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Beauty Inc issue 02/16/2016


When Procter & Gamble Co. paid $57 billion for Gillette back in 2005, no doubt company executives thought it was a sure bet. After all, P&G was the top consumer products giant in the realm of women’s products, Gillette the leader in men’s. It was a marriage made in mass-market heaven.

Then came the recession, followed by the digital revolution, and a whole new rise of competitor was born: The Disruptor.

This story first appeared in the February 16, 2016 issue of WWD.  Subscribe Today.

Gillette still commands a reported 60 percent of the retail market. But that market is contracting, replaced by digital-first brands like DollarShaveClub.com, which has been able to grab close to 16 percent of the $3 billion blades market. And though Gillette filed suit against Dollar Shave Club in December alleging patent violation, the rival upstart—and its estimated three million subscribers—shows no signs of going anywhere.

Of course, the razor category is not alone. Business models across all industries are being upended. “Over the last five years we have seen disruption in every industry and category you can imagine,” says Dana Cho, partner of Ideo. “The competitive landscape and ease with which a start-up can put something on the market are all contributing to companies asking what they should be doing next.”

Nowhere is this more true than in the beauty industry. After recovering from the Great Recession of 2008, many of the most esteemed brands in beauty have struggled to retain relevance as the traditional demographic and psychographic drivers of their business evolve at the speed of light, driven by the technological revolution. It begs the question—what does brand longevity look like today? Can a heritage brand, one that is 60, 70 or 80 years old, or even 100, maintain its relevance in a rapidly changing market?

“This is the question everyone is asking,” says Carol Hamilton, group president of L’Oréal Luxe USA, who oversees brands including Lancôme, Kiehl’s and Urban Decay. “But it’s not just heritage brands. In this fast-moving market, how do all brands maintain and retain their relevance?”

In this brave new world, where the Millennial is the new Boomer, big is no longer necessarily a benefit when it comes to brand relevance, and the way brands respond to change is key to future longevity. “There is a lot of emphasis, particularly with publicly traded companies, to have a short-termist approach to their brand image, their products and how they execute and adapt their language,” says Lucie Greene, worldwide director of the Innovation Group at J. Walter Thompson.

“That can be dangerous, because if you stick with the short term and what’s working, it’s working now,” continues Greene. “But successful brands are constantly reevaluating and pivoting. They aren’t afraid to pivot.”

In other words, as Darwin taught us, the key to evolution is adaptation. “A brand doesn’t have a life cycle,” says Hamilton, “but it is tougher for a heritage brand to reinvent itself. You have to know what to keep and what to evolve.”

The key to doing that lies, of course, in a deep knowledge of the consumer you are targeting. “When it feels like there is a lot of uncertainty,” says Cho, we always go back to the consumer, because that is our foundation. That anchors our strategic thinking. If you are serving the consumer, you add value and are able to understand emerging behaviors and insights.”

It sounds so easy, but of course how brands engage and interact with, understand and involve consumers is changing practically every day. For example, how many of you not only have a Snapchat account, but know how to post a message in under a minute? Such rapid-fire and ephemeral communication methods may seem counterintuitive to an industry built on emotion and human touch, but that’s just the point. “If you can be more adaptive while establishing a key brand behavior, you can future-proof yourself,” says Greene. “When you think about youth, they are constantly adapting. And if you look at a 50-plus consumer, they are loyal—but they are also increasingly behaving like Millennials. Millennial behavior is becoming mass behavior.”

So which brands are doing a good job of maintaining their relevance? To find out, we combed through sales data, brand equity analysis, digital market insights and our own reporting to compile a list of the 25 brands in beauty that are maintaining their mojo in increasingly complex times. Though their names are familiar, the landscape they are operating in is anything but.

1 L’Oréal Paris
L’Oréal Paris is a cross-category, cross-generational powerhouse. According to data from IRI, it has top 10 sellers in 13 categories; it is number one on Millward Brown’s 2015 list of top personal-care brands. Dominant in hair color and makeup, L’Oréal is increasing its presence in skin and hair care with innovative launches and a wide cast of celebrity spokesmodels. L’Oréal’s digital presence is also impressive (it pioneered try-on apps with Makeup Genius)and it ranks third on L2’s digital index. L’Oréal is a hit with editors, consumers and the industry, earning
85 awards (the most of any brand) in the last
five years.

2 MAC

In an era when makeup reigns supreme, MAC is the undisputed emperor. It is the top-ranked prestige color brand in the U.S., according to the NPD Group, and the fourth-biggest brand overall when taking into account all categories—even though it’s in only a fraction of the doors of the big three. Digital dominance? Check. It rules the social media indexes of Tribe Dynamics and L2, and is the most mentioned brand in vlogger videos, according to L2. It has also set the gold standard for corporate social responsibility with the MAC AIDS fund, which has raised more than $400 million to date for research.

3 Chanel
If there was ever any question of whether a heritage brand can remain fresh with a broad cross section of consumers, Chanel has laid the argument to rest. It is the number-one fragrance player in the U.S. prestige market, number nine in makeup and number five overall, and has perfected the art (and science) of keeping a brand simultaneously hip and iconic. While it has yet to achieve a significant social media presence, L2 cites Chanel for successfully keeping gray market products at bay on Amazon.com. But its products are a clear winner with consumers, racking up 54 awards over the last five years.

4 Neutrogena
Neutrogena is winning the mass skin-care market-share skirmishes at the moment, with bestsellers in every key category, according to IRI. Be it acne, antiaging, cleansers or moisturizers, Neutrogena has been adroit at creating—rather than following—market momentum, as with the 2015 top-selling Hydro Boost Water Gel. Editors love the
brand—its award count over the last five years reached 60, and digitally it is upping its game. L2 reports that Neutrogena is the top skin-care brand in category search visibility.

5 Urban Decay
Be it product trends or the digital dominion, where Urban Decay goes, others follow. The brand has excelled at marrying innovation and execution. Its Naked series of palettes may have spawned countless imitators, but the original and its subsequent iterations continue to drive Urban Decay’s sales. Digitally, the brand is equally as dominant, ranking number one on L2’s Digital IQ Index Ranking, which singled out the brand not only for its social media performance, but for also having the top mobile experience in beauty bar none.

6 Maybelline New York
Maybelline’s strength lies in its modernity. The brand’s age—101 years old this year—belies its youth-oriented approach to marketing and product development. Maybelline has successfully capitalized on its historic strengths in mascara to dominate the overall eye category. While the brand isn’t the strongest social media performer, its strength in search engine optimization and its effective use of shoppable user-generated content on its own Web site propelled it to the number-two spot on L2’s digital ranking index.

7 Benefit Cosmetics
Benefit’s tag line is “Laughter is the best cosmetic!” and no doubt it is smiling all the way to the bank. Its problem-solution approach to product creation coupled with an emphasis on in-store brow services have made it a first-to-market player that other brands emulate. Benefit is a social media standout (it is the sixth-most mentioned brand on sephora.com and Roller Lash was the most popular product of 2015 on Birchbox), and it eagerly experiments across platforms. The strategy works: Benefit ranks seventh in prestige makeup.

8 Estée Lauder
The naysayers were many. Estée Lauder is one of the most venerable names in beauty, but could it find its mojo with Millennials? The answer seems to be a resounding yes. According to The NPD Group, Lauder is the third-largest prestige beauty brand in the U.S. It has also effectively leveraged its spokesmodel Kendall Jenner to drive awareness among younger consumers and ranks number nine in the “gifted” segment, in L2’s Digital IQ Index. Look for the brand to capitalize on the strength of all of this as it gears up for the launch of The Estée Edit collection of makeup and skin care in Sephora.

9 Dove
From bar soap to beauty: Dove has effectively transcended its roots as a moisturizing soap to become a multifaceted brand with one of the most resonant points of view in the industry. Dove was an early adopter in championing a higher purpose with its Campaign for Real Beauty, whose content—from curly-haired emojis to self-esteem-increasing videos—has helped the brand increase its value 10 percent in the last year according to Millward Brown, which ranks it number eight in its top 15 personal-care brands.

10 Lancôme
Lancôme has proven to be one of prestige beauty’s most consistent players. Ranked number two in sales in the U.S. according to The NPD Group, it is the highest-ranking prestige brand on Millward Brown’s top 15 list, coming in at number four for 2015, a 23 percent increase over 2014. Lancôme is also one of the most consistent winners of Marie Claire’s Prix d’Excellence, and it occupies the number-three spot on L2’s Digital IQ Index, thanks to “the strongest desktop site in the Index which excels at content and commerce integration.”

11 Nars
Whether naming a blush Orgasm or creating edgy collaborations, Nars has never believed in playing it safe. The approach resonates with both industry insiders and editors—Nars racked up 72 awards during the last five years, second only to L’Oréal—dominating the blush and eye shadow categories. It also has a significant presence digitally, and was one of the first to capitalize on its community of “Narsissists” with a plethora of launches. Nars is the third most-mentioned brand on sephora.com, according to L2, as well as the third most-mentioned in vlogger videos.

12 bareMinerals
Call it the first social media makeup brand. Under the auspices of then-ceo Leslie Blodgett, bareMinerals forged a new distribution path for the industry, as well as a new product category—mineral makeup. While it has since evolved considerably as a brand, adding skin care, liquid foundations and a full makeup line, bareMinerals is no longer an Indie outsider. It is the sixth-largest prestige beauty brand in the U.S., according to NPD, and “gifted” in the digital sphere, says L2, which notes the brand’s particular strength in rate and review on its recently revamped
Web site.

13 Dior
Dior staged a coup when it landed Johnny Depp to be the face of its 2015 hit men’s scent, Sauvage, but it is far from the brand’s only win recently. Dior has successfully honed its “cosmetics meets couture” strategy to drive both its fragrance business (J’Adore is a perennial bestseller) and its color cosmetics business, which is a standout at Sephora. Strong globally and ranked number nine overall in the U.S. prestige market, the brand also consistently garners numerous awards for its mascaras, eye shadows and fragrances.

14 Sally Hansen
An emphasis on creating first-to-market technology has propelled Sally Hansen to continued strength in an otherwise sluggish nail category. The brand consistently innovates in product development, quickly translating trends from the professional market to the mass market, as with its Miracle Gel. It is also best of class digitally in its category with the launch of its ManiMatch app last May, which enables users to test out over 200 nail colors and helped catapult Sally Hansen to the number 12 ranking on L2’s Digital IQ Index, a 24 percent increase in its standing compared to 2014.

15 Clinique
The leading prestige beauty brand, occupying the number-one spot in skin care and the number two in makeup, Clinique is a giant in the midst of a reinvention. It excels at creating categories—as with its Even Better Clinical Dark Spot Corrector and the wildly popular Chubby Sticks, although the pace has slowed somewhat in the last couple of years. But that looks to be changing, as does the brand’s digital presence. While not a strong force on social media, Clinique’s Web site is among the best, with an L2 ranking of six, and its awards tally of 45 makes it a winning proposition with editors and industry insiders.

16 Cover Girl
Cover Girl’s ‘Girls Can’ campaign to help young women overcome boundaries and break through barriers is a successful metaphor for the brand, which despite stormy times with parent company Procter & Gamble has remained a strong mass market contender. It has best-selling items in the top 10 in every key makeup category, according to IRI data, and is collectively number one in foundation and number two in mascara. Its digital presence is equally strong, with an L2 ranking of six thanks to initiatives like an aggressive YouTube search strategy.

17 Giorgio Armani Beauty
Everyone knows foundation is a loyalty category, and that has certainly proven to be the case for Giorgio Armani Beauty. Though its color cosmetics line is in relatively limited distribution, it is a consistent award-winner with editors and a clear leader in the face category. Armani has adeptly launched of-the-moment limited-edition products that capitalize on the brand’s red carpet and runway strengths. That, combined with its number-two ranking in U.S. prestige fragrance sales, according to NPD, has made Armani a force in the specialty arena.

18 Jo Malone
There is only one niche player in NPD’s list of the top 10 fragrance brands, and it is Jo Malone, ringing in at number nine. One of the fastest-growing brands of the Estée Lauder Cos. Inc., according to industry analysis, it has reportedly sustained 30 percent average annual sales growth over 20 years. The brand isn’t a digital powerhouse, but its emphasis on creating memorable in-store experiences—be it through customization, fragrance combining or a robust gifting program—has enabled it to pull away from the pack despite being in a crowded category.

19 Philosophy
Philosophy has successfully recast itself from a bath and body business beloved at gift-giving time into a serious, well-rounded contender that is the fourth-largest prestige skin-care brand, the seventh-largest fragrance brand and the eighth-biggest prestige brand overall, according to The NPD Group. Philosophy is in the top third of digital performers, lauded for its efficacy across platforms. Look for its recently launched philanthropic platform benefiting mental illness to reinforce the brand’s relevance with Millennials.

20 TRESemmé
In 2013, TRESemmé became the official hair sponsor of New York Fashion Week, in a bid to establish the salon-inspired hair-care brand as a leader in styling. Mission accomplished. The brand is a leading player in myriad hair-care categories, according to data from IRI, and, along with sister brands Dove and Axe, is credited with helping to fuel the sales of Unilever’s personal care division. TRESemmé has a respectable social media presence for its category. Tribe Dynamics ranked it third in hair care, with an earned media value of $12.7 million, and the brand is known for its strength with how-to videos.

21 Tom Ford
Tom Ford has never shied away from controversy, and the unconventional route has served him well in beauty. First, he launched an ultraexclusive fragrance collection that spawned a category into itself. Next came color cosmetics, with stratospheric prices, supertight distribution and unabashedly sexy products. The approach has worked: Industry sources estimate the brand will reach retail sales of $500 million for fiscal 2016, making Tom Ford one of the most-watched—and fastest-growing­—brands in prestige beauty.

22 Revlon
Revlon’s owner, Ronald Perelman, may or may not be looking at selling, but one thing is certain: ceo Lorenzo Delpani is confidently moving forward. The brand’s recent campaign, “Love Is On,” appears to be garnering results, and the follow-up, “Choose Love,” is currently launching. According to IRI, Revlon occupies the top spots in foundation, lipstick, lip liner and eyeliner. The brand is a beauty editor favorite, with more than 35 awards, and it ranks 29 in L2, which cites its effective tablet-specific advertising strategy as among best in class. However, when it comes to social media, Revlon still lags.

23 Olay
Olay’s struggles have been well documented. But under Alex Keith, president of global skin care & personal care at Procter & Gamble Co., Olay is now firmly in turnaround mode and starting to capitalize on its historic market strengths. It ranks one, two and three in mass-market antiaging skin care, according to IRI, and is still strong in moisturizers and cleansers. Digitally, Olay has deployed an aggressive search strategy, according to L2, which says it owns 4.7 percent of total skin-care ads, behind only Amazon. And it has maintained its stature with editors, winning more than 35 awards.

24 OPI
Quick: What do Hello Kitty and Kerry Washington have in common? They’ve both been tapped by OPI as celebrity collaborators. It’s that kind of dichotomy that has helped OPI maintain a strong business in both the professional and retail sectors at a time when the nail business overall has been challenged. The brand’s consistently fresh approach is reflected in its digital engagement and award wins, where perennial bestsellers such as Lincoln Park After Dark are cited frequently, as are newer shades and treatments.

25 John Frieda
John Frieda has consistently launched innovation in the mass-market category since the debut of its Frizz Ease serum. It has maintained its strength in that category, while continuing to pursue a path to newness in others. For example, a recent standout launch was Root Blur, a first-to-mass market two-tone concealer for the hair to hide regrowth. The brand is also a consistent award winner, racking up the wins not just for its tried-and-true stockkeeping units, like Frizz Ease, but for many of the new products it launches annually.

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