Many different industries including the global beauty industry have been tremendously hit by the COVID-19 crisis. Starting in the beginning of 2020, the first-quarter sales for the beauty industry already were reported to have declined. On top of that, throughout the year, there have been widespread store closures because of continuous global lockdowns. The beauty industry is particularly affected by this, since in-store shopping accounted for up to 85 percent of beauty product purchases prior to the COVID-19 crisis.
However, behind the setbacks from the pandemic, a fresh new start may be waiting. Over the last year, important trends have established and are predicted to become the norm of beauty retail in the future as consumer expectation and behaviour has altered. Trends we see are around new ways to use technology and the internet. As companies and brands are prompted to digitalize, they lay the foundation to thrive in a digital age.
With this, we compiled and described four of the biggest trends for the future of beauty retail.
As the measures of COVID-19 have forced stores to close, many brands depending on brick and mortar are asking how they are supposed to reach customers if they can no longer visit the stores? Companies have found their answer in Shopstreaming, a combination of shopping and streaming. Through this new shopping experience, users can now see and shop products live all in combination with entertainment, real-time interaction and community feeling.
Even though Shopstreaming is not revolutionary in Asia, this new way of shopping has now expanded and successfully reached the rest of the world. Past numbers have proven the success. Alibaba group revealed that gross merchandise volume generated by Taobao Live has grown by around 150% a year for three straight years. They also presented the example of the beauty brand Lin Qingxuan (Forest Cabin). This brand saw a total sales drop of 90% due to a forced closure of half of its physical stores. However, once the retailer began hosting live streaming sessions, sales increased 120% year-on-year in February.
Just recently, Amazon has demonstrated the power for beauty brands through it’s 11-hour Beauty Haul Live event, including brands like Flawless, Honest Beauty, Cetaphil, and Neutrogena. With social media platforms like Facebook and Instagram or also TikTok quickly following by introducing their Live Shopping features, beauty brands now have more ways to engage existing followers and hook new audiences to drive consumption and conversions.
2. Online Counseling Commerce
Similar to shopstream, our next trend is online counseling, which is more individualized than shopstream. It has been seeing great success in Korea already, where door-to-door counseling and sales were very common before Covid. To compensate, these highly trained employees from companies like Amorepacific, LG Health Care and more are now serving and consulting through counseling apps and online systems instead of in person.
The Korean beauty company ABLE C&C, which carries brands like Missha or Apieu, also recently launched “Beauty Talk”, where consumers can live chat 1-on-1 with an experienced store member and directly purchase the recommended items online through their app. Similarly, Glossier launched “Live Edit” and also beauty retail giant Marionnaud launched the service named “Beauty Chat”.
Alternatively, brands have taken advantage of technologies like AI to provide a similar service without human interaction but through apps and chatbots. Revieve is leading this field with their Digital Beauty Advisor. It provides skin care recommendations considering factors such as redness, eye bags and wrinkles via selfie analysis. After the analysis, consumers get the perfect products recommended. In a study, Revieve found out that using the consultative service, 80% of consumers in Asia have converted to purchasing a product.
3. Social Commerce
Coming to the next trend in beauty retail, social commerce. Instagram, Facebook and co. have been changing the shopping game by introducing a new shopping feature for businesses to sell products directly in the app. For Instagram, users can explore the different products and options a company offers through their feed or story and subsequently checkout with the chosen products all within the app.
Moreover, Instagram users can get inspired by different set collections, browse selections from their favorite brands and creators and create wishlists saving products to shop them later on.
Through social media, brands can develop a personal connection to customers and build trust, which makes it easier to convert users. For Facebook and Instagram, the platforms allow easy integrated customer service through WhatsApp, Messenger or Instagram Direct to ask questions, get support, track deliveries, make purchases and more.
4. Virtual Experience
Another upcoming trend for beauty retail 2021 replaces the physical in-store experience with virtual experience. According to Goldman Sachs, the market for AR and VR in retail will reach $1.6 billion by 2025. VR and AR technology are nothing new to the beauty industry, for instance it has been used to help customers virtually try on cosmetics.
However, since last year more brands and companies have been using the technology to implement virtual store experiences. This unique buying experience is created by combining real shopping experience with the benefits of online shopping. More appealing to customers compared to usual online stores thanks to the realistic visualization of the sales areas with product sortiment and info points including product description, images or videos to provide the customer with all the relevant information. Above that, the innovative storytelling and added element of personalisation as well as through avatars and virtual human assistance, immerses the customer in an even more emotional way.
One successful example is the beauty brand Charlotte Tilbury, creating a digitalized version of their brick-and-mortar store. When entering the virtual store, users are first welcomed virtually by Charlotte Tilbury herself. In their virtual Beauty Secrets store customers can explore, shop and receive personalized advice or product recommendations.
5. Community led Marketing
The last upcoming trend for beauty retail is all around new ways to market products. It has been clear that marketing has changed over the years from traditional print and TV to digital and online ads. But even within digital marketing, there has been a change in preference. Consumers are becoming more and more visual and prefer short, quick and shareable content.
Given this, TikTok has seen the biggest success over the past year as the most downloaded app. With over 800 Million active users, the short-video app helps brands connect with consumers in a completely new way. Consumers especially love the authenticity of brands on TikTok and hence interact and engage more.
For instance, Hero Cosmetics ran a TikTok hashtag campaign with TikTok creators on the platform showing their morning routines with its Mighty Patch acne patches and the hashtag #schoolsurvivalkit. These Hashtag-Challenges give users the creative freedom to develop unique content. Besides Hero Cosmetics, other known beauty brands that are very successful in engaging with the TikTok community are for instance Fenty Beauty or the Ordinary.
The special thing about TikTok is the opportunity for smaller, independent brands to also shine. On TikTok it is not about who has the biggest marketing budget or most polished ads, but rather original ideas and engaging content. With the right content, a long-term consumer base and community can be built on the platform. Content that is relatable, authentic and organic performs the best.
Brands like Kaja Beauty understand the concept and conquer the platform with content that includes product texture, close-ups and ASMR. A whopping number of 1.5 Million followers love the brand, which is four times more compared to 367 Thousand on Instagram.
The Future of Beauty Retail
In conclusion, the crisis has accelerated the pace of innovation and opened new opportunities for the beauty industry to explore more creative and innovative ways to reach consumers. The need for digitalization has become more prevalent and a necessity for businesses to survive. Whether it be shopstream, online counseling commerce, community led marketing channels, virtual shop experience or social commerce, it is all about understanding customers and actively engaging with the community. All of the trends we presented in this article will be the standard in the future of beauty retail and foundation for new innovations. As in the future, the user experience will continue to change, brands should be agile and flexible to adapt with trends and consumers and unlock these new opportunities.