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CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL
BEAUTY
Comment Beyond consumer centricity Inside 2 Retail insights Travel retail
3 Tech bytes Netwatch 4 Trending Companies to watch
5 Data Around the world
6 Interview Frédéric Fekkai founder Frédéric Fekkai
7 Zoom in on Digital & HR
8 Seen in show Beautyworld Middle East
10 In case you missed it
INSIGHT
Few would call into question the importance of listening to consumers. And with advances in Artificial Intelligence (AI), companies can get much more detail about
what consumers want, when they want it, how they use products and how they buy. But while data and AI are useful for finding past correlations, is there a risk of these new technologies impeding innovation as they make the past weigh too heavily on what could be created in the future? Is there a danger of brand and product development becoming even more formulaic and market players looking too much like their competitors?In his latest letter to shareholders, Amazon ceo Jeff Bezos puts the usual emphasis
on listening to consumers and what he calls consumer obsession. However, Bezos also highlights that this consumer obsession is not enough. He says that the biggest needle movers will be what customers don’t know they want. “We must invent on their behalf. We have to tap into our own inner imagination about what’s possible,” he writes. He adds that if he had asked consumers in 2013 if they wanted an Amazon Echo, the answer would have been no. Some 100 million Echo-enabled devices have been sold since. Linked with this spirit of invention and creating a truly new and different product is
experimentation and risk taking. Bezos says that as a company grows, so too should the size of its failed experiments. He adds that if this is not happening, a company is not inventing in a big enough way. Beauty companies may not be willing or be able to have occasional multibillion-dollar failures in the way Amazon says it does, but less market-research-led projects and more experimentation could make a big difference to their products.
#188
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Comment Retail insights & Travel retail
Tech bytes & Netwatch
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Interview Zoom in on In case you missed it
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Oonagh PhillipsEditor in [email protected]
Retail insights• Brick-and-mortar retailers are making more moves to develop services and go beyond product sales to diversify revenues and bolster customer loyalty. This month, German perfumery chain Douglas acquired a stake in at-home beauty services start-up Welmoa. By investing in online bookings, Douglas aims to offer its customers more—a strategy that is seen as a way of mitigating any declines in store footfall, differentiating itself from the competition and forging stronger links with consumers.
• Remote shopping assistants. Gucci is opening six call centers in a bid to offer human, accessible and customized services, especially among millennials. The "Gucci 9" call centers are staffed by 500 remote assistants and the idea is to allow consumers to converse with real people about products. Staff are encouraged to develop a personalized rapport with a younger clientele accustomed to virtual interactions.
• Selling side by side. Grocery chain Aldi and department store Kohl’s piloted a concept where their two stores are adjoined in a bid to increase sales and footfall for both. It debuted in Wisconsin, US, and up to nine joint locations may be added. A survey by crowdsourcing firm Field Agent claims 90% of shoppers are "moderately likely" to shop at both stores on the same trip. More retailers could join forces to offer additional services, a differentiated assortment and pool resources to compete with online giants like Amazon.
Travel retail
NPD Travel Retail on how Russians are buying in duty free
• Russians are traveling again. In 2018, nearly 26 million Russian departures were made, representing 11.6% growth versus the previous year. In terms of the destinations favored by Russians, there is a return to Southern Europe in Turkey and Italy.
• Russian travelers’ visits to the beauty category reap greater conversion to purchase than the average duty-free passenger, over-indexing by nearly +8%. However, when Russians are converted to purchase in beauty their average spend is $69.80—some $8.20 less than the duty-free average.
• Russian beauty buyers are motivated to purchase, mostly, for ‘self’ reasons —at 81.4%. Some 16% of all beauty purchases are driven by gifting; for skincare only 7.9% of occasions are for gifts, yet 18.6% of fragrances are.
• Where Russian beauty buyers plan their purchase, 55.5% know the product they wish to buy. In skincare, 34% know the brand they will buy, but are yet to define the product. Cosmetics presents the greatest opportunity for in-store engagement, as 17.1% know the type of product they want to buy, but not the brand nor the exact product.
Source: Data comes from NPD Travel Retail Traveller Statistics & NPD Travel Retail Nationality Tracker. 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
Seen in show
San Francisco-based Tribe Dynamics shares exclusive data about beauty trends and brands making waves on social media
Tatcha’s skincare feature in make-up tutorials Tatcha collected $1.7m earned media value (EMV) in the UK in March, posting a notable 111% month-over-month change. The brand’s growth can be attributed to attention from powerhouse beauty bloggers like Thuy Le (@xthuyle on Instagram) and Radka Kovácová (@grwrady), who integrated offerings like the
Luminous Dewy Skin Mist ($225.8k EMV) into their make-up routines. Thuy and Radka, who had not posted about Tatcha in February, garnered a respective $358.5k and $301.7k EMV as the brand’s number-one and number-two March bloggers. 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’ March Tribe Top 10 report for the UK here.
Tech bytes
• Pinterest is going public this month, and beauty brands are starting to pay closer attention to the image-based social-media platform. Some analysts say the beauty industry is under-exploiting Pinterest, which functions as a search engine for consumers seeking inspiration and shopping ideas. Since most searches on the site are not for particular brands, marketing opportunities could be particularly strong for smaller companies.
• China's Alibaba rolled out a new products discovery portal on its Tmall site, strengthening its positioning in branding and offering companies new to China a platform for reaching local customers in e-commerce. Launched through the Mobile Taobao app, which currently attracts some 700 million monthly users, the "Tmall New Products" channel displays a mix of product-related content and personalized recommendations.
• Amazon is discontinuing its domestic Chinese e-commerce business to focus on importing goods to local consumers. Bloomberg reports that the online giant will shutter its China-based marketplace in July, pressured by competition from local players including Alibaba. The Amazon.cn website will soon present products exclusively from its global store. The company is reportedly still planning to invest strongly in cross-border e-commerce, and will maintain Kindle and web services in the country.
Netwatch
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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
Seen in show
Trending
Companies to watch
Grace Beauty. This UK-based start-up is to introduce make-up accessories designed for consumers with disabilities, particularly cerebral palsy and arthritis. Three add-ons for most standard mascara tubes, allowing more comfortable handling and precise application, are set to launch in June. The brand also runs a Facebook group called Community for Accessible Beauty. Products will be sold on the forthcoming Grace Beauty website.
Eighteen B. Challenging the idea that vegan cosmetics can't rhyme with scientific innovation, this skincare line developed by biotech company Bolt Threads uses vegan "b-silk" proteins harvested from yeast. The process was first developed to create an alternative to animal-derived silk for fashion designer Stella McCartney. Eighteen B's offering includes daytime and nighttime moisturizers and is available at the brand's website.
Fluff Casual Cosmetics has a simple ethos: Make customers look like themselves, rather than "made-up" or glamorous. The Australian company was launched by Erika Geraerts, founder of niche beauty brand Frank Body. The company introduced a lifestyle magazine before rolling out its first product, a bronzing powder and brush suitable for all skin tones. Products are exclusively sold on the brand's website.
Gender-fluid marketing is becoming stronger. Brands
that boast inclusivity and reject gender stereotypes are reaping rewards. NPD data showed a
40% rise in weekly unit sales for one brand's (the name was not revealed) setting powder after a male influencer featured it in a
sponsored Instagram post.
Brain-boosting products are catching on in beauty. Also known as nootropics, cognitive-
enhancing drugs and natural extracts such as caffeine and
L-theanine (found in green tea) are being prominently featured
on beauty and wellness platforms.
Popular TV franchises such as Game of Thrones are
inspiring limited-edition beauty collections. Urban Decay teamed
with HBO for a make-up line inspired by the series, launched
ahead of the new season's debut in April. Elaborate nail art
themed on the show is also trending.
German beauty is gaining an enthusiastic new following, despite holding a prominent
place in pharmacy skincare for decades. The trend is based on consumers looking for more
simplicity. This has seen beauty bloggers praise brands such as Dr Hauschka and Weleda for their simple formulations, minimalist packaging and unpretentious
marketing.
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Comment Retail insights & Travel retail
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Data
China livestreaming
• Alibaba’s Taobao Marketplace generated over RMB100bn ($15.1bn) in gross merchandise volume (GMV) through livestreaming sessions in 2018, growth of almost 400% on 2017.
• China’s livestreaming market is the world's largest, says Deloitte, and counts an estimated 456 million livestream viewers.
• Taobao's more than 4,000 livestream hosts generate 150,000 hours of content daily. Taobao customers can shop for 600,000 products through livestream every day.
User-generated visual content
• Visual content is becoming increasingly important beyond written reviews, according to Bazaarvoice’s Shopper Experience Index. The company reported a 160% year-on-year increase in visual content submitted with reviews in health and beauty in 2018.
• Some 81% of brands and retailers agree that featuring visual user-generated content in the shopping experience increases conversion.
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
Seen in show
Around the world
• US retail sales grew by 1.6% month-on-month in March, according to the Commerce Department. This represents the highest growth seen since September 2017.
• Analysts polled by Thomson Reuters had predicted a 0.9% increase in US retail sales for the month of March.
• Growth was driven by sales of vehicles, petrol and clothing. Clothing and accessories store sales increased 2%.
• Control retail sales (when volatile items such as food, petrol and building materials are striped out) saw growth of 1%. This compares with expectations of a 0.4% increase.
Radiant skin first thingin the morning
Sin título-1 1 10/04/2019 16:18:09
You were awarded the Cosmoprof Lifetime Achievement Award at the trade show in Bologna in March. What was your reaction?It was the occasion to step back and analyze my career. From Aix en Provence to Paris, and then to New York, where in 1989 I opened my first hair salon in Bergdorf Goodman. I opened five other salons in the US. In 1994, I launched my haircare line and by 2001 it was sold in 43 countries.
How have changes in the beauty market influenced your work for the Bastide brand, which you acquired in 2017?Today there is high demand from customers for clean, natural formulas and sustainable packaging. Digital marketing and an inspiring presence on social networks are also key. For our Provence-inspired brand Bastide we use only glass and aluminum except for the shower gels, which use recycled and recyclable plastic. Our formulas are 100% based on natural and pure ingredients that are all safe, non abrasive and non toxic. Bastide is about responsible beauty. We have refreshed the look of the brand with a new logo, new labels, a modern typography and soft colors, to make it attractive for millennials.
How do you plan to develop Bastide?The opening of our flagship in Aix en Provence has backed up the launch of the brand. We started with four scents and a bath and body range, as well as perfumed candles. In June we will launch a facial skincare line of four products. Bastide is sold in France in Printemps and in some concept stores, in Liberty in London, in 60 Mecca stores in Australia and New Zealand, and in six Holt Renfrew in Canada. In the US, we are present in five Nordstrom stores, 65 independent stores and the new Neiman Marcus at Hudson Yards in New York. Our next markets will be Germany, the Middle East and Asia. Next year we plan to open a boutique in Paris and New York. About 38% of Bastide’s sales are generated by our e-commerce site, which is our number-one market.
And what about Fekkai?Bastide gives us the tune to redevelop Fekkai. Formulas will be without parabens and silicon. We inherited the distribution set up by Procter & Gamble [which owned the brand from 2008 to 2015]. Now our two lines are sold exclusively in the US. The more basic range Fekkai 3.0 is sold in Target and Walgreens stores, while upscale range The One is sold at Ulta, Neiman Marcus and Nordstrom. The objective is to re-open international markets for The One, beginning with Europe, the Middle East and Asia. Fekkai accounts for 90% of the $55m-$60m 2018 combined turnover of Fekkai and Bastide. Our objective is to reach $200m in two to three years. n
”Frédéric Fekkai founder Frédéric Fekkai
Fekkai accounts for 90% of the $55m-$60m 2018 combined turnover of Fekkai and Bastide. Our objective is to reach $200m in two to three years
“
Interview Frédéric Fekkai founder Frédéric Fekkai
Hairstylist and entrepreneur Frédéric Fekkai talks about his plans to revive his namesake haircare brand that with Cornell Capital he re-acquired last year, and to expand beauty brand Bastide, which he bought in 2017
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credit: Pamela Berkovic
s Bastide (left) is based on clean and natural formulas, which has also influenced the positioning of Fekkai haircare (right)
Zoom in on: Digital & HR
“Digital and advanced analytics are changing HR and talent because of the different recruiting and training needs [companies have]. Secondly, the digitization of human resources and talent processes should theoretically be changing the way people recruit. The beauty industry has been a bit quicker to develop some of these capabilities than luxury in general. Beauty is quite insular—people in beauty work in beauty—but the bigger beauty conglomerates have built capabilities by acquisition, which has
meant that they've ended up with digital and advanced analytics capabilities more quickly. It’s made their jobs easier in terms of getting talent, but […] you’re competing against tech companies [as well as] start-ups, so there is more competition for talent in terms of both excitement of job offer and salary than many companies are used to.
Advanced analytics driving changeWhen you speak to ceos and senior management about talent, getting analytics and digital talent is one of the top things they’ll typically say to you. We believe advanced analytics will be one of the biggest drivers of change across luxury, fashion and beauty in general, so it’s a big struggle.There’s a second tier beyond [talent] acquisition around training and development.
Some companies are doing that through online training, while others are doing it through having lunch and learns, and digital-native companies come and talk to the organization. On the process side—the job of doing HR or talent acquisition and training—there’s been a number of changes. If you think about your pipeline of talent, you have a lot of digital platforms like Linkedin and Glassdoor. There are a lot more channels to source talent, but there are also a lot of channels you need to listen to, to make sure your organization is being perceived in an accurate light.
Digitalization of HR processes[In terms of] the digitization of HR processes in-house, many companies are finding online a good way of rolling out training when workforces are in disparate locations. On the workforce management side, if you’re a big organization there are a lot of digital tools to help keep track of employees. Beyond just hiring digital talent, there is an upskilling of the whole organization. A few in beauty are doing this—they are doing reverse mentoring, where they pair up someone younger in a digital role with someone in a more traditional role. From a compliance point of view, in a world of social media, some companies are trying to work out what channel employees are allowed to post and not post at work and the new business codes of conduct.Analytics and digital skills are the most difficult to acquire, but the most urgent is to get
[this] inside your company versus always relying on contractors and agencies, and being as creative as possible in acquiring those capabilities [is important]. Identifying potential employees who can be trained in digital areas is another great
option. A close affiliation with universities that have digital or analytical programs [can be beneficial]. HR or talent should have a strong seat at the table with the ceo, as if companies are working on digital, personalization or big strategic areas, the talent and training requirements are high, and so this makes a big difference.” n
Sarah Willersdorf, partner and managing director at Boston Consulting Group, discusses how digital is changing human resources for beauty
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Seen in show: Beautyworld Middle East
This year’s edition of Beautyworld Middle East saw the show cement itself as a key exhibition for fragrance creation and ingredients houses. The event was attended by 1,790 exhibitors from 66 countries—up 3% from last year—and saw a 19% year-on-year increase in visitors to 43,755 from 150 countries. “Fragrance has picked up in the last few years and is continuing to grow. We have the top fragrance houses participating every year, and they
are improving the way they look. For us, fragrance has become probably the strongest part of our show now,” said Beautyworld Middle East show director Elaine O’Connell.
Innovations on showKorean company Lumini presented a suite of AI skincare diagnosis tools designed for use by retailers and salons. Dubbed Lululab, the offer consists of a hand-held tool for personalized skincare consultations, a standalone touchscreen kiosk for self-experience in stores, and a tablet that can detect UV levels. Lululab ceo Yongjoon Choe said the standalone kiosk is a “one-stop AI beauty store” that can deliver skin analysis and product recommendations in 10 seconds. Lululab launched in Galeries Lafayette in Dubai in April and has attracted clients in the US, Korea and Europe.
Spanish fragrance house Iberchem invited key clients to create a personalized fragrance during a workshop animated by its perfumers. Starting from a base of 32 accords developed from 40,000 natural and synthetic raw materials, perfumers Luz Vaquero and Angeles Santiago guided clients through the role of different notes in the composition of a scent before inviting clients to formulate their own creations.
Heard in show: Fragrance executives on the region "This year is still going to be tough for raw materials, both naturals and synthetics. The market is growing, but capacity is tight. You can’t fix the lack of investment in just one year. Lack of capacity in naturals is a long-term issue. Demand for naturals could have an important environmental impact, and we need to educate consumers about sustainable solutions. We need to simplify the message; consumers think naturals are the only answer but other solutions are just as safe, fully transparent and more sustainable. We need to start a dialogue to get past misunderstandings to develop tangible, sustainable solutions." Firmenich president global fine fragrance Jerry Vittoria
“This is the first year we are being briefed by many clients on colognes, a new interest in the region, inspired by the collections from the big Western brands.” Firmenich regional director fine fragrance IMA and SEA Ian Crompton “We’ve grown at strong double digits in the Middle East for the past four or five years. Fragmentation allows us to be entrepreneurial in style, to be fast and help give clients and brands what they want in a fast-moving market. Consumer tastes move quickly.” Givaudan global head of fine fragrances Felix Mayr-Harting
BW Confidential highlights what was seen and heard at the Beautyworld Middle East show, which took place in Dubai from April 15-17
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“The market in the Middle East is stabilizing. 2019 is hopefully going to be a better year, especially in Saudi Arabia. The difficulty now—aside from the raw materials issue—is the increased number of players in the market. It is very fragmented, which complicates the scope of the work. In Saudi Arabia, the confidence of consumers has changed. They are back in the market and taking risks. Also, in previous years, clients were launching one or two products, now they are back to the regular five or six.” Givaudan fine fragrance director South Asia, Middle East & Africa Danielle Hokayem
“In the Middle East, last year was very tough and this year we are back on track in terms of growth. We suffered a lot last year in the region, as many companies did, but we saw a good recovery in the first quarter. I feel like it was due to a stock adaptation—customers and consumers reduced their fragrance budget. That’s a consequence of oil prices but that’s now back on track. The macro economy is playing in our favor.” Symrise senior vice president global fine fragrance Ricardo Omori
“Today Kuwait and Yemen are successful markets for us. Qatar is complicated [due to the diplomatic crisis in the region]. Kuwait is getting a lot of business from Qatar and is probably overselling. Saudi Arabia is still complicated, but our Saudi customers view [the political changes] as an opportunity because the government is cleaning up the market. So Saudi Arabia last year did very well for us. The problem is the bubble in the UAE. Saudi Arabia is a market that consumes for itself and Saudi companies were not exporting much; now they are learning how to export and are offering strong competition in the UAE. The market in the UAE is not strong, but it’s a great platform for export to Africa.” Eurofragance ceo Laurent Mercier
“We are at a crossroads between tech and niche. Niche brands are no longer dependent on little indie retailers, we can go straight online and do big volumes—it’s 'Niche Fragrances 2.0'. There are new opportunities to be less dependent on retailers and have more direct contact with consumers; people are coming straight to the brand.” Ulrich Lang Fragrances founder Ulrich Lang
Trends from the showShowing muscle: Large and elaborate stands by exhibiting fragrance houses were regarded as a way of reassuring jittery customers in the region.
Highlighting creativity and individual perfumers was emphasized by fragrance houses looking to differentiate in a competitive market.
Managing supply and high prices of raw materials was a key discussion point, with fragrance houses emphasizing the need to be transparent with clients about issues.
Natural ingredients and sustainable products have yet to break through as a priority selling point for consumers in the Middle East.
Layering fragrances continues to be a key trend in the region, as are hair & body mists.
Political and economic turmoil in the region—and especially the impact of renewed sanctions against Iran—is keeping players agile in the market.
The 'Dubai bubble'. The cost of living for expatriates in Dubai continues to rise. Many question the sustainability of the emirate's economy and when the bubble will burst.
Seen in show: Beautyworld Middle East
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CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL
In case you missed it
LG Household & Health Care to acquire New Avon
Unilever Ventures invests in Dr Roebuck’s
Kérastase rolls out new travel-retail initiative
Sekhmet Ventures invests in Heretic Parfum
Dior unveils Pink City pop-up
La Prairie inaugurates revamped Zurich Airport boutique
Unilever acquires wellness supplement brand Olly Nutrition
The Hut Group buys Christophe Robin
Coty renews fragrance license with Marc Jacobs
Diesel to launch fragrance from Brazilian football star Neymar Jr
Beiersdorf selects first five Korean brands for accelerator
Amorepacific to open anti-pollution research center
Esxence opens its doors
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 May 28, 2019:
Natura’s strategy
PLUS: • The latest retail and tech news • Interview • Travel retail data • Beauty trends • Social media insights
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