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Gaining a competitive edge in today’s retail market poses a unique set of challenges, and the panel assembled at the Cosmetic Executive Women's (CEW) Women & Men in Beauty Series event, held October 25, 2012, at New York’s Harmonie Club, tackled the questions surrounding those challenges with strategic insights. The presentation, titled "Beauty Retail Evolution: Connecting With Today’s Consumers," featured speakers Shannon Curtin, divisional vice president and general merchandising manager, beauty and personal care, Walgreens; Karen Grant, vice president and global beauty industry analyst, The NPD Group; and Chance Wales, director, category leader, U.S. health and beauty, Amazon.com.
The panelists were welcomed by Carlotta Jacobson, CEW president, who introduced the presentation, noting that attendees would leave “smarter, more well informed, and with actionable ideas” as takeaways from the discussion. Jacobson also said, “Consumers today are so inundated with so many brand messages that they are experiencing information overload. These three industry leaders know firsthand how to connect successfully with consumers in our modern competitive marketplace.” She thanked the evening’s sponsors (including Shape, Givaudan, Mark., 24 Seven Inc., HauteLook, Eucerin, Nivea, Pantene, Beauty Inc, WWD, Kaplow Communications and Indelible) for their participation as well, and introduced Jill Scalamandre, CEW chairwoman and moderator of the discussion.
Retail Strategies and Trends In-store and Online
Connecting with consumers through the influential realms of digital technology and social media, as well as with innovative brick-and-mortar approaches, must first and foremost align with consumer shopping habits. This was the premise upon which the three panelists approached the evening’s discussion.
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Amazon's Wales brought his perspective to the discussion with an overview of the vast online retailing website, noting that as a $48 billion global company, Amazon's sales are significant and customer service is essential. “In terms of reach, Amazon has 180 million active customers, and innovating on behalf of the customer is what Amazon is all about.” He also added, “Jeff Bezos, CEO of Amazon, makes sure that the customer is top of mind.”
Wales continued, “Health and beauty is a growing segment of the business, and Amazon.com customers account for 74% of customers who buy beauty products.” He also noted that Amazon.com wants to provide an outlet for consumers to discover and research harder-to-find brands and products.
Walgreens' Curtin said, “Walgreens is a $70 billion company, and we touch about six million people every day. We’ve had a 111-year journey, grew up in the U.S. and have now become a global company.” She added, “We’re slated to be a $130 billion company in 2016 and are planning to become best in beauty retail and are utilizing a range of entities together to do that.” She highlighted Walgreens partnerships with Boots.com, Duane Reade and DuaneReade.com, Beauty.com, Drugstore.com, its core Walgreens and Walgreens.com, and DiscoverBeautyWithin.com.
The NPD Group's Grant addressed the retail trends question with a look at what has been and will continue to be successful as businesses emerge from the recession. “Retail trends really depend on the channel. As we come out of the recession we’ve seen a strong performance in prestige, with 11% growth in 2011, and a 6–8% growth in the first half of 2012. This category in beauty has grown by a billion dollars since the recession. It is a robust business in prestige,” she said. Mass has also seen growth in 2011 and 2012, but at a slower rate. Grant further noted, however, “There are fundamental differences between prestige and mass, and we’re seeing those in direct to consumer sales, which have risen by 26%. The online space is seeing above 10% growth, particularly in the prestige area.” There is also significant growth in small niche makeup and skin care brands, including color innovation, lip hybrids, BB creams and brightening serums.
Curtin noted the popularity of particular categories, including the growth of the nail category as well as the popularity of BB creams. She also noted increased performance and growth in areas utilizing beauty advisors at Walgreens, as well as online, saying that the largest growth for Walgreens has been in categories where there is an educational component. She added that Walgreens believes consumers should be able to shop across all platforms as they desire. As Amazon.com currently aligns with brand pages including BeautyBar.com and Soap.com, Wales said, “We’re seeing good strength in mass as well as prestige, and as we add more prestige we’ll be able to spin that category more.”
Grant noted she is seeing a unit increase in fragrance, particularly in some categories, for example, niche brands. “Niche brands are also doing great business in skin care and makeup, as well as lip color, and there is continued momentum in mass. However, there are also huge opportunities for prestige.” She noted, “Customers want the best price possible, and the service element is also very important. We’re seeing the prestige shopper as a more engaged shopper, shopping across channels. She loves beauty. The beauty category also appeals to the economically depressed consumer, who will pursue the products she wants. There is a split between the love of beauty and the engagement with it that really drives the category.” She added that changing the conversation at the store to more fully engage with the consumer is key.
Creating Unique Experiences for the Consumer
Curtin said that Walgreens knows the young, confident woman and how she shops, and adds, “We want to provide that experience for her. We have brick-and-mortar as well as online platforms, and we watch how our consumer shops.” Wales added, “At Amazon, we want customers to discover, research and buy whatever kind of product they want. The convenience aspect of shopping at Amazon is key for beauty. We also see what customers do when they come to Amazon, looking outside the beauty channels that they visit.”
Wales also indicated that Amazon wants to hear from the different beauty brands to ultimately give customers what they want, which is more selection. “We custom build brand pages on our site with new products and have added celebrity spokespersons to that space. We’re also seeing people browse more, where in the past they’ve gone directly to the products they wanted,” he said.
Curtin, referring to the addition of Duane Reade to the Walgreens’ family, as well as Boots.com, Beauty.com, Drugstore.com, Walgreens.com and DiscoverBeautyWithin.com, said, “We’re going to take the best of each and leverage what everyone does well and bring it all into one box. We have a mission to become the best in beauty to make sure that the customer has the best experience when she comes to us.”
Curtin cited the recent successes of Coty and Revlon launches on Walgreens’ Times Square Jumbotron as a positive experience to draw customers into the store, and also cited the Look Boutiques as an opportunity to test new brands and new markets as stores continue to roll out in the future. Wales welcomed the idea of brands working with Amazon.com to build customized brand pages and cited Olay’s Facial Cleansing device as an example of utilizing Amazon’s targeting segments to drive awareness of a brand and leverage automated personalization technology to recommend an entire regimen for customers, in much the same way as book buyers at Amazon.com find themselves receiving suggestions for similar or related books and publications.
When asked what she saw as the coming blockbuster hit for holiday 2012, Grant didn’t single out a specific product to rival Justin Bieber’s fragrance success of 2011. However, she did mention some notable contenders. “Every category is growing. Artists’ brands, like Urban Decay and Nars, as well as natural skin care brands, including Origins, Kiehl’s and clinical brands, will be strong,” she said. Grant also predicted that fragrance will be a big winner at holiday, and said that the fourth quarter will be critical, with 50% of yearly fragrance sales occurring in that time period.