Stay smart, sticky and authentic – the 3 keys to building a successful beauty brand

08-Nov-2023 - Last updated on 08-Nov-2023 at 15:52 GMT

'Authenticity' is a key trait that many potential investors look for (Image: Getty)

Creating a brand from scratch is no easy task, but staying authentic, building a loyal following and making smart distribution decisions is key to success, say experts.

This week, beauty brands, investors and consultancy firms – big and small – came together at Beauty Independent's debut Dealmaker Summit EU/UK 2023 in London, UK.

The two-day event, designed to offer networking opportunities and market insights, delved into opportunities and challenges for beauty brands looking to grow today in the EU and UK, drawing insight from the likes of Unilever, L'Oréal, Beauty Pie, Sephora, Bain Capital and Rothschild & Co, along with a plethora of successful indie brands and early-stage investors.

Here, we round-up key takeaways from the event that provide insight on how beauty brands today can successfully create, build and scale business in the UK and Europe.

Authenticity – who are you and what do you stand for?

A key word repeated throughout the two-day event by panelists and attendees alike was 'authentic'. The word was used to describe what investors look for in a beauty brand; what retailers expect from a beauty brand; and what founders say is an absolute must in engaging with consumers.

Aaron Chatterley, co-founder of Feelunique – acquired by beauty retail major Sephora in 2021 €150m+ – and current co-founder of teen beauty startup Indu, said he had received two pieces of advice when developing his latest business venture.

“Number one: if it's not 'shit-hot' don't bother because we can all sell something once but the second sell is the challenge. And then second: it has to be authentic. If it's not, teenagers will sniff it out,” Chatterley told attendees during a panel session.

Marc Elrick, founder and CEO of brand incubator Future Beauty Labs and UK skin care startup Byoma, agreed. “My role in this industry is to shape it, move it forward, challenge it, shake it up. And the really exciting thing is Byoma is one of the many brands doing it. I just facilitate what the consumer wants; I am a servant to the consumer. If your business is built with those deep-rooted values and comes from a place of authenticity, you can only win.”

Authenticity was also critical in securing funding, according to investors, as it helped brands stand out in the increasingly competitive market.

Cécile Chevallier, principal at global consumer investment firm Verlinvest, said: “We look at values, authenticity and sustainability. We talked about how brands differentiate, and for us, having a strong purpose and standing out is a way to differentiate. So, we would not invest in a brand that isn't differentiated.”

While Hui Chan, managing director for private equity at global private investment major Bain Capital, said it was easy to get a sense of true authenticity from a brand. “I see a lot of beauty brands; you can feel it. You can feel the authenticity when you're talking to them - not just the team lead but employees further down below. We ask: how well does everyone buy into the mission and values of the business? I would ask consumers that question too: how authentic do you feel that brand is?”

Smart distribution – meeting consumers where they are

However, reaching these beauty consumers in the first place also remained a critical challenge for beauty startups, particularly reaching relevant and engaged consumers.

According to the investors, retailers and founders at the event, it was also vital that brands were finding these consumers in the right channel, ideally omnichannel.

Membership major Beauty Pie, for example, had maintained a direct-to-consumer (D2C) approach thus far, but CEO Kevin Cornils said the company was exploring other channels. “We did a popup last summer in Covent Garden, just to get a sense on what engagement would be like, and it was super positive engagement. The business plan to doing a popup was to enable discovery to potential new members but we ended up being overwhelmed with the huge queue out the door of our existing members wanting to experience it. There was a love of the brand and a desire to connect,” he shared.

Meanwhile, Katy Cottam, founder and CEO of intimate care startup Luna Daily, said D2C made a lot of sense for plenty of brands but branching out could shake up shopping patterns. Cottam's goal for her brand was to de-stigmatise sexual wellness and make 'feminine hygiene' redundant, for example, and being stocked in Sephora North America and Boots UK helped in this mission.

“For startups particularly, if your route to market is omnichannel with retail, the retail landscape is so important for the impact it has on consumer behaviour (…) The most important thing with retail partners and retail merchandisers is about working with those who have your same vision,” she told attendees.

'Stickiness' – gaining repeat and loyal customers

Once a brand had found beauty consumers in relevant channels, be that online, via social media or in-store, experts said it was then critical to build out the 'stickiness' of these customers – i.e. how loyal and regular they were over time – especially if the goal was to secure investment or work towards an exit buy-out with a strategic bigger player.

Vasiliki Petrou, group CEO of Unilever Prestige, said: “Loyalty is one of the indicators we look at. Another one, obviously, is consistency of growth. We want brands that have the potential to grow over the next 10-15 years and stickiness is one metric we look at with repeat customers. A healthy brand would always be a mix of new and then repeat consumers.”

And gaining this loyalty or 'stickiness' could be achieved in a number of ways, but playing into a strong category was an important angle, according to Hind Sebti, founder and CGO of beauty and wellness special purpose acquisition company Waldencast.

“The market trend is showing more people going into high-science skin care. And when you go there, and there are results, it tends to be 'stickier'. That's why we see increased appetite in this domain,” Sebti told attendees.

And finally, Sarah Chapman, founder of Sarah Chapman Skinesis clinic and boutique, said a clinic-based business was another strong space for building loyalty. “The clinic is important in terms of the stickiness of customers, with some clients coming for treatments every month for over 15 years. We have people so solid and loyal in terms of what they're having treatment-wise, and 60% in treatment will purchase a product off the back of that – that's a consistent thing happening all the time,” she shared.