It’s not like consumers aren’t loyal to beauty brands — they’re just not loyal to any particular point of sale.
In A.T. Kearney’s latest 2016-17 survey, “Beauty and the E-commerce Beast,” the consulting firm concluded that online sales of beauty and personal care are doing well, but loyalty has lost its luster, which is creating fresh challenges for retailers.
Hana Ben-Shabat, a partner at the consultancy firm, explained that consumer shopping patterns in apparel and fashion — one where consumers are focused on price transparency — has caught up with purchases in beauty and personal-care products.
According to the A.T. Kearney survey of 800 online shoppers, 72 percent said they shop for the best prices when shopping online. Second in terms of priority was free shipping, at 68 percent. Rounding out the top three was site security, also at 68 percent. Free returns and special promotions also made the top five. Compared with the 2014 study, finding the best prices has overtaken site security and free shipping to become the most important feature for consumers.
“We’re not saying there is no loyalty in beauty, only that there’s no loyalty in the point of sale. A consumer may buy [brand A], but they can buy it one day at sephora.com, at walmart.com on another day and later in the week at macys.com,” Ben-Shabat said.
Another change from the last study has been the increase in online purchases of color cosmetics. Recent makeup apps such as L’Oréal’s Makeup Genius and Sephora Virtual Artist show a “strong link to the spike in online sales of color cosmetics,” Ben-Shabat said. She added that the new online tools and technological capabilities have “pushed the online penetration of most beauty categories beyond the 3 to 5 percent mark that most industry players see as the tipping point beyond which online sales accelerate and penetration reaches high teen or low double-digit figures.” Further, smart sampling, virtual testing and free returns have helped change consumer behaviors in color cosmetics, which reached 10 percent penetration, up from 7 percent two years ago.
As for where they shop online, Amazon leads the pack as the most commonly used web site at 69 percent of the sample, followed by Sephora Inc., Ulta and Wal-Mart Stores Inc. According to Ben-Shabat, Amazon has also been making investments for its luxury beauty category.
The study also found that beauty influencers, lifestyle bloggers, YouTube vloggers and Instagram stars are seen by shoppers as “independent, authentic and trusted,” oftentimes wielding more power over consumer decisions than the brands themselves when it comes to the authority on product information.
A.T. Kearney concluded that brands and retailers need to reconsider their communication strategies to engage the consumer and make them a part of the brand. And with new developments in artificial intelligence, brands and retailers now understand not only who the consumers are, but also what they want, how and when they want it, and even what colors and shapes they react to more positively. Thus, the ability to direct the right product or message to the right person at the appropriate time would significantly impact the top line.
According to Ben-Shabat, consumers who are bombarded by digital marketing — whether texts or e-mails — that isn’t personalized tend not to react. She also said the survey indicated that “only 9 percent said ‘I feel the brand knows who I am and know what I really want.'”