• Keeping up with Amazon. As Amazon-age consumers expect increasingly speedydelivery for online purchases, some brands and retailers are fighting back by usingsubscriptions. The subscription model lets companies such as Nestlé’s Nespresso andUnilever’s new Skinsei skincare brand keep revenues stable, delivery costs down andensure timely delivery, while gathering valuable customer data.
• A Food & Beverage offer is becoming more important for retailers looking toattract traffic. But F&B spaces need to match the brand’s ethos, say analysts. Examplesinclude Swedish fashion retailer H&M’s in-store café, Pleats, with healthy meals andInstagrammable décor. The group’s brand Arket’s café serves vegetarian and vegan meals.
Travel retail
Horizon Consumer Science president Ian Cesa on why beauty is performing better with international travelers when other categories are doing worse
“While the total size of the international traveler retail market is declining, the beauty category is growing. Between 2012 and 2018, the total retail market* for international travelers dropped from $397bn to $382bn, despite increases in the number of people traveling internationally. At the same time, the beauty market has grown from $37bn to $47bn, with increases in both on airport and off-airport spending by international travelers.Why has beauty done so well? Because more millennials are buying. A significant factor
in the growth of spending for millennials appears to be the better availability of information on what to buy before they leave home. There has been a profound shift recently in decision making. Some 63% of beauty buyers said they made the decision to buy before they left on their trip in 2018 compared with 43% in 2016. In 2018, those who decided to buy beauty before their trip had an average spend of $186 compared with $127 in 2016. Beauty retailers are doing a much better job of catering to a millennial audience.”
All data from Horizon Consumer Science’s 2018 Global Traveler Report. More than 31,000 traveling consumers from 38 countries have been surveyed every two years since 2012 for the four Travel Retail Catalyst Studies (TRaCS) which make up the Report. For more information: www.horizonconsumerscience.com. Contact Ian Cesa at [email protected]* Market covers all spending that travelers make on merchandise when they are traveling
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Comment Retail insights & Travel retail
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Data & Around the world
Interview Zoom in on In case you missed it
San Francisco-based Tribe Dynamics shares exclusive data about beauty trends and brands making waves on social media
Influencers hype Too Faced’s Pretty Rich Collection Too Faced France generated $3.4m earned media value (EMV) in December, rising one rank to third place among the Top 10 EMV-driving beauty brands. The brand enjoyed
increased hype around its November-launched Pretty Rich collection, which garnered $210.6k EMV from 21 ambassadors in December after pulling in just $41.8k from two content creators the previous month. The offering’s top-earning ambassador was beauty blogger Richard (@richaard2609), who contributed $54.3k EMV by incorporating products from the set into original Instagram looks. 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.
Tech bytes
• With more demand for authenticity and transparency, brands may want to get involved in direct transactions between consumers and influencers. Digital marketplace Storr launched this month as a platform where consumers can buy new, brand-name products from influencers and friends. Available on Apple and Android devices, the app lets anyone open a ‘store’ and make a 15% to 25% commission on purchases made via their store, while brands handle shipping and returns.
• Amazon is testing its new delivery robot, Scout. The size of a small cooler, the device is designed to roll on a sidewalk at walking pace and autonomously follow a route, avoiding pets, pedestrians and other obstacles, says Amazon. A fleet of six Scout devices is currently being tested in a Washington, US neighborhood, accompanied by an Amazon employee during the pilot stage.
• US-based grocery retailer Kroger has partnered with Microsoft on a connected grocery store. The stores have a shelving system that uses digital displays to indicate prices, promotions and product information. The shelves will also connect with Kroger’s app to guide consumers in the store. For example, the shopper creates a shopping list on the Kroger app, which guides the shopper to what they want in the store. The shelf display can show a picture set by the shopper so he or she can easily spot what they are looking for. The shelf will also allow Kroger to generate revenue by selling digital ad space to brands.
Netwatch
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Comment Retail insights & Travel retail
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Organised by:
where personal care ingredientsand creators come together
The leading global event for personal care ingredients
L E A R N • E X P L O R E • N E T W O R K • C R E A T E
Paris Expo Porte de Versailles • 2-4 April 2019
• Source ingredients from up to 800 suppliers • Touch and try the latest innovations
• Meet exhibitors from 40+ countries • Learn about future personal care trends
• Establish profi table business networks
Register and learn more at in-cosmetics.com/global#incosGlobal
7214 in-cosmetics Global 19 Master Advert 210x297mm.indd 1 02/10/2018 11:46
Trending
Companies to watch
Milèo. Founded in 2018 by Matthew Milèo, a former beauty and fragrance director at Chanel, Milèo is a natural skincare brand offering a range of organic face oils. The oils contain a blend of 3,000 fresh flowers and 100-year-old oud extracted from the agarwood tree, which claimed to have anti-aging benefits. Prices range from $150 to $295 and the line is sold through the brand’s e-commerce platform.
Knours. Clean beauty brand Knours (the name is a play on the phrase “know your skin”) makes products based on vegan and natural ingredients, but its USP is its focus on hormonal beauty. The skincare range is designed to be used at different times in a woman’s cycle, while the accompanying app helps customers track symptoms of hormonal fluctuations and discover which products to use and when. The brand’s full line was launched in 2018 and products are available through its e-commerce platform and online via Nordstrom.
Function of Beauty. Founded in 2015, US-based digital-first player Function of Beauty makes customized haircare that’s vegan, cruelty-free and free from parabens, sulfates and GMOs. Its e-commerce site asks customers to fill out a form that includes questions on hair texture and goals—such as “fix split ends” or “reduce brassiness”—and suggests a shampoo and conditioner based on the answer. Users then enter a name to be printed on the bottle, choose a fragrance as well as its strength and sign up for a subscription or order a one-off set.
Topical results are no longer enough, with an increasing interest in mood-
enhancing beauty products. Brands tapping into the trend include
non-toxic beauty company Osea’s stress-managing Vagus Nerve Oil and UK-based Cowshed’s Grumpy Cow range, which claims to lift spirits with
ingredients such as mandarin and grapefruit essential oils.
As a reaction to the 10-step K-beauty and J-beauty
skincare regimens, consumers may begin to look for fewer, harder-working products.
The Skip-Care trend will see consumers seek out quality multi-taskers to save money
and relieve over-stimulation of sensitive skin.
Lilac may be 2019’s millennial pink, at least for hair color. Searches for lilac hair grew
1,077% in 2018 on Pinterest, while on Instagram, the
#lilachair hashtag had over 198,000 posts at press time.
Mushrooms are set to be one of 2019’s it-ingredients. Market
analysis firm Grand View Research expects the fungus’ global market value to exceed $50bn by 2022 due to awareness of its health benefits. Brands including US-
based Moon Juice and Youth To The People are already using it in
their skincare products.
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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• More than 400 million Chinese will travel during the upcoming Lunar New Year,according to Shanghai-based online travel agency Ctrip data cited by press agency Xinhua.Among these, nearly seven million will travel abroad. The most popular destinationsinclude Thailand, Japan, Indonesia and Singapore. Nordic countries, the UAE and Spainhave witnessed the fastest growth in terms of Chinese visitor numbers.
• Companies are counting the cost of the prospect of a no-deal Brexit. UK-basedBurberry said the scenario would cost it tens of millions of pounds in tariffs and severelydisrupt its supply chain. Elsewhere, firms are preparing for a chaotic Brexit, with manycompanies stockpiling raw materials and finished goods. France’s LVMH, for example,said it has added fourth months of stock to its UK wine and spirits inventory in preparationfor Britain’s exit from the EU in March.
• From February 1, India imposed restrictions on how e-commerce firmsoperate in a bid to protect the interests of offline retailers. E-commerce firms with foreigninvestment are barred from selling products via firms in which they have an equity interest,and cannot strike deals with sellers to sell products exclusively on their platforms. Amazonand Walmart-owned Flipkart have protested against the new rules. Many products areexpected to disappear—at least temporarily—from their platforms as a result. Indianplayer Snapdeal has welcomed the changes.
US & UK prestige beauty sales
• Prestige beauty sales in the US rose 6% to $18.8bn in 2018, according to TheNPD Group. Skincare sales were up 13% to $5.6bn and contributed to 60% of theindustry’s total gains. Natural skincare accounted for $1.6bn of sales, up 23% on lastyear. Make-up rose 1% to $8.1bn, while fragrance sales grew 4% to $4.3bn. Haircarewas the smallest, yet fastest-growing category, with sales up 25% on 2017. NPDexpects growth to continue in 2019, although perhaps at a slower pace due to economicuncertainties. The group predicts an amplification of trends such as transparency, brandstaking a stand on social issues and experiential retail and pop-up concepts.
• In the UK, NPD reports that online sales of prestige beauty products rose 13%in 2018 to around £540m ($707.5m). Online growth is being driven in part by morebusinesses offering Click & Collect, next day and same-day delivery. Online sales nowaccount for 20% of the UK’s £2.7bn ($3.54bn) prestige beauty market, an increase of2% on the previous year. Total UK beauty sales fell 1% compared with last year, a declineNPD attributes entirely to the make-up category, whose sales were down 7%. Fragranceand skincare finished the year on a positive note, driven by double-digit growth online.
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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
The Maison concept seems more casual. Is luxury evolving? Perhaps yes, towards more simplicity. There are no advertising visuals here, just pictures on the wall. The digital view in the ‘window’ also changes with the season. […] We created the impression of a cozy Parisian home. I don’t know if you would call it a luxury statement, but for Maison Christian Dior it was the right idea. It could not be black—you are not at a counter or part of a merchandising concept. It works well as the customer could be in their own apartment with a nice view from the window.
The boutique is situated away from the Dior Parfums location in WDF’s main store. How do you manage customer flows to maximize sales?The standalone aims to give passengers the best expression of the Maison Christian Dior concept. In T3 we have Maison Christian Dior beside the Dior shop-in-shop in one area, but conceptually separated using the wooden floor and other elements. Both methods work, but here in T5 it was an added opportunity to have the separate boutique. All our main shop staff have been trained on the Maison Christian Dior concept and they know when to bring relevant passengers to the boutique. Details are also visible at the main Dior counter, and we have hidden testers there that staff can use for VIP shoppers.People stop at the boutique—it is a high-traffic area with plenty of seating and visible
from the upper level.
What’s next for the Maison offer in Europe? We plan to open the next Maison Christian Dior boutique at Paris Charles de Gaulle Airport soon with Lagardère Travel Retail. Our strategy is to open more boutiques in travel retail, but in selected locations. The idea is not a general roll-out. We first need a quality space as we have requirements related to wall space, the glass ceiling that we are using, and the see-through ‘window’. All this means we will select specific spaces to ensure the right quality of execution. […] We want the key airports or those with the widest variety of passengers. We will also look at markets that are well educated about fragrances.
Does that mean airports with strong shares from the Middle East or Asia?We can look at that, but it’s really at hubs with a large spectrum of passengers, as well as good retail environments. The Maison Christian Dior concept is unique and is exceptionally well executed in local markets. We will ensure the same in travel retail. n
”Parfums Christian Dior general manager travel retail Europe Floriane Pampiglione
It is part of our strategy to open more boutiques in travel retail—but in selected locations. The idea is not a general roll-out
“
Interview Parfums Christian Dior general manager travel retail Europe Floriane Pampiglione
Parfums Christian Dior opened its first travel-retail location in Europe for its Maison Christian Dior collection in London Heathrow Airport terminal five in December. The store, operated by Dufry-owned World Duty Free (WDF), shows what to expect at other European gateways in the coming months
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s The boutique showcases the 22 scents in the Maison Christian Dior range
Zoom in on: The BA of the future
The role of the BA of the futureDigital technology and e-commerce are pushing the BA to evolve into the role of a real advisor. The BA will need more authority or expertise that can rival that offered by the Instagram influencer. This means bringing a human, emotional connection. Blake Morgan, a customer experience futurist and expert, stresses the importance of trust and the credibility of the BA, whose role is to build relationships. She describes the BA as a confidant and coach as well as a part-time therapist and an expert.
The BA will require more training and expertise to build credibility, she adds. “Customers can get all sorts of beauty information and advice online, so a beauty advisor needs to stand out and give customized information the customer can’t get anywhere else,” says Morgan. Pam Danziger, founder of luxury marketing research firm Unity Marketing agrees, describing beauty as a highly personal business and says the BA needs to be a guide who can enhance the store experience.
How she will work with technologyContrary to the view that technology will radically change selling approaches, experts stress the importance of the personal connection of the BA in the store. Digital tools (for example, to access stock availability or a client’s purchase history) will be used to assist BAs, but should be used discerningly and preferably without the customer knowing. The deployment of technology will nevertheless be strategic in enhancing the BA’s
and store’s performance. “Data is huge, and beauty advisors will need to know how to leverage that,” says Morgan. “They should know how to gather and track data, even in basic forms.” A key example is using technology to provide personalized services, and this can be as involved as tracking mood and activity, notes Morgan. The BA will also need to be able to connect with their customers via their preferred technology channel, such as social media, an optimized website or even a chatbot for repetitive questions, she says.
The challenges to this changing roleOne major challenge is keeping up in a faster-moving market and preparing the BA for new tasks. This means retailers need to rapidly adapt training and investments and be able to continually evolve in-store roles or create new more relevant ones. In the face of the changes and challenges, experts cannot emphasize enough the importance of training. “[BAs] need to have more training and a sounder understanding of trends, products and even the science behind what makes a product work well for one person and not for another,” says Morgan. Bob Phibbs, ceo of Retail Doctor, a New York-based retail consultancy, adds: “It will ultimately take sales training as you can’t assume young women will innately be able to figure out how to engage a stranger, discover the shopper and make a customer. That takes a high level of understanding of how and why people buy and a real skill to be able to do it so well that the shopper does not notice.” n
A spotlight on how the beauty advisor’s profile and job are set to evolve
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CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL
In case you missed it
Avon to cut staff, inventory and skus as part of restructure
L’Occitane launches same-day delivery service in the UK
Shiseido sells bodycare brand Ferzea to Lion Corporation
LVMH reports double-digit growth in sales and profit for 2018
L’Oréal to launch online platform for ingredient information
Rituals opens stores in Toulouse and Prague airports
Kiehl’s opens pop-up for Lunar New Year at Changi Airport
Interparfums SA 2018 sales up 8%, driven by Coach
Ioma founder launches connected beauty device
Givaudan opens digital project accelerator in Paris
Marc Jacobs Beauty names youtube make-up artist as advisor
Elf Beauty urged to review strategy by investors
Kaufhof to cut costs
Coty names Txema Marquiegui travel retail svp
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 19, 2019:
Behind L’Oréal’s 2018 results
PLUS: • The latest retail and tech news • Interview • Travel retail data • Beauty trends • Social media insights
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