Beauty companies need to shift the focus away from the product and more toward the experience, said Sarah Quinlan, senior vice president and group head of market insights at MasterCard Advisors.
“The heck with buying stuff anymore, we want services,” Quinlan said. “This is the biggest growing area.” Beauty services specifically are the way that consumers take a break and pamper themselves, and it’s an area where they are more likely to spend money because it creates a memory. “We want to create memories more than anything,” Quinlan said. “That’s all she wants.”
Consumer desires have shifted following the recession, and they are placing higher values on experiences, including food, and less value on possessions. “So if you sell stuff, what do you do? You’ve got to put a service with it,” Quinlan said. She also advised brands to switch the focus from the affluent consumer — who won’t spend as much — to the aspiring affluent consumer, who spends regularly.
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The MasterCard data also shows that following the recession, women are shopping in fewer stores — about half the number they shopped in before the recession. “You have to have that relationship to bring her in,” Quinlan said. Loyalty programs are one way to build that relationship, as they can provide valuable customer insight and a way to individualize offerings. “Anything that you can do to know her better will increase your sales,” she said.
In a shifting landscape, department stores in the U.S. have not generally fared well — and it can be hard to reach the consumer through the department store channel, Quinlan said. Smaller stores — those with $50 million or less in annual retail sales — are winning, with growth for four years in a row. That means it’s time for retailers to stop discounting, Quinlan said. “If she’s shopping at these stores…she’s paying full price,” Quinlan said. “The other thing she is saying is she wants to be special…she’s willing to pay for that.”