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How Cosmetics Retail Is Being Transformed by New Technologies

How Cosmetics Retail Is Being Transformed by New Technologies

The evolution of technology has changed a lot in retail, and the cosmetics industry has been a part of — or even a leader in — that revolution. Developments like augmented reality have spurred the transformation of cosmetics to new heights, and the interconnectivity of the Internet of Things (IOT) could do it again soon. Cosmetics brands and marketers that leverage these tools can stay ahead of their competition, and this post will focus on six areas of technology impacting the cosmetics industry.

Augmented Reality

Cosmetics has utilized augmented reality — i.e., the combination of the virtual world and the digital world, often through the use of a smartphone — to spectacular effect. Using cameras to track their face, customers can have a beauty makeover without actually trying on any makeup. Some companies, like Sephora, have incorporated this in-store through AR-enabled mirrors. ModiFace, the company that created these mirrors for Sephora, has increased sales for its client stores by 31%.  This growth can be attributed to customer satisfaction; they are buying the right products to create the look they desire.

When many customers are shopping, they’re on the go and don’t necessarily want to stop and take the time to explore cosmetics this way in-store. That’s where mobile apps come in, and there are many options, including Meitu’s MakeupPlus or OPI’s Nail Studio app. Sephora and ModiFace also have a limited mobile version of their AR platform they’ve dubbed the Virtual Artist, and while conversions aren’t released yet, it garnered more than 45 million “try ons” in just its first eight weeks. ModiFace-based apps overall (including those for L’Oreal and Yves Rocher) have seen 100 million downloads.

IOT

The Internet of Things has only continued to expand as more smart devices are available, but most people don’t think of cosmetics as something that could be connected to the internet or other devices. L’Oreal has started to change that; recently it introduced a smart hairbrush designed to improve haircare by informing customers about different moisture or texture concerns, and can even provide an alert when the customer is brushing too hard. L’Oreal has also launched a new smart temporary tattoo, My UV Patch, which helps gather information about UV exposure throughout the day while still making a fashion statement.

These are still early adoption attempts at applying the IOT to cosmetics, yet projections pin the global beauty connected device market to grow to $54 billion by 2020. There are plenty of possibilities to provide serious added value to consumers and cosmetics companies alike. This might be something seemingly fantastical like a smart nail polish that allows you to automatically log in to devices or open doors, or something as health conscious as a makeup that notifies the wearer if they become too dehydrated during a long night out.

In-Store

AR isn’t the only technological approach to improving the shopper experience in-store. Cosmetics brands are latching on to other advancements, like beacon technology or other sensors. Sephora continues to be a beauty tech leader; they installed beacons in trial stores nationwide in 2015. Some 15 months later, Sephora reviewed its success and decided to put more beacons in stores; despite the technologies’ current limitations, nearly 80% of Sephora’s app shoppers opted in. The beacons allowed the brand to serve personalized ads to shoppers in real time as well as visualize their movements throughout the store.

The Fragrance Outlet also successfully leveraged beacons to improve loyalty. Beacon data in combination with loyalty programs can take the shopping experience to the next level. This retailer used it to provide rewards points simply for browsing in the store. Those points could be redeemed for samples of major brands, adding major value to foot traffic for the shopper.

Mobile

Mobile isn’t limited by the AR or beacon applications we mentioned above, either. Sephora partnered with Map My Beauty to offer the Pocket Contour app. This application of AR would do much more than simply show a customer how a makeup might look on them; it uses learning technology to fully map the customer’s face and then provide a step-by-step, personalized tutorial on how to apply makeup. Since contouring can be difficult to learn to do, this kind of individualized guidance where customers see the steps on their own face is a major value add. Similarly, IMAN provides an app for women of color to thoroughly analyze the color of their skin, lips, and hair to make recommendations on makeup looks and products.

Cosmetics companies should also take advantage of the mobile outreach seen in other industries. For example, geolocation triggers can provide personalized offers when a customer is near the store. Under half (45%) of consumers would prefer to shop for cosmetics information from their mobile device in-store; 39% have used or are interested in using a mobile device (tablet) provided in-store. This is a significant pain point that stores should be addressing.

Digital Video

Over-the-top (OTT) video services, especially YouTube, have been a game changer for the cosmetics industry. Makeup tips, product demos, and other content from influencers results in more than 700 million views on YouTube alone per month. Almost 60% of cosmetics brands have adopted influencer marketing, probably because 65% of the search results for beauty products are content from major beauty vloggers (i.e., video bloggers). How-to videos are a major draw, but believe it or not, product unboxing videos can be just as important. Just over 66% of cosmetics customers say that unboxing videos help them visualize the beauty products they want to consider buying. User-generated content can also be powerful since it provides social proof and further builds the relationship between brand and shopper.

Ipsy has conquered these concepts in spades. It relies heavily on influencer-driven content marketing, starting with its founder and moving on to fold those influencers in-house through its Open Studios program. Each of the Glam Bags shipped to subscribers every month includes a card touching on the influencers and reminding users to check out the how-to videos for the products inside. This expansive network has brought the brand a level of authenticity that can’t be manufactured, and subscribers have responded. As of last year, it was valued upward of $800 million, with more than 2 million monthly subscribers and a revenue that has likely exceeded $300 million accounting rate of return (ARR).

Social Media

Instagram is a key social tool for beauty companies, and nearly all major beauty brands had a profile on that platform as of 2016, representing tens of millions of followers. In fact, the leading beauty brand on Instagram, MAC, has 14 million followers. Snapchat is also incredibly popular, garnering 60% of those beauty brands in the same year. While Instagram often provides alluring and glamorous options, not to mention the imminent shopping feature, Snapchat provides rough authenticity. Both make users feel like they have direct access to the brand, while also giving them the platform to have a conversation of their own. It’s not hard to understand why.

Social media presents the new word of mouth in all its visual glory. Brands like Glossybox depend on this kind of word of mouth to drive sales — 80% of its acquisition can be attributed to it. They’re leveraging it to be thought leaders and to connect with more influencers.

The changes in the cosmetics industry brought on by technology provide a host of opportunities for brands to connect with their shoppers, and furthermore, presents new and creative ways to market to them as well. The integration of technology gives brands a direct path to influencing customers with personalized information injected at critical moments of interest. As technology continues to evolve, so too will the transformation of cosmetics continue to match it as cosmetic companies strive to stay ahead. Opting in sooner rather than later gives you the opportunity to get the edge on your competition, too.