Europe represents the largest personal care and beauty market in the world, valued at €78.6 billion at retail sales price in 2018, according to trade group Cosmetics Europe. Germany, France and the UK represent the largest markets, each worth more than €10bn each.
But as the European beauty market continues to flourish and the world of online and offline retail collide, how can beauty brands and retailers stay competitive? We caught up with Djalal Lougouev, co-founder and chief product officer at Ometria – an AI-driven, cross-channel marketing platform for beauty, fashion and homeware – to find out.
First off, Lougouev told CosmeticsDesign-Europe that the European beauty sector was highly susceptible to seismic changes in retail, notably fiercer online and offline competition and considerably higher consumer expectations.
“Consumers are expecting experiences beyond what retailers are doing today. It’s absolutely vital for a retail brand to be able to action that in real-time,” he said.
Forget next-day free shipping, build brand affinity
Amid a “plethora of different brands” on the beauty market, he said the days of next-day free shipping or 10% discounts as purchase incentives were gone. “Today, the retail space is extremely competitive, let alone the beauty space.”
Beauty brands and retailers had to establish more complex and meaningful engagements across numerous touchpoints with the consumer, he said – “the only way to stand out is to create that human relationship”.
Importantly, Lougouev said this consumer contact had to be consistent across all touchpoints – a space that had ballooned in recent years. Beyond traditional product visuals through packaging, in-store face scanning, post-subscription emails and Instagram and Facebook engagements now also had to be considered, he said.
“As technology advances, there’s going to be billions of datapoints. At the end of the day, the visual reputation for beauty brands is just one touchpoint with their customer. Maybe now we have ten, and in five years we’ll have 100. The key there is to treat each channel as a journey between the brand and consumer and make sure it’s consistent.”
“…It’s key to be very agile and iterative in the way you communicate with your customers,” he said.
Currently, less than 5% of the beauty market was providing cutting-edge, one-to-one consumer experiences, Lougouev said – “there’s a lot of opportunity there”.
Experiential beauty to bridge online-offline ‘chasm’
Asked what consumer touchpoints were exactly, Lougouev said: “It’s both tangible and intangible experiences. It’s the end-to-end journey – from you finding out as a consumer about the brand and every single conversation, whether digital or physical, with the brand.”
From seeing a beauty ad on a bus, to going online to find out more, he said it was vital a consumer felt welcomed from the very first touchpoint. Should an email address or details be provided, for example, that could then be acknowledged in-store or when the consumer purchased a product. But working seamlessly between online and offline was not straightforward and required adequate data analysis, he said.
“When there was this creating of a chasm between online and offline, it created many problems. Brands typically diverged to create two difference experiences. Now with technology and a system like Ometria, that gap is starting to converge once again to unify those experiences.”
Lougouev said the challenge would continue to evolve as the number of channels and devices used by consumers continued to increase exponentially, from today’s mere seven devices for shopping.
“The number of devices is going up, creating different touchpoints you have with a brand and so the different ways you can market to consumers has increased – ads on TV, in-store experiences, virtual channels, augmented channels, interstellar advertising. You just don’t know what channel is going to pop up; the marketer’s challenge is extremely difficult right now, to make sense of that data.”
Direct-to-consumer succeeding where others haven’t…
Within beauty, Lougouev said direct-to-consumer (D2C) business models had addressed these challenges far more successfully than others because they had started with the right fundamentals –collecting data across multiple channels.
“The data you’re collecting and using for marketing purposes is actually vital to improve your product. That’s what D2C brands have successfully done because they collect data in such a frequent manner, they can improve products on-the-go.”
The D2C beauty segment had seen a “huge shift” in the last two to three years thanks to this, he said. “The likes of Glossier have transformed the way beauty is created – the creation of the business through truly understanding customer pinpoints and needs and approaching it as you’d develop a technology product. Glossier showed beauty can be transitioned in the correct way through the direct-to-consumer experience.”
Lougouev said some of the larger beauty corporates had started to incorporate D2C departments internally, testing different products and digitally transforming, and if this was done well, they could give the smaller pureplay D2C brands a run for their money.