The Millennial impact is in full effect.
This story first appeared in the June 24, 2016 issue of WWD. Subscribe Today.
The demographic dominated the conversation at the WWD Beauty CEO Summit, held in May in in Palm Beach, Fla. Almost 83 million strong in the U.S. alone, the demographic was the main agenda item, a topic that touched on authenticity, the impact of social media and major industry shifts such as the evolution in traditional beauty values.
“Aspirational beauty is no longer flawless,” said Jenny Frankel, the founder of Nudestix, succinctly capturing one of the larger themes of change. Now, individuality is the name of the game—for consumers and companies alike.
Other key topics included the increasing importance of beauty services across a spectrum of channels, creating memorable in-store experiences that give consumers a reason shop in-store versus online and an industry-wide focus on improved training to give beauty advisers a deeper well of expertise.
The Young Run:
Millennial spending is on track to reach $2.5 trillion by 2020 according to Meredith Corp.’s Women 2020 research study. Of that, 73 percent of the Millennial women surveyed said that looking beautiful is important to them, compared with 57 percent of Baby Boomers.
To capitalize on that, brands need to make sure their products truly resonate with what Millennials are looking for—identifiable, individualized beauty. Frankel, a serial entrepreneur who co-founded Cover FX, detailed a store visit with her two teenaged daughters (and the inspiration for Nudesix), Ally and Taylor, where they felt alienated by the glamorous, airbrushed models in the advertising campaigns. “It became very clear that there was an obvious neglect, or disconnect, for real beauty, which is natural-looking beauty, by brands and influencers,” she said.
Thus was born Nudestix—a line described as Crayola meets Chanel. All the products are in pencil form, and the idea is to draw the makeup on and smudge. While the business is just over one-year old, it’s already expanded globally, the message seems to be resonating: Nudestix, which has close to 50,000 Instagram followers, is sold in Sephora, Urban Outfitters and on QVC.
Be True to You:
To win over today’s educated and picky customers, brands need to remain focused on their core DNA, emphasizing differentiation rather than imitation. It Cosmetics, which is on its way to sales of $400 million this year, according to industry sources, has experienced exponential growth through staying true to its original vision of making a line of hero products that help women cover skin concerns. “When we started having success as a brand is when real women started spreading our authentic brand mission and DNA,” said founder Jamie Kern Lima. “When women find a product that actually truly works for them, they tell people. It was real women getting real results — that’s what kept our company alive in the early years.”
Today, It is not only alive, it’s thriving, a key presence on QVC and Ulta, and, soon, Sephora. “When I see competitors knocking off something we do, whether it’s how we use before-and-afters, or our product or our message, I know that they’re confused and they’re getting distracted,” Lima said. “Every brand connects and speaks with customers in a new and different way, and the moment that way isn’t authentic to a brand’s DNA is when the potential of their great success gets diluted.”
Engagement is the key to social media—not just having followers but creating a meaningful dialogue with them. Anastasia Beverly Hills has leveraged social media to grow its business, particularly on Instagram, an idea chief executive officer Claudia Soare pitched to her mother, founder Anastasia Soare, years ago. “Social media changed absolutely everything about us,” said Anastasia Soare. “I knew that I had the best products. I knew that I had the best technique,” said the entrepreneur. “I would post a picture and a woman in Pakistan would answer. I used to go to Nordstrom and touch — how many? — 100 people a day. I put a post, and I will get 100,000 comments.” Industry sources have indicated social media engagement has helped the brand’s sales quadruple.
The Perfect Touch:
In-person engagement—especially through beauty-related services—is increasingly important as consumers focus less on material possessions and more on experiences. “The heck with buying stuff anymore, we want services,” said Sarah Quinlan, senior vice president and group head of market insights at MasterCard Advisors. “This is the biggest growing area. So if you sell stuff, what do you have to do? You’ve got to pull service in with it.”
In the digital era, consumers would rather spend on services because it creates a memory. “We see services as a revenue opportunity, but even more importantly, bringing engagement into beauty. When you walk into one of our stores and the services are really humming those people feel a sense of beauty happening. They can hear it, see it and smell it,” said David Kimbell, chief merchandising and marketing officer for Ulta Beauty. “Beauty is happening because of the services we provide in the stores.”
Take Skin Laundry, a fast-growing chain of spas that has helped usher in the concept of ‘fast services.’ Its entire brand concept revolves around the service it provides: laser light facials. Founder Yen Reis said her idea is to reduce the offering, focus on the experience and get consumers on the preventative skin care bandwagon. Skin Laundry has expanded to 14 locations globally, including in the U.S. and Hong Kong.
For retailers, offering services on the selling floor can also benefit brands and retailers by providing insight into consumer behavior, said BlueMercury founder Marla Malcolm Beck. “[The customer] wants services out on a store floor, where there is activity and action, not in a quiet room,” she said. “It’s one thing to know the statistics on your customer, it’s another to see them in their store habits. We learn by talking to and watching them.”
In the fashion sector, Rebecca Minkoff has upgraded its in-store experience with energetic collaborations, said Uri Minkoff, ceo. Rebecca Minkoff’s focus on experiential retail includes everything from hip-hop yoga classes to bringing in Smashbox and Donald Robertson, who hand painted Minkoff products. “If you create entertainment in-store you have people in the store, but it’s that extended peer-to-peer network that goes on out there that created FOMO [fear of missing out]. It created an external surge of traffic on our social and e-commerce areas, which yielded higher conversion.”
In order to provide in-demand beauty services, brands need to have well-trained professionals. The industry is facing a deficit, as skin therapists and similar professions aren’t seen as viable ways to make a living. It was a point Dermalogica’s chief executive officer Aurelin Lis honed in on. “Eleven dollars an hour is not going to cut it in the long term. We’re not going to have long-term employees who are building a career, who are proud of what they do, if they can’t feed, never mind their family, but even themselves,” he said. “The need for licensed individuals is going up substantially, yet the supply is not there. As an industry, we’re heading to a crunch time, which is not very pretty,” Lis said.
Walgreens and MAC Cosmetics also spoke of the need for trained professionals. As it looks to amp up its beauty department, Walgreens is planning to add 3,400 beauty consultants, said group vice president and general merchandise manager for beauty and personal care, Lauren Brindley. At MAC, the focus remains on training makeup artists with boot-camp style training, which the brand has in 14 countries, said Karen Buglisi Weiler, global brand president. It started in India, where she went between MAC stores and noticed a lack of makeup artistry. “If we’re basing everything that we do on makeup artistry, this is a problem,” Weiler said.
So she started makeup boot camps, where artists “do makeup, wash it off, do makeup, wash it off, do makeup, wash it off, again and again and again until they get it,” Weiler said. MAC’s boot camp program has touched more than 2,000 artists. “This is now the way we go to market because we’re creating agility … this is one way to create service that we expect and artistry quickly,” Weiler said.
Trading Up, Take Two:
Savvy brands and retailers are focusing on upgrading the consumer experience. Walgreens is a prime example. The drugstore chain is elevating and differentiating the beauty shopping experience by adding new brands and beauty experts in-store. Wal-Mart, too, is evolving its beauty department with upgraded displays, said Jody Pinson, vice president of merchandising for beauty. “We are committed to upgrading our stores and fixtures,” she said. “We are going to understand the brands that we want to carry and the quality that the customer is looking for — this is how we are going to continue to build credibility at Wal-Mart.”
To Err is Human, To Change Divine:
Frankly assessing missteps can lead to productive future planning. Several leaders at the Summit admitted to making mistakes, but also learning from them to chart a path for future growth. When Masahiko Uotani took over at Shiseido he found the company suffering from declining sales, a lack of investment and increasing inventory. So he formulated a plan. “The challenge for Shiseido is to become a strong global company,” he said. “We must change quickly, become more results-oriented, create speed and get rid of bureaucracy,” said Uotani. “At the same time, we also needed to embrace our heritage of high-quality products and caring for people like a family. Shiseido needs a transformation.”
P&G, too, has had its woes. Patrice Louvet, group president of P&G Beauty, reflected on multiple missteps, including deviating too far from the core Olay Regenerist product and making too many beauty acquisitions a decade ago. “Understand what’s old is still new,” Louvet said. “We get tired of innovations long before the people who use our products do. We move onto the next new thing when there’s still abundant opportunities to grow existing products.”
For example, in retrospect P&G realized that instead of focusing on getting more women to use Regenerist, it added too many products to the line. “We should have been focusing like a laser on creating trial of Regenerist and new Olay users,” Louvet said.
As has been well reported, P&G is divesting the bulk of its beauty brands, and holding on to core brands including Pantene, Head & Shoulders, SK-II and Olay so it can do just that. Concluded Louvet, “Clarity and consistency pay off … the principal is sound and it applies to high end luxury products just as much as it applies to an everyday product like shampoo.”