Opportunities and threats

More innovation is needed to make buying BPC more convenient and more appealing. BPC brands and retailers have innovated to ease the online shopping experience and drive experimentation since the start of the COVID-19 outbreak.

Virtual consultations

Amidst non-essential store closures and reduced retail footfall, 2020 was a turning point for virtual beauty/grooming consultations as several brands and retailers moved their advice and expertise online. In the UK, brands that launched virtual consultation services in 2020 include Bobbi Brown, Deciem and Glossier. Meanwhile, retailers that have introduced virtual consultations include Boots and Space NK.

Whilst usage of virtual consultation services remains relatively low, such services are helping brands and retailers maintain relationships with existing customers, while also improving customer acquisition. Bobbi Brown has reported that 46% of its Virtual Artistry Consultations convert to purchase within three hours, with the brand also forecasting a 30% increase in new customers thanks to the launch. Meanwhile, Deciem reported that in the three months after its Deciem at Home launch, almost 250,000 shoppers requested virtual skincare consultations, spending an average of 37% more per order than the brand’s typical online shoppers.

As a growing number of brands and retailers offer virtual consultations, consumer acceptance of using them will grow.

Figure 1: Bobbi Brown Virtual Services Homepage, August 2020
[graphic: image 1]
Source: BobbiBrown.com/Mintel

Product recommendations using AI

AI-powered quizzes and recommendations that aid online product discovery gained momentum in 2020, evolving beyond single product recommendations to multiproduct routine builders that help consumers navigate the increasingly complicated world of beauty. Brands and retailers are leveraging both active and passive AI technique. Active techniques require consumers to input information about themselves while passive AI techniques leverage existing customer data to create personalised recommendations.

Amongst the brands investing in AI to improve its skincare layering recommendations is The Inkey List. In 2020, the brand introduced its #AskINKEY social media campaign which coincided with the launch of its online Recipe Builder, which curates a personalised routine for its online shoppers based on their answers to a series of questions based on their skincare goals. The Inkey List has reported that since the launch it creates a bespoke skincare routine every minute. Elsewhere, Alpha-H similarly has an online Routine Builder, and Feelunique has been using AI to personalise emails. Meanwhile, Boots is leveraging the technology for its No7 Personalised Skin Analysis tool.

Figure 2: The Inkey List #askINKEY Campaign, 2020
[graphic: image 2]
Source: The Inkey List/Mintel
Figure 3: Boots No7 Personalised Skin Analysis, 2020
[graphic: image 3]
Source: Boots.com/Mintel

Adding the human touch with live-streaming

One key element of the in-store experience is human interaction. Brands can attempt to recreate this using live streaming. Our Globalise worldwide consumer research (from July 2020) found that 23% of French consumers would like to see more live streaming videos from beauty brands on social media (eg Tik Tok, Instagram).

Mintel Trend Going Livelooks at the growing interest in creating livestreaming platforms that allow customers to join in the conversation and engage with products and brands. In October 2020, Nocibé (which is owned by the Douglas group and is the second largest specialist in France after Sephora) launched two new livestreaming services in the country. The first, called “Mes conseils personnalisés” is a one-to-one exchange with an advisor, which the brand developed with the start-up livestreaming expert Spockee. The service includes a shopping cart function, so customers can find the product they have identified in their customer interface. In South Korea, online shopping mall 11Street has begun to offer livestreamed content on its beauty and cosmetics site, giving consumers a true-to-life review of products before purchase.

Making beauty shopping more fun

While BPC brands and retailers have been better prepared for dealing with online demand during the second lockdown, there remain opportunities to make shopping online more fun, perhaps creating some of the appeal of shopping in-store and capitalising on the possibilities of the online channel.

Beauty brands can take inspiration from China, where online streaming has become a retail tool and source of revenue for influencers. In the US, secretive Instagram accounts have created closed communities which encourage followers to pay for access, enabling a new way to promote products within a trusted, tight-knit community of followers.

Gamification also presents opportunities. Gaming saw a surge during the first lockdown and beauty brands, such as Tatcha, Glossier and Givenchy, have used the Animal Crossing game to promote their brands. Gamification was used to inject fun into gifting vouchers in the lead up to the festive period, and can be a way to engage Gen Z.

During confinement in 2020 many people did more home cooking, took up hobbies, such as sewing, and embarked on DIY or home improvement projects, and we’re seeing this move into the BPC market as well. One of Mintel’s Five Market Studies, The Impact of COVID-19 on BPC – Europe - May 2020, found that 6% of French said they were making more beauty and personal care items at home, rising to 14% amongst 16-24 year-olds. With time to spare, and limited access to beauty suppliers and stores, some people started to experiment with making their own products and had time to practise and research, with the internet offering lots of information sources, such as blogs, social media and brands’ own websites. Brands and retailers could respond to these trends with in-store concessions or products from a dedicated make-your-own brand. They can add value for consumers with unique recipes. Another way to bring customers into stores might be via DIY workshops.

Making shopping safe will pay off

Our consumer research looked at a variety of BPC shopping innovations for beauty and personal care shopping (both in-store and online), which show strong value being placed on hygiene and safety aspects that have emerged from the COVID-19 epidemic.

Beauty is an area where shoppers like to test, try out and feel products, which creates hygiene problems for beauty retailers in the current climate. There is a lot of interest in contactless testing, such as single use samples and contactless product dispensers, highlighting areas where retailers can create interesting and innovative ways to allow shoppers to try out products, which could also add to the overall enjoyment of shopping in a store.

Touch contamination anxieties will boost demand for in-store technology to narrow down choice, driving demand for technology like ICON.AI's http://icon.ai/amazon-alexa/ - product-section smart mirror, which is powered by voice assistant Alexa and offers skin diagnosis as well as virtual makeup try-ons.

Any reintroduction of in-store testers will require a combination of contactless dispensers, as seen at Shiseido’s new concept store in Tokyo, which features virtual diagnostic tools alongside touch-free sample dispensers for skincare and makeup.

Meanwhile, comprehensive staff training on sanitation techniques will be essential, with opportunities to learn from second-hand beauty retailers like Glambot, which have positioned themselves as experts in this space. Our analyst insight In-store testers and sampling in the post-COVID-19 era, July 2020 explores these and many other ideas in the same vein. BPC retailers can also look to what other sectors such as grocery retailers are doing, with hypermarket chain Emart in South Korea offering customers antibacterial shopping carts.

As people remain cautious about shopping in-store, many brands have had to roll out delivery services to support those who are unable or hesitant to come in-store to shop. This behaviour has accelerated the need for speedy delivery services. We expect COVID-19 to have accelerated the trend for contact-free and safer delivery options. For example, Lush launched a local delivery service from its Oxford Street store in May while doors remained closed due to COVID-19. London-based customers would have their orders delivered the next working day for online orders placed before 2pm the previous day.

In March 2020, Lush allowed passers-by to use its sinks and soaps to wash their hands at its Oxford Street store in London in order to help stop the spread of coronavirus. Visitors to the UK stores are under no obligation to buy products. They can simply wash their hands using Lush’s soap and sinks. In July 2020, Lush announced the launch of a new self-timing soap, which is designed to dissolve after 30 seconds. The tiny soap was developed in collaboration with Deliveroo in the UAE. The food delivery giant delivered the bars along with takeaway orders to promote increased hand washing.

Cash-strapped consumers may restrict BPC spend

With hard times ahead as countries and individuals pay the financial price of the pandemic we may see more reliance on repeat purchasing and intense price competition which could push down value sales for those operating in the sector. As people have less money they will look for value for money, buying from non-specialist stores (especially as they can then also reduce the number of shops visited) and opt for own brands. Furthermore, many consumers may be reluctant to shop online for beauty/grooming products they have not tried/used before, which restricts product/brand experimentation

In order to overcome these potential threats, specialists will need to develop their pricing strategies very carefully so as not to alienate potential customers. Sales promotions, such as buy one get one free offers, coupons or discounts and giveaways or free samples, could potentially become more important for beauty and personal care specialists going forwards.

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