Selling into Disruption | The Future of Beauty Stores
June 5, 2020
Co-Authors: Chris Hogue, Elliott Jacobs
LiveArea’s Chris Hogue, Vice President of Strategy & Products and Elliott Jacobs, Director of Agency & Commerce Consulting discuss the issues facing retail businesses as physical stores open once again. To watch the full webcast with Adobe | Magento Commerce, click here.
With uncertainty surrounding what retail will look like as stores begin to open again, many will look to the mainstream leisure retail sectors – such as health and beauty and fashion – to see how brands and retailers can adapt to post-pandemic retail. These are the sectors still reliant on the physical retail experience, with 70-80% of transactions happening in-store, so the challenge they face in adapting to the ‘new normal’ is intriguing.
- Focus on digital
- The physical experience
- Online marketplaces
- Merging digital and physical
Browsing, trying on, meandering through stores, these are exploratory and social interactions that may drastically change as a result of this pandemic.
When it comes to health and beauty retail, you can’t ignore the core experience. What do shoppers do when they walk in a store – they interact with staff, they pick up and try the testers.
You can imagine how that might feel in the future, and it’s not comfortable. This simple, vital exploratory experience has changed from something fun to something potentially dangerous. You pick up a bottle of perfume to sample the fragrance, and suddenly you have no idea how many people have touched that bottle before you. You pick up a tube of lipstick or a foundation pad to try some swipes on your arm and see if you like the color. This is now not a safe thing to do.
Whilst considering what the in-store space might look like in the future, we can’t ignore digital platforms. A digital presence at this time is so much more important than ever before. What brands can do right now at a basic level is make sure their sites are performing, are mobile optimized, and are aligned with consumer desires. This means a focus on intent, the ‘moment-based-needs’ of shoppers.
Are users coming to the site or the app to transact or to research, to consume inspirational or educational content, or to check reviews? Beauty is probably the most researched category online. Before anyone even walks into a store, they’ve engaged on social media, they’ve watched influencer videos, they’ve checked which ingredients are a good fit for their skin type. Many will be checking brands’ online channels for inspiration to inform a purchase.
This is where digital marketing, analytics and UX teams are vital, in leveraging data and analytics to better understand digital user behavior. Then, using this to curate and optimize moments and design experiences to promote certain behaviors, all driven by data and intent. Practically, this means having clear behavior flows and using measures and tagging that provide visibility on these.
And there’s work to be done before many brands can engage with their audiences in this way. As we look to get our stores online, from a marketing perspective, how do we get our brand to the top of the funnel?
Until this pandemic, 70-80% of purchases came from in-store transactions. That’s clearly not the case right now, and may never be the case again, so more product searches and buying journeys will start with trusted digital platforms like Amazon and Google.
Businesses need to consider how they position themselves in this space, to become part of this consideration stage, before moving customers onto their own channels. There is a real danger for brands missing out on this initial consideration stage, with potential customers doing their research elsewhere and, due to convenience, buying on those same platforms.
If we’re looking at a situation where shoppers are concerned about physical interactions with staff or trying products due to hygiene, then we must consider what happens to these fundamental stages of the buying journey, and what they might look like going forward.
Perhaps individual samples become the new in-store testers. We’ve seen success with the likes of Birchbox – a subscription-based model where customers can demo small samples of recommended products through the mail. These smaller format products are a big part of selling today and have been integral parts of marketing channels for years.
Now it might be time to consider scaling these. Clearly there is an initial outlay – sampling can cost anything from £25- £200k just to roll it out on a marketing basis – so imagine a situation where samples are permanently replacing the testers that we put in stores.
This is where businesses must focus on intelligent data. Those with full visibility across in-store usage, online browsing data and inventory management will be able use these insights to forecast product sampling, optimize production and distribution to meet demand and minimize wastage. They will also be able to analyze which products will sell well, and support marketing and merchandising efforts to maximize revenue here.
The physical experience
Retailers have spent decades evolving and refining how to deliver marketing, sales channels, customer service, returns, and products in a more meaningful way for their customers. Pivoting for tomorrow is a huge effort, but there are areas businesses can consider today to plan for tomorrow, when we relook at changing the in-store format. This altered environment needs to enable people to feel safe, to build trust that brands care about their needs and wellbeing, whilst still facilitating quality, personal brand experiences.
It’s interesting to think about these human, physical experiences as part of in-store retail. In health and beauty, brands have invested a tremendous amount into technology. Skintyping kiosks, smart diagnostics tools and virtual assistants have created fun experiences that allow consumers to learn more about brands and products.
Many of these tools have moved online and onto apps, but what we often find is that the consumer reaction to these isn’t as strong as it is in-store. It lacks a lot of the atmospheric, human, physical connection. So, when we start to think about tomorrow, we need to rethink some of these formats.
Forrester did a study in 2019 around beauty buying behavior, and there were some interesting findings around in-store. Over half of people would rather use their own device in the store environment, whilst only 19% wanted to use in-store technology. And this was before the pandemic, so you’d expect some of these in-store devices to be less popular now, with concerns around hygiene.
So, businesses that use these devices need to reconsider these concepts and technologies to create connections in a safe and meaningful way – both in-store and away from stores. Often, the reason we go to stores is to try something different, due to seasonal changes, new trends, changing tastes, or new product launches. People are naturally more exploratory when in a store. So, how can we reimagine these exploratory experiences.
Another part of the physical beauty retail experience is variety. Those shopping in department stores enjoy the convenience of multiple brands, experiences and products right next to one another. There’s an interesting opportunity for brands replicate this experience online to come up with niche marketplaces.
Instead of brands just pushing their products through ultra-competitive marketplaces like Amazon, brands could partner with complementary companies, creating niche marketplaces. This allows a more focused target audience and product set, which makes marketing, content, and UX curation more effective.
For example, for a group of brands that have a focus on organic ingredients, or addressing specific skincare needs, there might be the opportunity to create a marketplace with an app or guided selling experience that provides more educational content around ingredients. Whether through these niche marketplaces or through their own channels, this is where brands can differentiate from the likes of Amazon.
We’ve already acknowledged that beauty is a heavily researched retail category, so those brands that deliver the right content, at the right time, will help reassure consumers and convert browsers to loyal customers. It’s important to help consumers find the right product, and buy the product in an easy, safe manner, whilst using emotive content to shape a decision.
The likes of Amazon and larger retailer websites have extremely robust product information systems, that can deliver a lot of information, but don’t often consider the intent or needs of the customer.
For example, someone researching anti-aging serum is going to need very different content to someone looking for a new lipstick. Those looking for serum might need content around ingredients, skin types and daily routine advice, whilst someone seeking lipstick is likely more interested in how the shade matches their skin coloring, and which complementary products might complete the look. Now is the time for brands to start delivering these types of content and experiences and analyzing user behaviors to understand intentions and preferences.
Merging digital and physical
It might be purely digital right now, but we need to think about the mix of digital and physical for tomorrow, and how that’s going to look.
What happens to the experiences brands have invested in in-store? We have to reevaluate the role of these assets in-store, whilst ensuring they’re safe.
For example, the smart beauty mirrors tend to be very functional: People walk in, scan their face, it diagnoses skin type or colorings, and makes relevant recommendations. This is very sequential and often transactional, but not always aligned with intent. The intent of shoppers in-store is often quite exploratory, so these experiences could be much more open, fun and inspirational.
They could be visiting in-store to expand upon the research they’ve done online or check out more about a product they’ve seen an influencer wear. They might have had a negative experience with a competitor’s product or have a coupon to redeem for a certain value. How can the experience cater more for individual intent, instead of pushing people down a very narrow sales funnel?
Data is the key
Spending time considering how we curate these experiences for different intentions and different modes instead of one single application, is how brands might rethink the store experience. This is where data is key. If brands can find a way of leveraging customer data and preferences in-store, and aligning these experiences with personal mobile devices, the potential for a 360-degree view of the customer individualizing these experiences is huge.
Read the other blogs in this series:
Chris Hogue | Vice President of Strategy & Products at LiveArea
Chris has more than 20 years of experience launching innovative digital solutions and services. He works closely with B2B brands on expanding their capabilities in new ways. Before joining LiveArea, Chris was head of strategic initiatives at Isobar where he led the development of a new data platform, optimizing campaigns and user experiences and combining behavioral and emotional data.
Elliott Jacobs | Director of Agency & Commerce Consulting at LiveArea EMEA
Elliott is an experienced global commerce and multi-channel retail professional, specializing in helping B2C and B2B companies achieve measurable success by reviewing current strategies and processes, and identifying and capitalizing upon emerging digital opportunities.