Klarna beauty

Coronavirus may have put many things on hold for brands, but the pandemic has also served as an accelerant for brands that have shown a guarantee to product safety and a commitment to the principles of clean beauty. As the beauty industry continues to change, Klarna, the leading global payments and shopping provider which serves over 85 million shoppers and 200,000 retailers around the world, takes a deep dive into what its own proprietary data reveals to meet consumer demands.

According to Klarna, personal care and clean beauty have been among the top shopping trends by Generation Z, Millennials, and Generation X during the coronavirus pandemic. Analysing data from the Klarna app in the U.S., which allows consumers to shop at any online store, revealed that out of the more than 2 million items that were wish listed in the past year, sleeping masks, facial protective primers, concealers, peeling solutions, and hair products were ranked among consumers’ top picks.

Sales in the “wellness economy” soared from 2015 to 2017 by 6.4 percent to $4.2 trillion, according to the Global Wellness Institute — which pegged revenues at $4.5 trillion in 2018. And it continues to grow.

And as the COVID-19 pandemic continues to impact regions all over the globe, there’s a renewed interest in wellness as well as clean beauty. Consumers are concerned about what goes in and on their bodies. It’s a consumer trend that has paralleled the growth and demand for organic and farm-to-table foods.

In a comprehensive consumer trend report last year from AlixPartners, analysts at the firm said in beauty and personal care, “almost three quarters [72 percent] of all respondents, regardless of age, said it was important to purchase healthy or clean products.”

“These demands, though, are differentiated by market and demographics and very sensitive to pricing,” the authors of the report noted. “Understanding the implications for the supply chain and how these products are brought to market is therefore essential to developing the right business strategy.”

In March, data from NPD revealed that clean skincare represented 13 percent of total prestige skincare sales, and sales from clean beauty brands sold in limited distribution was up 10 percent. Further in April NPD reported that while total prestige beauty sales were down by 14 percent, due to store closures, clean beauty had increased 11 percent.

The Consumer Mindset

In regard to how the current pandemic is impacting the consumer mind-set, Cindy Deily, vice president of merchandising, skincare and hair at Sephora, told WWD it has amplified demand for key products.

“Our Clean at Sephora category continues to do incredibly well,” Deily said. “Our clients have grown increasingly conscious of what they’re putting in and on their bodies — even more so as we now navigate a public health crisis — and they’re demanding high-performing, clean and safer beauty products.”

Deily said when the brand launched “Clean at Sephora in 2018, we pledged to continuously identify opportunities to grow and evolve the category, and while skincare has been a huge focus for us, we’ve recently focused our attention on growing our Clean Color offerings as well, with brands like Tower28, Ilia, RMS, Bite and Lawless Beauty.”

“Our aim in expanding our Clean assortment is to be more inclusive in our offerings across the spectrum of beauty categories, and to continue to serve as a trusted and transparent resource as clients navigate the category,” Deily added.

Gregg Renfrew, founder and chief officer of Beautycounter, also acknowledged the rising consumer awareness due to the pandemic.

“Consumers are increasingly aware of, and more conscious of, their health and safety right now, much due to COVID-19,” Renfrew told WWD. “Clean is now top of mind, along with protecting the health and safety of their families. They want to make sure whatever enters their home, their bodies, their communities is not going to adversely impact their health.”

“They will continue to seek out brands dedicated to transparency, and expect more of the brands they shop with,” Renfrew added. “Beautycounter has always led the clean beauty movement and we will continue to educate consumers on how and why making a switch to clean remains so important.”

According to Klarna, there has been a 17.58 percent volume increase within the clean beauty category among its network of 8 million shoppers in the US. And data from the company shows that in addition to higher order volumes, all age groups have increased average spend on clean beauty purchases during the pandemic.

Klarna’s data found the largest increase from the Generation Z consumer which has increased its clean beauty spend by 25.78 percent compared to spend pre-pandemic. Still, Millennials who account for 70.92 percent of the overall volume for clean beauty purchases in 2020, increased its spend in the category by 17.57 percent since the beginning of the pandemic.

Klarna Beauty

Personal care and clean beauty have been among the top shopping trends.  Courtesy Image.

A Conscious Future

In many ways, the pandemic has also shaped the process by which consumers will purchase beauty products now and in the future. E-commerce has undoubtedly become the primary means for shopping during the pandemic, however recent findings from surveys by Influenster show that many consumers have no plans to go back to stores at all. In fact, 24 percent of respondents told the company that they will not return to buying beauty products in-store. The shift makes the online shopping experience even more important for brands to gain loyalty.

“In Klarna’s global network of more than 200,000 retail partners, the beauty brands we work with emphasize a need for a seamless and flexible online shopping experience for their customers,” said Sebastian Siemiatkowski, founder and chief executive officer at Klarna. “Beauty has always been a very physical experience for testing and customizing products, so now brands must merge their offline touchpoints with more innovative online shopping events and experiences.”

Further, price sensitivities and consumer behaviors have also shifted as record unemployment rates and a struggling economy disrupt consumer confidence.

Siemiatkowski sees the correlation between the rise in clean beauty and the 8 million notably conscious consumers who use Klarna in the U.S. daily. “Gen Z and Millennials are savvy shoppers and have increased expectations around the services and brands they interact with, from the browsing experience to checkout,” said Siemiatkowski. “By offering customers a valuable shopping experience and flexible payment solutions, brands can retain their customers at this time while attracting wider audiences along the way.”

Brand Spotlight 

Sephora

“Clean at Sephora” was launched in 2018 with the goal of eliminating products that are formulated without SLS, SLES, parabens, formaldehyde, phthalates and mineral oils. The company also pledged to “grow and evolve” the category, and after focusing on skincare, “Clean at Sephora” now includes “Clean Color” and includes brands such as RMS, Lawless Beauty and Bite, among others.

Beautycounter

With its first product launch in 2013, Beautycounter has strived to be the industry leader in the clean beauty movement. With its “The Never List,” questionable ingredients are omitted from its products and are replaced with clean and sustainable ingredients. Beautycounter also works to deliver products that perform above expectations while adhering to “unparalleled standards of safety.”

The Lip Bar

The Lip Bar is renowned for creating a vibrant customer experience in its stores. And now as e-commerce has exploded, the brand has created an online experience that is engaging, smart and satisfying. The brand is currently offering a “fast face” service on its site, with a marketing mantra of, “Life is difficult, your makeup should be easy.” The online tool takes minutes and offers complexion-based recommendations of its vegan and cruelty-free products within a few minutes.

Executive Spotlight

WWD Studios speaks with Sebastian Siemiatkowski, Chief executive officer at Klarna.

Klarna CEO

Sebastian Siemiatkowski, Chief executive officer at Klarna.  Good Thanks Media

WWD Studios: How has the coronavirus pandemic impacted overall beauty trends?

Sebastian Siemiatkowski: The coronavirus has had a big impact on the way we live our lives, including what and how we shop. For the beauty industry in particular, brands have had to create full e-commerce makeovers to shift their physical retail experiences online. While the beauty industry faced various challenges these last few months, consumer behavior trends have shown that people are still very much spending in this category.

When analyzing data from Klarna’s app in the US, which allows people to shop at any online store, Klarna saw that beauty was one of the fastest-growing online categories in spend among Gen Z and Millennials. The beauty industry has consistently been a leader of innovation in online shopping and community building, which is reflected in how our 8 million customers in the US have been shopping. Klarna’s app revealed that Millennials increased spend in beauty by 32 percent, and Gen Z by 23 percent throughout the pandemic, when compared to an average week of spend pre-COVID 19 (prior to March 10).

WWD Studios: Have you seen the wellness segment evolved as a result of COVID-19?

S.S.: In current times, hygienic products such as hand sanitizer and soap have been top of mind for consumers, which made the shift to a clean beauty focus in the industry. Personal care and wellness will remain in the spotlight for a while, as Klarna’s app data reveals that Gen Z has increased their spend on clean beauty products by 26 percent throughout the pandemic compared to pre-pandemic and the top wish listed beauty items have pivoted to personal care products such as sleep facial masks, peeling solutions, and hair conditioners free of toxins.

WWD Studios: Can you speak to the rising trend in personal care during quarantine?

S.S.: With the increased duration of stay-at-home conditions, consumers are taking the opportunity to treat themselves and invest in their personal well-being. When looking at our app data, Gen Z increased spend on personal care and clean beauty items by 32 percent compared to pre-COVID, and athleisure and sleepwear categories also saw significant increases in spend, with luxury pajamas as one of the main wish listed items. They don’t call it “beauty sleep” for nothing. 

WWD Studios: What should beauty brands be thinking about to align with current consumer sentiment and shopping trends?

S.S.: Wellness and clean beauty will continue to be a top priority for consumers in a post-COVID world, and the beauty brands that understand their customers and shopping behaviors will be best positioned for success. That includes offering them experiential ways to engage with their brands through virtual shopping events, AI, VR and AR, creating more social shopping elements to their e-commerce platforms, and flexible payment checkout solutions for end-to-end customer service.

WWD Studios: Do you think consumer behavior trends in clean beauty and flexible payment options are here to stay?

S.S.: I believe this period will accelerate many trends we were already seeing prior to the crisis, particularly in e-commerce. From videoconferencing to telehealth services for your doctor to a fashion shift in athleisure and a beauty shift towards clean beauty, Klarna is seeing a lot of consumers try new products and services from the pandemic and start to shift their lifestyles permanently around these mindsets and behaviors. The same will be true in the beauty industry as more people become conscious of what they are putting on and in their bodies. From a financial standpoint, that will also change, as customers and retailers are seeing massive value and success in buy now, pay later. If the experience was positive throughout the pandemic, it will continue post-pandemic as well.

 

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