Jay Hakami, chief executive officer of Skypad, the software service used by 72 percent of global luxury brands such as Gucci, Prada and Fendi, says the biggest difference between fashion and beauty retail is a higher sense of loyalty and fewer markdowns.
Buying trends, Hakami tells WWD, have changed drastically over the last few years and unfortunately many retailers yet to adapt strategy or brand image are unlikely to survive. For consumers, whose main focus continues to be overall experience and a consistent message across channels, branding is highly important. Further, consumers who are now accustomed to instant gratification, are looking for the most seamless, methods of shopping, online and in-store.
When shopping for beauty, Hakami says, consumers spend significantly more time researching a brand and its offerings. Unlike when shopping for fashion, consumers purchase with the mentality of need, rather than seeking popularity or currently trending items. “This can translate into more of a socially driven shopping process,” Hakami said. “Beauty is primarily driven by celebrities and influencers who have cultivated devoted followers of their entire brand. The name adds a stamp of approval that no retailer is able to replicate at the moment.”
Further, Hakami told WWD, to find a product that will fit specific needs, consumers search online for reviews by other consumers, engage with influencers and interact with brands they already trust.
“Consumers are more loyal to beauty brands, whereas, in fashion, they are more willing to try something new and different,” Hakami said. “Fashion can inherently mark a specific moment in time to replicate a growing trend, whereas beauty can seamlessly fit into any period. Streetwear has become a staple among younger shoppers, but it could fade in the next few years and shoppers can easily move onto the next fad gaining all critical attention.”
Beauty retail also has a different relationship with markdowns. Whereas the possibility of markdowns is dramatically lower in comparison to apparel, beauty brands focus on having enough in stock as to not lose a sale. Further, beauty products do not bend with the season as fashion does.
“There is a major difference in sell-through performance between fashion and beauty, which is also part of the reason why at Skypad we’ve expanded our efforts into the beauty space,” Hakami said. “We bring multiple data sets together to improve the way retailers and suppliers share, report and collaborate on sales, inventory and consumer demand insights. Since fashion brands are seasonal, they don’t care as much about the replenishment of their products at the retailers they sell into, whereas beauty brands are very interested in learning when a quantity of their product reaches a predefined low quantity in specific stores.
“Fashion can learn how to build better brand loyalty by creating a more personalized experience for their customers,” Hakami said. “Beauty brands have immersed themselves within their own base by gaining feedback from consumers and making them feel part of the process. We are a society that functions on engagement and it’s become almost expected to listen to customers and adapt products to their needs.”
One such area of personalization in the fashion industry that has fallen behind is sizing. “Sizing, for the most part, hasn’t changed or adapted to modern times,” said Hakami, “and retailers need to adjust the archaic notion that consumers fit into a small, medium or large — there are in-betweens.”
While beauty brands have succeeded in higher sell-through performance with great personalization and adhering to consumer’s needs, Hakami said beauty brands are just beginning to integrate technology and AI-driven data. The specialty retail market for beauty products is “primarily driven and dominated by a small handful of companies.” To illustrate, Hakami points to Sephora, Ulta and Bluemercury who have all earned large customer bases. He explained that for brands hoping to improve sell-through performance, technology is a must.
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