Prestige beauty is in the eye of the in-store beholder
Launches, product innovation and the personal touch are key in the luxury beauty sector, according to a new survey.
Anchored by a champagne bar and set over three floors in its Liverpool department store, Harvey Nichols’ new Beauty Bazaar emporium promises premium beauty brands and the latest aspirational glamour. The retailer’s confident move in the midst of an ongoing economic recession has been planned carefully, recognising that technological innovation and strong emotional connections are both big drivers of prestige beauty purchases, according to new research.
In-store, beauty has to be about the feel-good element, Harvey Nichols group concessions and beauty director Daniela Rinaldi argues. “In the midst of discounting and a ‘cash and wrap’ approach, we are taking beauty back to its luxury heritage,” she says. “People gravitate to places and people who give them real attention, not half measures.”
Harvey Nichols’ new store concept responds to several consumer trends in the sector, identified by a study carried out for Marketing Week by research firm NPD Group. Among them is the importance of new launches and product innovation in pushing up sales in the prestige beauty category. According to NPD, new launches account for 14 per cent of the total UK makeup market share.
NPD director June Jensen says: “The UK consumer loves newness. That’s what drives them through the door and whether they purchase a new product or an old product really depends on the consultants and the brand’s emphasis on personalisation.”
New beauty products are crucial because they are showing growth while established products are not. For example, Benefit’s Hello Flawless Oxygen Wow foundation has been a key driver of growth for the brand. Across the total skincare market, however, growth in 2012 fell to 3.4 per cent year-on-year due to a 6.7 per cent decline in sales from new launches. This decline is down to fewer new products reaching customers, NPD says.
Fragrance brands, which find it difficult to create newness, have also suffered as a result of this trend. NPD’s research found that the fragrance market has experienced a similar year to makeup, with growth slowing to 2.8 per cent year-on-year to September 2012.
“If you have a lot of new products coming to the market, it really fuels the whole category,” says Jensen. “After that initial excitement and high sales, brands have to keep the attention on the product for the long term in order to develop that into a hero product or beauty classic.”
The current emphasis from retailers such as Harvey Nichols on surprising and delighting with a carefully curated store tallies with further findings uncovered by the NPD report. In examining the strategies used by successful beauty brands, it finds that developing ‘hero products’ and increasing personalisation are two effective methods of attracting consumers in the face of increasing competition.
Jensen says: “With more retailers targeting the premium beauty market, the availability of products is much higher than before. It is not just advertising but the stories behind the products that are really supporting the growth.”
Personalisation is a tactic that allows both retailers and manufacturers to build trust with the consumer, and encourages them to form a wider relationship with the brand. “It is about educating the shopper and making it personal,” says Jensen. “For example, retailers and brands are using customer relationship management to a higher degree to connect with consumers.”
NPD cites brands such as Murad and Elizabeth Arden as leaders in providing customised advice and skincare routine recommendations based on an individual’s skin concerns. In addition, NPD found that within the prestige makeup segment, brands have had to enhance their offers for foundation products.
“Consumers are no longer satisfied with foundation that matches only their skin tone,” says Jensen. “They now see matching their skin type as equally important and brands increasingly organise in-store events focusing purely on foundation matching to ensure customers feel as though the product has been custom-made for them.
“What we are seeing is two types of consumers. Those who are interested in value for money and those who are very loyal to the brand but want something exclusive.”
Extending a ‘hero product’ into a new product line is a relatively recent phenomenon for the prestige beauty sector. However, hero products and their contribution to the sector overall provide significant value for manufacturers, according to NPD. Once a brand has a product that consumers trust, it can build a whole franchise based on that product.
The research cites Clinique Even Better serum as an example of this strategy. The product was initially launched in only 30ml quantities. At the launch anniversary, a 50ml version was released. Now the range includes foundation, eye concealer, hand cream and eye cream.
NPD also notes this strategy is in action at fashion house YSL in the way that it markets its Touche Éclat hero product. Available initially in only in one colour, it has extended the product to different colours and this year to a foundation.
“It is the same story,” says Jensen. “The brand has one product that consumers really trust and then you build on top of that and extend into the wider range. You can go back to using this formula with other products because the trust is already there.”
Advertising, PR and in-store promotion play a key role in the beauty sector. However, NPD examined how prestige beauty brands without big advertising budgets inspire and excite customers with unique marketing activities that build awareness with the right audience, as well as driving footfall and sales growth.
“Benefit Cosmetics has enjoyed some of the most successful product launches in recent years without any TV or press support,” notes Jensen. “For example, its ‘They’re real’ campaign was the best mascara launch NPD has researched, thanks to social media, in-store focus and PR activities only.”
NPD says Benefit is savvy with social media and executing engaging events such as the ‘Mascarathon’ charity run, which saw people making their way from Scotland to London this summer. The report says Benefit creates a fun atmosphere around its products and the strong identity of the brand translates to all touchpoints.
The research also shows that persuading customers to give beauty products as gifts can help sales. The fragrance category is a leader in this approach, with 21 per cent of total fragrance sales in 2011 coming from gift sets. Other beauty categories are also beginning to use gifting to their advantage. NPD notes that in 2011, prestige skincare saw 14 per cent of its value sales coming from gift sets, which is up 21 per cent year-on-year in value and 12 per cent year-on-year in unit sales.
Brands should also remember that the in-store experience can significantly augment interest in prestige beauty. Bobbi Brown is one brand using such methods to drive growth, notes NPD. For example, if the customer is looking for an eye concealer, the consultant will match the shade and demonstrate it together with an eye cream to ensure that the final result is as good as possible. The customer is likely to leave the counter with more than one product.
According to NPD, consumers still want a treat despite sensing that their pockets are feeling the pinch. With beauty showing resilience during tough economic conditions, careful development of the category smooths the way to sales.
“Brands have to be clear about their strategy, why they are marketing a specific product and what the aim is with that product,” says Jensen. “Whatever offer you want to present you have to have a very clear vision on who you want to target, who your consumers are and where you are heading.”
We ask marketers on the frontline whether our ‘trends’ research matches their experience on the ground
CRM and loyalty manager
In-store events are a huge part of marketing beauty. Whether it is Liberty, Harvey Nichols or Selfridges, you only have to open the paper to see the huge array of events and concepts retailers are launching. I don’t see that really going away but what I do see is
brands starting to decide what their point of difference is.
Personalisation is a trend that has become more widespread. Combining digital technology and customer data with the product proposition, while delivering exceptional service across any channel, is going to become an important way for brands to keep on top of that customer need in the future.
For me, customer relationship management (CRM) is going to be extremely important. With beauty being such a replenishment business, brands will need to think about what the customer has purchased before, how they have purchased before, what their wants and needs are, and tailor the communication to them - as well as surprising and delighting them. Really drilling down and creating that personalised one-on-one relationship across all channels - whether that is your mobile app, website, social media, or in-store - is crucial going forward.
Alicia Grimes Gibson
I agreed with most of the points in the research. Prestige beauty in the UK is very competitive and is sought out by customers who are very product savvy, are trend aware and will look for products with the most advanced technological innovations. Product innovation and technological breakthroughs are key to continued growth and customer loyalty in this category.
At Shiseido, there is a huge emphasis on launching products into the market that demonstrate technological innovation. We endeavour to be at the forefront of the beauty industry with our products, to ensure that we launch products that excite, offer targeted solutions, and deliver clear benefits and measurable results.
We believe in our products and our claims, so letting the products speak for themselves through a robust sampling campaign on new and hero products is crucial to the Shiseido marketing plan and supporting the growth of our business. PR - working in tandem with social media, targeted CRM programmes that reward loyalty and encourage the growth of brand advocates, and introduction of seasonal, limited edition or exclusive offers - also plays a huge part in driving additional sales.
International director of marketing
NPD’s research is very interesting and spot-on. As one of the leading UK skincare brands it is imperative that we push the boundaries of innovation, be reactive to any market trends, innovate and engage with our home market.
Next year is massive for Elemis; we are launching a new ‘hero product’, Pro-Collagen Cleansing Balm, a line extension of our Pro-Collagen Marine Cream, which is also celebrating its 10th birthday. This is Elemis’s best-selling and first clinically trialled
anti-ageing cream, with one sold every minute. This product will provide the platform for the brand to reach out with a full media campaign - raising awareness of the Elemis brand and the product.
I believe the trends will be about utilising technology to enhance the customer’s beauty experience - more video content, the latest scientific equipment and innovation in ingredients.
Customers will have even greater expectations of customer service not only via call centres but also social media platforms. CRM is key to any company’s success but is also challenging, and those who are doing it well will be ahead of the game.
I think the findings, to a certain extent, reflect the strategy practised by most of the key players in the premium beauty market. Advertising, PR, sampling and the shopping experience have long been foundations on which success is built. It is the quality of the latter that enables each brand to project its personality and develop its relationship with the consumer.
Benefit’s relationship with its customers, and the resulting experience they enjoy in our hands, has been a key pillar in our strategy from day one. It has been pivotal in establishing brand loyalty and success. Benefit has eschewed the usual industry marketing model - heavy traditional advertising and promotions - and focused on our people, the retail experience, PR, digital, social media and experiential activity.
I’m sure all brands will continue to review the effectiveness of the traditional industry marketing model and its return in relationship to the investment. The dialogue and relationship we have with our consumers will continue to grow in its importance. So many opinions are now formed as a result of views gleaned from independent sources: social media, bloggers, friends, online ‘friends’ and so on. This makes the brand’s task to form or inform opinion more difficult. However, this change in dynamic affords ‘new’ brands a unique opportunity.
Beauty trends 2012
- New launches have a 14 per cent share of the makeup markets
- The new launch market in makeup grew 13 per cent year-on-year, while the total makeup market grew 9.4 per cent
- The new launch skincare market fell by 6.7 per cent year-on-year, while the total skincare market grew 3.4 per cent
- The new launch fragrance market fell 9.4 per cent year-on-year, while the total fragrance market grew 2.8 per cent