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The beauty industry bets on digital technologies

The BeautyFULL Club, a think tank comprised of beauty industry leaders, commissioned a group of six students from the Master in European Business at ESCP Europe for an update on the latest practices and innovations regarding the integration of digital technologies in the marketing and sale of luxury cosmetics. The results of this study were presented last week at the ESCP Europe and in the presence of Georges-Edouard Dias, Digital Manager at L’Oréal.

A wide range of digital tools, the effectiveness of which has been more or less assessed, is available to brands that want to to capture the attention of consumers, turn their visits into purchases, or increase their loyalty. Students from ESCP Europe commissioned by the BeautyFULL Club [1] have studied a wide array of existing technologies and tried to assess them through a grid taking into account, their impact on visits in retail outlets, on the brand’s reputation and image, on the collection of customer information, or the return on investment. Then, they tried to investigate future trends.

Attracting consumers

From augmented reality contests on mobile phones to e-mailing campaigns, through holograms within shop, interactive displays or YouTube channels: technical possibilities seem almost limitless when it comes to attracting the attention of consumers and highlighting a brand’s values. However, said the group of students, all of these techniques must be evaluated in terms of their impact on the reputation and image of the brands. Depending on brands’ market positioning, these tools can be used to preserve the brand image, to optimize the recruitment of clients or to build an interactive and immersive relationship with the brands’ values. In all cases, "the aesthetic of the brand must prevail over purely technological issues.

Digitizing outlets

Beyond their capacity to seduce consumers, digital technologies have already demonstrated their ability to generate significant sales. The e-commerce market share in cosmetics retail sale in France reaches 2%, to compare to 9% in China. In parallel, while the market for high-end cosmetics is growing by about 5% per year worldwide, online sales are progressing by 30% on average, but at very uneven rates, ranging from 12.5% in the United States, 45% in Russia and 66% in China, and 20% in France. At this level, however, it is necessary to take into account the particularities of each country, especially in terms of payment and delivery habits.

However, if online sales of cosmetics are constantly increasing, 71.7% of consumers still say they prefer to buy in high street stores rather than on the web. However, they are almost as many (69%) to consider that the new digital technologies make brick and mortar retail stores more attractive. According to the ESCP Europe students, beauty retail trends are definitely proving to head towards outlet digitalization.

New technologies are emerging clearly as a propeller for the acquisition of new customers and the transformation of visits into purchases: 87% of consumers believe that technological innovation contribute to upgrade retail stores, and 74% that they are timesaving.

Once again, the list of available technologies is impressive: 3D without glasses, digital flasks, tactile holograms, applications for smartphones, indoor GPS, mobile cash desks, etc. Their objectives vary from brand promotion, consumer education, purchasing and payment facilitation.

Because of their low cost and a high equipment rate of consumers, smartphone applications rank first and are proliferating, in particular for consumer information purposes. For instance, noting that nearly one third of consumers are using their mobile phone at the point of sale, in particular to obtain information and advice, L’Oréal has developed InstantBeauty, an application that allows scanning barcodes of L’Oréal Paris products in order to retrieve information. For its part, Sephora has chosen to equip sales consultants in its 50 top stores in France with an application allowing them to better advise clients.

New digital equipment is also entering outlets. In the United States, Sephora has launched, in cooperation with X-Rite/Pantone, a system that measures colour values of customers’ skin tone to facilitate the choice of a suitable foundation. The same system is now being deployed in Boots stores in the UK.

As far as payment methods are concerned, innovations are legion but have to cope with security concerns and the problems linked to their complexity. Many systems are being tested but, so far, current technologies lack of maturity are seem far from being able to revolutionize the act of purchase. System swap tested by Sephora in its stores in New York seems promising to relieve the shops and avoid the abandonment of purchase intentions as a result of waiting too long in body.

Also note that some technologies may face hostility from consumers, for reasons of privacy protection, or may have to cope more stringent legal frameworks.

Loyalty tools

Obviously, students from the ESCP also investigated the issue of customer relations. While 70% of consumers use social networks and 80% consult reviews published on the Internet, many brands have developed strategies at this level, in more advanced cases, these strategies may include the incorporation of social networks in ecommerce platforms, or the set up of online concierge services for the most important clients, or the co-creation of products.

As far as technology is concerned, the dematerialization of the loyalty cards seems on track, as well as, especially for mass retail, mobile phone couponing.

Prospective tracks

Finally, regarding the future, the study focuses on the potential of contactless technologies to streamline in store purchases, on outlets optimization based on the study of customers’ movements through GPS tracking (indoor-mapping), or even on holographic projections of customers enabling to test makeup on a virtual clones. Who said that traditional shops are no longer surprising anyone?

Vincent Gallon

Footnotes

[1] Gala Granier Deferre, Laurie Lhoyer, Orianne de Wendel, Hugo Bartoli, Clément Lerouge-Bénard, Victor Wacrenier

Portfolio

  • mobile cash desk
  • Instrument de mesure du teint par X-Rite/Pantone
© 2013 - Premium Beauty News - www.premiumbeautynews.com
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