Surviving beauty retail in 2024: what businesses need to know
In recent years, technology has transformed the way beauty products are sold to meet consumers’ ever-increasing demands for personalised products and experiences, as well as on-demand services.
According to Sampo Parkkinen, CEO of Finnish-American personalised digital brand experience company Revieve, beauty retailers’ future success will be intrinsically tied to their ability to embrace technology.
“Whether it’s the art of creating captivating ‘phygital’ experiences that seamlessly merge online and in-person shopping, streamlining operations through the adoption of automation, or exploring the transformative potential of Gen AI, technology serves as the cornerstone for not just surviving, but thriving in the ever-evolving retail landscape of 2023 and beyond,” he said.
“It’s the conduit to delivering unparalleled customer experiences and staying ahead in an industry that continually demands ingenuity and adaptability.”
More ‘Phygital’ stores & the rise of text shopping
Although many retailers are aware of the need to embrace technology to stay competitive, it can be challenging to know where to invest first.
Revieve has just released a new report to help guide beauty brands and retailers when creating their strategies.
In the report, it highlighted how more retailers are integrating their digital experiences with physical stores, creating a hybrid hub and store model and developing a greater number of mobile apps for use in brick-and-mortar locations.
The company cited statistics from a digital retail report by Adobe, in which 41% of retailers highlighted mobile apps as one of their top two investment areas in 2023; and 29% said they also explored the potential of hybrid-hub install models.
It flagged another rising trend, text shopping. The report showed that 19% of consumers expressed an interest in purchasing directly through text or chat messaging tools, compared to only 17% in 2021. While 57% stated that self-service checkers or chatbots were important.
There are also more opportunities for retailers to use data-driven personalisation to create an in-store experience that turns first-time shoppers into devotees.
According to Revieve, retailers can accomplish this by implementing effective loyalty rewards programmes. “Customers who enrol in such programmes are twice as likely twice as likely to become a repeat patron and also spend on average 37% more than those who are not part of a loyalty programme,” the company said in its report.
By nurturing these relationships and harnessing zero- and first-party data, retailers can cultivate customer loyalty and secure a loyal fan base of enthusiastic brand advocates.
Personalisation & automation
Personalisation is an ongoing challenge for beauty retail industry, as while retailers are aware of its benefits, many are still dipping a toe in the water and are yet to implement it.
Revieve said that the key to effective personalisation lies in putting the customer's needs first and that effective personalisation now means brands need to adopt an omnichannel approach to meet customers wherever they engage. It also highlighted that customers now expect brands know them on a deeper level and understand their needs.
A survey from Shopify found that 88% of customers emphasised that the ‘brand experience’ was crucial as the product. Real-time personalisation is playing an important role by quickly responding to changes in customer experiences during interactions, both online and offline.
Data is key to this process and beauty brands and retailers can use zero- and first-party data, self-reported preference behavioural and psychographic data, to create a complete picture for customers, and to enhance revenue generation and customer retention.
Another notable trend in beauty retail is that it's not enough for a brand to just have a good product and service. Customers now crave experiences that have a lasting impact on their heart and mind and leave them with memories.
According to Revieve’s report: “Customers crave more than just shopping. They want immersive unforgettable encounters that leave them eager to come back for more. And retailers who embrace this paradigm shift and curate experiences will win the hearts and loyalty of today's experience-centric consumer.”
Automation has also become a powerful retail tool, however, there are still some misconceptions in terms of use of automation tech.
Revieve said it was important to understand that tools are not designed to replace human staff or render jobs obsolete. Instead, they should be “revolutionising the retail landscape by streamlining time consuming tasks. This in turn, allows employees to focus on what they do best: create unforgettable brand experiences with a personal touch and expertise.”
Leveraging AI insights
According to Revieve, the spotlight is now on the rapid expansion of AI in the retail sector and beauty retailers can take advantage of the potential benefits of both generative AI and conversational AI.
As well as leveraging AI to predict customer churn and provide personalised product recommendations fuelled by data-driven insights it can use a live chat interface to expertly guide customers to devise personalised beauty routines tailored to their unique needs and skin/hair types etc, as well as harnessing the potential of selfie diagnostics.
In its report it said that: “Users transition from assessing visual data to engage in in text-based conversations. This approach not only delves into intricate skincare details, it also transcends conventional boundaries…. Generative AI doesn't just replicate a look a consumer wants. Instead, it deciphers their very essence and tailors this to individual preferences, serving as virtual beauty guide.”
And the interactive journey doesn't stop there. Users can virtually trial the proposed makeup look, and then generative AI will curate personalised product recommendations.
The report concluded by saying that retailers that invest in innovative tech solutions and foster a culture of adaptability, will be well positioned to thrive in the ever-changing landscape of 2023 and beyond.
