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The Online World—Beauty Counter of Tomorrow

By: Liz Grubow
Posted: April 6, 2010, from the April 2010 issue of GCI Magazine.

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In Japan, where beauty and appearance play a major role in society, the beauty industry is the second largest in the world only to the U.S. However, while online retail is increasing in Japan, it is not as widespread and has been slow to catch on. Japan is also the world’s oldest market with just 2.6 people of working age for every person over 65, and is only expected to get older in the coming years. With Japan’s beauty market almost completely saturated, beauty companies are looking for ways to personalize their beauty products and the consumers overall experience. With that in mind, mass and prestige beauty brands from the likes of Procter & Gamble and Shiseido are focusing on specialty shops or dedicated counters where a consumer can receive focused attention and advice on their skin, to increase brand recognition and loyalty. Even with these strategies being employed with premium brands popular to the Japanese consumer, these brands continue to see the least amount of beauty sales.

According to the Direct Selling Association, beauty companies that employ direct sales techniques in tandem with Internet-based retail sales, are positioned to grow exponentially by using a combination of door-to-door and online media tactics. However, still more than 76% of direct sales are made to face-to-face, a figure that may continue to decrease as Internet sales become more prevalent globally. In Russia and Brazil, for example, where a majority of the population remains in rural areas, direct sales continue to remain the strongest retail channel for beauty sales.

With direct sales comprising more than 1% or 29.6 billion of consumer sales globally, companies such as Avon are keeping up with the evolving trends and changing the way they do business. In 2009, Avon’s sales reached $10.4 billion, nearly double what they were selling in 2000 with still more than 5.8 million representatives worldwide. So, what is its trick? Avon has been adapting with the market by combining its traditional home sales with social media and new product categories. In 2003, Avon debuted Mark, a beauty brand focused exclusively on teenagers and women under 30. The brand combines low price points with digital marketing tactics such as personalized e-boutiques, iPhone apps and Facebook e-shops where “Mark girls” can sell their products directly on their Facebook pages.

As consumers continue to rely on the ease of shopping online, gathering information from beauty blogs and the availability of a wide range of products on the Internet, the beauty industry will continue to develop new strategies to prosper and to better understand its consumers. In established markets, brands will rely less on traditional brick-and-mortar retail and continue to embrace digital technology as the key to keeping up with the demands of the consumer.

Liz Grubow is vice president and group creative director of the LPK Beauty. In her 20-plus year career, Grubow has helped develop and manage brand identity programs for some of the world’s most successful beauty brands—including Pantene, Olay, MAX Factor International and Cover Girl.