In the first of our new Sector Briefing event series, we heard from three experts on what we can learn from the fast-paced world of beauty.
To kick off our new Sector Briefing event series, we set our focus on exploring new ideas and innovations from specific industries, starting of by delving into the world of beauty.
The days where a few big players dominated the beauty industry are long gone. Today, over 80% of the market is made up of small, mid-level and start-up brands, all vying for attention and competing to produce the most innovative products, services and campaigns in the shortest times. From new subscription and membership models, to augmented reality apps, and the enormous impact of beauty bloggers, vloggers and Instagrammers — the way we discover, try and buy beauty products has radically changed over the last five years. And according to data and analytics firm Global Data, it's a sector that's set to grow rapidly over the next five years.
Joined on Friday morning at Shoreditch House’s Library by a panel of experts, we discovered what's driving the biggest changes to this industry, explored emerging trends, and found out how companies big and small are creatively responding to these changes. Guest on this event’s panel were:
Kat Towers, Head of Culture at design studio LOVE, a collective in the heart of Manchester. Kat shared ideas from her research into ‘hacking fast-beauty’, and explain how she helps brands to stay agile in this fast-paced space, and to gain inspiration by looking sideways at what beauty sector innovators are doing.
Karinna Nobbs, Chief Futurist at Holition, a creative technology agency in London which specialises in consumer experience innovation across the beauty, luxury and fashion sectors. Holition has developed omnichannel augmented reality solutions for trying on make-up, and works globally with beauty brands such as Charlotte Tilbury, Rimmel and Shiseido.
Rachel Humphrey, PR & Strategic Partnerships Director at the beauty subscription service Birchbox UK, which offers a personalised way to discover and shop for new beauty products online, and in recent years has opened physical stores in New York, Paris and London.
Here’s what we learned.
Challenger brands are serving up fast beauty
Kat from Love began by emphasising that, in today’s beauty market, established brands are threatened by the rise of ‘challenger brands’. As a result, they are looking for new and innovative ways to compete, and keep up with the relentless pace of today's beauty consumer. She listed some of the ways in which challenger brands are successfully dishing out fast beauty to their audiences and coming out on top: fearless innovation, on-point personalisation, utilising influencers on social media, staying on top of cultural trends, and the idea of the challenger brand being the decision maker. She explained that ‘fearless innovation’ is when challenger brands go “where established brands are too scared to go”, citing Milk Makeup's innovation around cannabis culture by launching cannabis oil-based products. She also referenced Beauty Pie as a brand “changing the whole face of the beauty business” with its memberships, which allow consumers to access cost-price beauty: “It cuts out the middleman, and you can buy lipstick for less than a latte”.
Staying culturally relevant
Knowing your consumer and what they're tuned into is key, said Kat, as proven by the recent launch of Glossier’s Lid Star eyeshadow. Glossier seeded its new product with as many celebrities as possible to coincide with awards season, when people would be online looking at events such as the Oscars for fashion and beauty inspiration. “This is the difference between culture and marketing. We think about consumers, but they don’t think in terms of 360-degree marketing — they just live 365 days a year.”
Harnessing digital platforms
The YouTube beauty category rose from 55 billion to 88 billion subscribers last year, Kat pointed out, and it's largely challenger brands that are harnessing these digital platforms. Often, their strategy involves creating products that lend themselves to being shared on social media, for instance in 'unboxing' videos. She explained, “beauty trends and cult products are born on social media before they’ve even launched. Beauty enthusiasts are always looking for content to fuel their digital lives”.
Social also provides an invaluable tool for building and connecting with an online community. “One of the challenges we have with established beauty brands is they have lost their connection with their consumers”. Challenger brands like Kylie Cosmetics are masters of “no-marketing marketing”, with their ability to make their websites crash simply by promoting new products on their Instagram feeds.
Looking for gaps in consumer experience
Sharing the motivation behind challenger brand Birchbox, Rachel Humphrey explained that then when founders Katia Beauchamp and Hayley Barna set up the brand in 2010, they identified three customer pain-points, which were essential to informing the company's business model.
Firstly, despite there being a massive uplift in e-commerce in 2010, the beauty sector online was not seeing the same successes: “only 5% of beauty spend in 2010 was actually online”. Secondly, there was an inefficient sampling strategy within the industry. Brands would often only give out samples to customers who had already made a purchase, a strategy that strategy focussed on loyalty and not on new acquisitions. Thirdly, customers where overwhelmed by the thousands of beauty launches every year, making it exceptionally hard to find products that were really suitable their individual needs. Birchbox’s founders understood that the beauty consumer needed clarity and a simpler and more personalised experience when it came to buying beauty products, which led to their uniquely customer-orientated business model. Their solution was to send personalised beauty boxes straight to consumer’s doors.
Taking a tech-based approach
The last five years has seen innovation agency Holition developing augmented reality solutions for the beauty sector. The starting point is always the consumer, and their user experience, Chief Futurist Karinna Nobbs explained: “We always start by asking what is the consumer going to get out of this? Who is the consumer? How can we make their life easier? How can we make them happy? We’re constantly tracking what’s going on in the environment, speaking to current and potential clients.” The importance of this research phase can't be overstated, and Holition spend a long time understanding the user journey — something that established brands and often failing to do. “The complexity of that consumer journey is not straight forward, and brands that are not tracking their target customer in that area should have a word with themselves," Karinna advised.
Opportunities in augmented reality and chatbots
By offering a way to virtually try on cosmetics, Karinna explained that augmented reality offers the consumers an opportunity to reduce the financial or psychological risk of a buying new beauty products. Augmented reality is also proving useful as a way of surprising and delighting customers, through innovative launch campaigns, games and social media features such as exclusive Snapchat filters.
Discussing the potential for connecting with consumers via chatbots, Karinna felt that "nobody seems to have cracked this yet," and there are still areas of uncertainty: "If you are creating an artificial intelligence identity, should it be female or should it be male? Should you say its a robot? Should it help with functional things or emotional things? This is something that still needs further research.”
Convenience for the consumer
Rachel attributed Birchbox’s success to the company’s ability to tune into its customers' needs, and to make the beauty buying process as convenient and straightforward as possible: “What if everyone could get the right products, individual to their needs, while having fun — and not have to spend too much money on it? What if everybody could have a beauty editor best friend?”
She pointed out that most beauty brands focus on the customers who are spending the most in the category, and who actually only make up 20% of the market. Instead, Birchbox’s strategy targets the rest of the female population — "the everyday, casual beauty shopper" — by engaging her and increasing her spend. Each new customer fills out a beauty profile when signing up for a subscription — using this data, Birchbox customises their box, using algorithms that pull together all the key attributes of suitable products.
Also commenting on convenience, Karinna notes that while Holition aims to create innovative ways to engage their client's audiences, a “hands-free” marketing option should also be considered — "a purchasing journey for someone who really doesn’t really want to interact. As stress-free as possible”.
Better for brands
Rachel highlighted that not only does Birchbox cater to the everyday beauty consumer, it works to the benefit of the beauty brands it samples and sells. The 360-degree consumer experience is completely mirrored on the B2B side, she explained. Brands are given the opportunity to get their products directly into the hands of a customer, they get a multi-faceted marketing campaign tailored to their objectives and complimentary to their marketing plan, and then a seamless path to purchase. It's a strategy that's working: “Birchbox subscribers, after 12 months of subscribing, increased their spend within the prestige beauty category by 70%”. Birchbox itself has gone from 1,000 subscribers when it launched in 2010, to 1 million subscribers globally today.
All photography by David Townhill.
See future panels, workshops and roundtables on this topic and more, in the Learning Programme here.