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Frictionless or Experiential?*

Contact Author Jeb Gleason-Allured, Editor in Chief
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  • Retail is splitting toward two extremes, according to an argument put forth in a recent Marketing Week article by Tom Goodwin, executive vice-president and head of innovation at Zenith USA. Goodwin’s argument, simplified, makes the case that retail, no matter the channel, is diverging toward simplified practicality on one hand, and highly experiential on the other. (https://www.marketingweek.com/2017/02/15/make-shopping-practical-or-an-experience/)
  • Shaun Kirby of Cisco has defined frictionless retail as “the elimination of any non-value added activities that can negatively impact the customer experience, sales or operational efficiency.” In retail, friction can include wading through endless product options without guidance, waiting in line to check out, having to swipe a credit or loyalty card and wait for a paper receipt, filling out poorly designed online forms or going through lengthy password authentication steps. Today’s frictionless retail innovators include Amazon Go, a physical concept store with no lines and no checkout; McDonald’s mobile order and pay app, which will allow consumers to simply pull up to the restaurant to be handed their orders, and of course Dollar Shave Club’s simplified male grooming subscription service.
  • On the experiential side, you have stalwarts like Starbucks, with its up-market coffee that requires a wait and cafes that invite you to linger, and Nike, which encourages its consumers to join its running or training clubs in various cities, offers gait analysis from experts to ensure each shoe purchase is ideal for the consumer’s running style, and encourages shoppers to personalize their shoes at NIKEiD stores or online.
  • Goodwin’s conclusion is simple: “Modern shoppers don’t buy online or offline. They buy in the modern world. One where expectations have changed, where patience is short, where service and delivery is expected and where they either expect things to be incredibly quick or very fun.” For this presentation I’ve examined some beauty and personal care brands through the twin lenses of frictionless and experiential retail and ask which brands fall under which category, which appear to be moving in both directions simultaneously and consider whether any of them are quick or fun enough for the changing consumer.
  • BeautyPie describes itself as the “buyer’s club for beauty addicts.” In truth, it’s a brand that focuses relentlessly on great products without the flashy packaging and retail markups. By offering products at factory cost to subscribers for $10 a month, founder Marcia Kilgore has found a way to cut out the middle man without sacrificing the wide array of on-trend products so coveted by beauty enthusiasts.
  • Dollar Shave Club was acquired by Unilever for a simple reason. It removed omitted from its brand experience everything that men hated about shopping for razors. For a $1 kickoff fee, subscribers can get a monthly shipment of blades. And, they don’t have to worry about renewing each month or going down the dreaded shaving aisle.
  • Function of Beauty is one of the rare players in the industry to have received funding from Silicon Valley startup mecca Y Combinator. Function of Beauty’s premise is simple. Consumers go to the site, select their hair type, choose five hair goals and personalize their formulations with their preferred color and fragrance. The resulting shampoo and conditioner is branded with the customer’s name and shipped to their home for $32.
  • Like Function of Beauty, Madison Reed simplified at-home hair coloring by prompting its customers to answer a handful of questions in order to retrieve their ideal at-home hair color option. The brand launched mobile first, and only later expanded to ecommerce and, eventually, opened its first physical hair salon in New York’s Flatiron District, which offers personalized hair color tutorials, root refreshes and blowouts.
  • MatchCo, which was recently acquired by Shiseido Ameircas, sits at the crossroads of AI, beauty and mass customization. MatchCo’s mobile app allows consumers to scan their skin tones and generate a custom foundation based on their individual data. No need to try on multiple products or even set foot in a store. Shiseido has plans to boost its on-demand customization of cosmetics using MatchCo’s technology, while also improving the technology for skin assessment/analysis, as well as creating new direct marketing opportunities.
  • Last year, Sephora introduced two bot-powered beauty services for the Messenger app. The Sephora Reservation Assistant allows consumers to book makeover appointments by chatting with a bot, while Color Match for Sephora Virtual Artist facilitates the shade matching of lipstick via a simple scan of a photo. The services ease access to the retailer’s services and simplify product searches.
  • As consumer expectations evolve, old retail models fall by the wayside. Experiential retail offers a solution for the troubled brick and mortar channel by giving consumers some form of activity or interaction beyond merely purchasing products. As Hannah Symons recently wrote in our latest issue, “In any guise, the fun and frivolity of the beauty industry makes it an ideal breeding ground for the interlacing of experiential threads across the value chain.”
  • As traditional retailers struggle to capture young consumer excitement, many brands are opening their own boutiques to “offer a fun and interactive environment that isn’t found in other channels,” according to Kline Group’s Ewa Grigar. According to Kline figures, the fastest growing boutique chains in the US are: Nature Republic, NYX and Rituals, while the fastest growing groups in the UK are Sakare, Cowshed and Aesop. High-profile beauty boutiques include Burberry’s Covent Garden high-tech shop, the NYX New York flagship (pictured), L’Oréal Paris’ first branded store in Paris and Estée Lauder's Estée Edit shop in London’s Carnaby Street.
  • These boutiques offer brands new opportunities to engage consumers with enhanced shopping experiences that fuse the digital and physical worlds in order to build brand awareness, grow sales and boost consumer loyalty. Kline’s Kelly Alexandre noted in one analysis, “It is almost like a cult, the followership is often buying into the exciting concepts of these stores virtually more than the products themselves. The success of such stores depends on whether brands can keep up with the pace of younger consumers’ digital needs, as well as keep a store’s levels of innovation and engagement high."
  • Philosophy recently unveiled its concept wellbeing beauty workshop in the Westfield Garden State Plaza in Paramus, New Jersey. According to the company, “the environment invites you to mindfully engage the senses on an individual level through touch, sight, sound and scent.” The philosophy concept store offers various experiences for consumers, including personalized consultations, “discovery stations” for various elements of the brand and guided meditation delivered via virtual reality.
  • Meanwhile, Natura Bisse’s new Mindful Touch experience elevates face and body spa treatments with the incorporation of a VR headset and that offers immersive video and audio paired with a gentle massage from a therapist. The multisensory experience is intended to treat the skin, lower stress and offer a “more intense experience of the treatment.”
  • In the age of Blue Apron cook-it-yourself delivery kits, it was only a matter of time before similar beauty models emerged. Oleum Vera is a “home-cooked” beauty brand that offers cleansing, moisturizing, body care, spa-style pampering, hair care and men’s body care kits that allow consumers to whip-up their own products. Each organic, non-GMO kit comprises plant-based oils and essential oils, powdered clays (when applicable), algae and dried flower petals, and comes with a how-to booklet. The brand has claimed that it “takes inspiration from bountiful nature to create products that empower consumers to reclaim their beauty regimen, using fresh ingredients from their pantry and fridge, natural clays, and organic butters and oils.”
  • So, what do these brands and retailers tell us about the retail environment in 2020? On the frictionless side, not only will AI be in more of our homes via integration into everyday objects, but that AI will continue to make more decisions of ever greater sophistication for us, including shopping decisions. Brands will have to find a way to compete when a machine is calling the shots. Meanwhile, on-demand delivery and virtual reality on mobile and headset devices will allow consumers to access a facsimile of the physical brand experience anytime and anywhere they wish, rendering less experiential retailers increasingly obsolete.
  • And, as Beauty Pie shows, group replenishment models can transfer the type of savings traditionally reserved for retailers and manufacturers to the consumer. Brands and retailers could potentially proactively initiate group replenishment online and via social media among consumers with relevant profiles and purchase histories. According to PricewaterhouseCoopers, group replenishment models may become necessary to defend and increase market share.
  • As shown by the many pop up shops deployed by the beauty industry, small formats dropped in the right locations, with offerings closely attuned to targeted consumers can reap big rewards. In the United States, retailers such as Dollar General, Dollar Tree and Family Dollar learned this lesson long ago, taking market share from Walmart superstores by offering shopping within neighborhoods. Target, meanwhile, has begun opening tiny shops in urban areas to effectively mimic the effectiveness of dollar stores. These Target stores can be optimized for the needs of local shoppers seeking convenience. Notably, Target is now beginning to leverage its retail storerooms not just for sales floor replenishment, but as hyperlocal distribution centers that can help it facilitate same-day or even on-demand delivery of goods on a mass scale.
  • On the experiential side, as shown with Oleum Vera, brands will need to find ways to allow the consumer to become a creator, to feel actively engaged in the products that they consume, particularly for those who have a heightened awareness of ingredient safety and the impact of consumer consumption on the environment. Brands and retailers will also increasingly integrate customization tools across formats, such as menu options for products or products optimized for different stages of life. The question is: will the beauty industry be ready?

*This presentation is modified from a talk delivered during the 2017 Cosmoprof Bologna event.

Where is retail headed? And are beauty brands prepared? This analysis explores the ways in which brands are alternately making their experiences both easier and more fun. 

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