DIpil Das
We present three key insights from the Coresight Research webinar on August 18, in which Steve Dodd, SVP of US Operations at beauty product and retail solutions provider Meiyume, discussed how beauty retailers have pivoted to meet changing consumer demands during the pandemic. The webinar was hosted by Deborah Weinswig, CEO and Founder of Coresight Research.
1. Supply Chain Holdups Continue To Challenge Beauty Retailers and Brands
Dodd cited the lockdown of Italy as the unofficial beginning of coronavirus-related disruption in the beauty industry. Many of the raw materials used to manufacture beauty products are made in Italy, meaning that the lockdown impacted not only the Italian and European beauty markets but also the US market.
Dodd points to increasingly complex, global supply chains as one explanation for the significant impact of the pandemic on the beauty industry. Brands have been forced to contend with shipping issues sparked by the global crisis—many beauty retailers have turned to Meiyume for assistance in moving products that are stuck in multiple locations across the world.
Increasing competition and high prices for traditional freight shipping are among the challenges that Meiyume helps beauty brands to overcome. Dodd indicated that he has experienced multiple instances where goods have been loaded onto a ship only to be taken off after another business bids more to have its product shipped instead. When asked by Weinswig whether air freight is a viable alternative, Dodd explained that the Meiyume has explored air shipment, but that space on planes remains scarce and expensive.
[caption id="attachment_115832" align="aligncenter" width="700"]
Deborah Weinswig and Steve Dodd discuss challenges and opportunities in the coronavirus-impacted beauty industry.
Source: Coresight Research [/caption] 2. Larger Retailers Should Emulate the Flexibility of Indie Brands Dodd argued that in the age of the coronavirus, flexing between online and offline sales channels is more important than ever. The brands that have performed best during the pandemic, in his experience, have been smaller, newer beauty brands that have pivoted quickly to focus on their online offerings—some large brands had difficulties disentangling inventory from brick-and-mortar locations and department-store websites. While many of Meiyume’s indie clients are digitally focused, Dodd says that many larger clients are still relying on department stores for their online and offline presence. As it is becoming increasingly difficult to succeed and remain agile with product tied up with department stores, Dodd recommends that beauty retailers focus on developing their own online businesses. He believes that beauty retail will move towards a direct-to-consumer model, much like the shift in fashion retail. 3. Fast-Paced Changes in Demand and Shopping Habits Dodd noted that beauty sales for eye products have thrived during the pandemic, while sales of other makeup products have dipped due to the “mask economy." However, other beauty products are likely to make a quick comeback—once people get used to wearing masks, Dodd argued, they will return to purchasing facial products for parts of their face that may not always be visible. He pointed to South Korea as an example of an area where people wear masks with relative frequency while still using full-face beauty products. The way people purchase beauty products is also changing rapidly. As is the case for so many industries, online sales have sky-rocketed amid country-wide lockdowns, but consumers’ in-store shopping preferences have also evolved. Where shops have reopened, most shoppers no longer want to touch or try on products that others have already touched. They are also increasingly reluctant to interact with sales associates to try fragrances. Dodd sees opportunities for touchless technologies to begin taking center stage in brick-and-mortar beauty retail. For example, NFC technology enables shoppers to quickly glean information on products on their mobile devices without touching anything. Using NFC in stores enables Meiyume and retailers to collect data on what products are attracting the most attention and achieving the highest conversion rates. Automated product dispensers also enable customers to try on beauty products knowing they have not been touched by anyone else. [caption id="attachment_115833" align="aligncenter" width="700"]
NFC and QR code technology can be used to improve the customer experience without requiring interactions with store associates or touching shared surfaces.
Source: MarketingWit/Citizens Bank
[/caption] Beauty industry interactions with consumers at home are evolving. Dodd recommends that retailers and brands use QR codes on packaging shipped to customers homes to increase interact opportunities for instances where a consumer has chosen not to purchase in-store. Dodd predicted that DIY beauty products will thrive in the coming months and years, pointing to existing technologies that enable consumers to make their own lipstick with limited materials. While this sector of the industry remains underdeveloped, Dodd anticipates that it will grow quickly.
Deborah Weinswig and Steve Dodd discuss challenges and opportunities in the coronavirus-impacted beauty industry. Source: Coresight Research [/caption] 2. Larger Retailers Should Emulate the Flexibility of Indie Brands Dodd argued that in the age of the coronavirus, flexing between online and offline sales channels is more important than ever. The brands that have performed best during the pandemic, in his experience, have been smaller, newer beauty brands that have pivoted quickly to focus on their online offerings—some large brands had difficulties disentangling inventory from brick-and-mortar locations and department-store websites. While many of Meiyume’s indie clients are digitally focused, Dodd says that many larger clients are still relying on department stores for their online and offline presence. As it is becoming increasingly difficult to succeed and remain agile with product tied up with department stores, Dodd recommends that beauty retailers focus on developing their own online businesses. He believes that beauty retail will move towards a direct-to-consumer model, much like the shift in fashion retail. 3. Fast-Paced Changes in Demand and Shopping Habits Dodd noted that beauty sales for eye products have thrived during the pandemic, while sales of other makeup products have dipped due to the “mask economy." However, other beauty products are likely to make a quick comeback—once people get used to wearing masks, Dodd argued, they will return to purchasing facial products for parts of their face that may not always be visible. He pointed to South Korea as an example of an area where people wear masks with relative frequency while still using full-face beauty products. The way people purchase beauty products is also changing rapidly. As is the case for so many industries, online sales have sky-rocketed amid country-wide lockdowns, but consumers’ in-store shopping preferences have also evolved. Where shops have reopened, most shoppers no longer want to touch or try on products that others have already touched. They are also increasingly reluctant to interact with sales associates to try fragrances. Dodd sees opportunities for touchless technologies to begin taking center stage in brick-and-mortar beauty retail. For example, NFC technology enables shoppers to quickly glean information on products on their mobile devices without touching anything. Using NFC in stores enables Meiyume and retailers to collect data on what products are attracting the most attention and achieving the highest conversion rates. Automated product dispensers also enable customers to try on beauty products knowing they have not been touched by anyone else. [caption id="attachment_115833" align="aligncenter" width="700"]
NFC and QR code technology can be used to improve the customer experience without requiring interactions with store associates or touching shared surfaces. Source: MarketingWit/Citizens Bank
[/caption] Beauty industry interactions with consumers at home are evolving. Dodd recommends that retailers and brands use QR codes on packaging shipped to customers homes to increase interact opportunities for instances where a consumer has chosen not to purchase in-store. Dodd predicted that DIY beauty products will thrive in the coming months and years, pointing to existing technologies that enable consumers to make their own lipstick with limited materials. While this sector of the industry remains underdeveloped, Dodd anticipates that it will grow quickly.