cosmoprof north america 2017 wrap-up july 13 2017 - deborah weinswig – the retail ... ·...
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Cosmoprof North America 2017 Wrap-Up
TheFungGlobalRetail&TechnologyteamattendedCosmoprofNorthAmerica2017inLasVegasthisweek.CosmoprofistheleadingB2BbeautytradeshowinNorthAmerica,drawingmorethan33,000attendeesand1,015exhibitorsfrom39countries.Inadditiontothetradeshow,theeventincludedathree-dayeducationprogramwherebeautyindustryexpertssharedinsightsanddiscussedkeytrends.
Belowareourtoptakeawaysfromthethree-dayevent:
1) Earvin“Magic”Johnsonkeynote:knowyourcustomerandoverdeliver
2) Ashiftindemandfornaturalcosmeticsandskincareinthelasttwoyears
3) Socialmediainfluencersdominateconsumerengagementinthebeautysector
4) Malegroomingisbooming
5) Thefutureofbrands
6) Thedigitalizationofthesupplychainisexpectedtoshapethefutureofthebeautyindustry
7) Technologyhascontinuedtoadvanceinthebeautycategory
8) Influencers,influencers,influencers
9) Chinaisbecomingthelargestbeautymarketintheworld
10) Indiebrandsworktogainscaleandcompetewithmassbrands11) K-beauty’smomentumcontinues
12) Interactivetechnologyareashowcasedthelatestinnovationsinbeauty
13) On-demandstartupsaredisruptingthebeautyindustry
14) Eco-friendlyandorganicproductswereprevalentatcosmoprof
15) Beautyservicescanchangethebrick-and-mortarexperienceBonustrend:big-boxretailersareactivelyengagedwithindiebeautybrands
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
TheFungGlobalRetail&TechnologyteamattendedCosmoprofNorthAmerica2017inLasVegasthisweek.CosmoprofistheleadingB2BbeautytradeshowinNorthAmerica,anddrawsmorethan33,000attendeesand1,015exhibitorsfrom39countries.Inadditiontothetradeshow,theeventincludedathree-dayeducationprogramwherebeautyindustryexpertssharedinsightsanddiscussedkeytrends.
Belowareourtoptakeawaysfromthethree-dayevent:
1) Earvin“Magic”JohnsonKeynote:KnowYourCustomerandOverdeliver
BasketballlegendandkeynotespeakerEarvin“Magic”Johnsonsharedhisexperienceabouthowoverdeliveringtoanunderservedcustomerbasewaskeytohissuccessasabusinessman.HenotedthaturbanAmericansandminoritieswerebeingunderservedandhadsignificantspendingpower:$2trillion,with$1trillionofthatfromHispanicconsumersand$1trillionfromAfricanAmericanconsumers.Asaresult,hecameupwiththeideatolaunchMagicJohnsonTheatres,openingmovietheatresinurbanneighborhoodsthathadnofacilitiesatthetime.Byknowingthedemographicandtheireatinganddrinkinghabits,insteadofofferingCokeandSpriteatthetheatreconcessionstands,hesoldgrapesodaandorangesoda,whichweremorepopularamongstAfricanAmericanconsumers.
Afterthesuccessofthatventure,Johnsonalsosawthattherewasalackofcoffeeshopsinthesesameneighborhoods.HemetwithHowardSchultzofStarbucksandproposeda50/50ownershipstructurebetweenhimselfandStarbucksforthesestores.SimilartohisstrategyatMagicJohnsonTheatres,Johnsonreplacedsconeswithsweetpotatopies,knowingtheyweremorepopularamongthedemographic,andchangedthemusicplayedinstorestoPrinceandMichaelJacksontocatertohiscustomers’tastes.Afterasuccessfulthree-storetest,theconceptwasrolledoutandtheyopened125stores.Lastly,Johnsonsawaneedforafull-service,sit-downrestaurantconceptinurbanareas,whichledhimtobuythechainTGIFriday’saswell.
Johnsonhighlightedhisbeliefthatlisteningtocustomers’needsandoverdeliveringwaskeytohissuccessinbusiness.Anotherexampleofthesameconceptis,astheowneroftheLosAngelesDodgersbaseballteam,Johnsonlistenedtothefans’feedbackabouttheneedforcheaperparkingandabetterstadiumexperience.Heultimatelyloweredpricingforparkingandofferedfansadifferentiatedexperience,whichresultedinselling3millionticketsbeforetheseasonhadevenstarted.
Johnsonalsotalkedaboutthefactthathealwaysknewhewantedtobeasuccessfulbusinessman,evenwhilehewasplayingbasketballprofessionally.HethoughtaboutthelongtermandlaidthegroundworkforhisfuturecareerwhileheplayedwiththeLosAngelesLakers.Hesoughtmentorsandlearnedfromothersthatweremoreexperienced.Healsobroughtthesamedisciplinehehadinhisprofessionalbasketballcareertothebusinessworld.
Source:FungGlobalRetail&Technology
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
2) ShiftinDemandforNaturalCosmeticsandSkincareintheLastTwoYearsWhiletherehavebeennaturalbeautybrandsfordecades,therealdemandforthecategoryacceleratedinthelastcoupleofyears.2014representedaturningpointinthecategory.Therehadbeenaperceptionthatnaturalbeautyproductsdidn’t“work”andweren’teffectiveandthatconsumershadtochoosenaturalorresults.Thatisnolongerthecase.Naturalproducts,despiteinmanycasesbeingofferedatpremiumpricepoints,garnerverypositivecustomerreviews(whichisn’talwaysthecaseforhighendandpremiumproducts)andmillennialsandyoungerconsumerstendtoeducateandshowtheirolderfamilymembersandfriendsnaturalproducts.
Authenticityiskeyinthenaturalscategory,asconsumersneedtobeabletotrustbrandsandtheproductstheymake.Theyneedtobeabletotrustthatbrandsarebeinghonestandtheproductswillbeconsistenttimeandagain.
MaryBemis,founder&editorialdirectoroftheInsider’sGuidetoSpas;JeanGodfrey,June,beautydirectoroftheGOOP;IndieLee,founderoftheIndieLee;Dr.LilianaSGeorge,presidentofthePureBeautyConcepts.Source:FungGlobalRetail&Technology
Consumers’motivationforusingnaturalbeautyproductsvaryandincludehealth,anextensionoftheirlifestyleandperformance.Womenaremoreengagedinreadinglabelsandunderstandingingredientsandwhattheyareputtingintoorontheirskinandbodies.Accordingtosome,nothingismoreluxuriousthannaturalproductsparticularlygiventheincreasedfocusonhealthandwellness.
Forconsumersthatdousenaturalproducts,theymaynotusenaturalproductsexclusivelysimilartoorganicfood.Consumerseatorganicfoodsomeormostofthetimebutnotallofthetimeandthatisokay.Makingpeoplefeelbadorshamingthemintousingnaturalproductsisnoteffectiveastheynowhavetheoptiontomakeapurchaseonline.Theoldcosmeticssalesmodelofpushingproductisnotsuccessfulanymore.Consumersarealsomoreeducatedaboutproductswhentheycomeintothestore.Forconsumerswithsensitiveskin,theyoftencomebackaroundtonaturalproductsafterotherproductsdidn’twork.
Thisisnotafadandisnotsomethingthatwillslowdownorgoaway.
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
3) SocialMediaInfluencersDominateConsumerEngagementintheBeautySectorTheriseofinfluencershastransformedhowbeautybrandsmarketthemselves.Beautyshoppersnowpreferauthenticcontentcreatedbypeersandinfluencersoverdirectcommercialappealsfrombrands.YouTubehasbecometheprimarychannelforbeautyshopperstoobtaininspiration,mostlythroughbeautyinfluencers.Instagramalsohashighengagementratesinfashionandbeautycategory.Consumersalsonowdemandmorepracticalcontentfrombeautybrands,suchasmakeuptutorials.
Micro-influencersthatreachaspecifictargetarefavoredbybeautycompanies.Researchshowsthatthelargerthenumberoffollowersaninfluencerhas,thelowertheengagementlevel.Assuch,beautycompaniesareworkingwithinfluencerstotargetspecificaudiences,particularlywithmicro-influencers,orinfluencerswhohaveonlyafewthousandfollowersonsocialmediaplatforms,butwhosecontentisperceivedasbeinghighlyauthenticratherthancommercial.Micro-influencers’followerstendtohaveaveryspecificinterestincommon,sobrandscaneffectivelytargetnicheaudiencesthroughthem.Professionalstylistsareincreasinglybecomingsocialmediainfluencersinthebeautyspace.Theyhopetoleveragetheirprofessionalskillstoeducateconsumersandotherstylistsviasocialmedia.LarisaLove,ownerofLarisaLovesalonstartedhercareerasahairstylist.ShestartedtobuildherclientlistbycreatingdramatichairtransformationsonherInstagramaccount,@larisadoll.Shehasbuiltover500,000Instagramfollowersandmanybecameherloyalclientsforherhairservices.AlfredoLewis,GlobalDirectorofEducation,BrazilianProfessionals,notedthathisfirmusessocialmediatotrainprofessionalstylists.
4) MaleGroomingIsBoomingWhentouringthetradeshowfloor,wesawastrongrepresentationofmalegroomingproducts.Theglobalmarketformalegroomingproductsisbooming,andisprojectedtoreachUS$60.7billionby2020,accordingtoEuromonitor.Whilesomemayattributethistothegrowthinshavingproductsandfragrances,thestrongestgrowthisactuallyinthelargestcategory,maletoiletries.Valuedat$17.5billionandcomprising37%oftotalsalesin2015,thiscategoryincludesmen’sbathandshower,deodorant,skinandhaircareproducts.ThelargestmalegroomingmarketisWesternEurope,valuedat$12.4billionin2015.AsiaPacificisthehighestgrowthmarket,forecasttogrowatacompoundannualgrowthrate(CAGR)of8.1%to$11.5billionby2020fromUS$7.8billionin2015,accordingtoEuromonitor.Brick-and-mortaristhemaindistributionchannelformalegroomingproducts,accountingfor81%oftotalsalesin2015.Groceryretailersandnongroceryspecialists—mostlyhealthandbeautyspecialistretailers—arethetwomajordistributionchannels,accountingfor37%and36%sharegloballyin2015,accordingtoEuromonitor.
Source:FungGlobalRetail&Technology
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Someretailershavedesignedstorelayoutstomatchmen’sshoppingneedsinthiscategory,includingspecialtybeautyretailerKiehl’s,aswellasdepartmentstoressuchasMacy’sandNordstrom.TheArtofShaving,apremiumgroomingomnichannelchainstore,isofferingbarbershopsinselectedoutlets,deliveringgroomingexperiencestoitscustomers.L’OréalandPhilipscollaboratedinDecember2016andlaunchedapopupbarbershopatSingaporeChangiAirport,showcasingtheirproductsinabidtowidentheircustomerbase.Whilemostofthemajorbeautyandpersonalcareproductcompanieshavealreadycreateddedicatedbrandsorsub-brandsfortheirmalegroomingproducts,anumberofmalegroomingstartupshaveemergedinrecentyears,successfullytappingintotheunmetneedsandgrowingtrendsinthisfield.
StephanKanlian,professorandchairoftheCFMMMaster’sProgram,FashionInstituteofTechnology;MorganHagney,seniormarketingmanageroftheL’OrealParis;NicolasVissat,marketingdirectoroftheHaircolorCategory,Matrix;GraceGordon,globalmarketingmanageroftheEsteeLauder.Source:FungGlobalRetail&Technology
5) TheFutureofBrandsTherewillbesomebrandsthatwon’tmakeitthroughthecurrentfluxinbeautyandretail.Thebrandsthatwillbesuccessfulandwillhaveafuturewillbethosethatmakeanemotionalconnectionwithconsumers.Brandscanmakeanemotionalimpactwithconsumersinthreeways:
i. Transparency–millennialsaremorelikelytobuyfromabrandiftheyknowthepeoplebehindthebrandandwhattheystandfor.Theyareinterestedinwhatthecompanysupportsandhowtheygoabouttheirbusiness.Consumerswantbrandstotakeownershipandtostandforsomething.
ii. Experience–Experienceisaboutcustomerserviceinthestoreaswellassomethinguniqueinphysicalretail.Experienceisaboutadialoguebetweenthebrandandconsumers.Consumerswanttheirfeedbacktakenintoaccount.
iii. Community–Loyaltyisgroundedincommunity.44%ofmillennialsshowbrandloyaltybymakingrecommendationstofamilyandfriends.Communityisgroundedintrust.Today’sworldisvolatileandtrustisincrisis.Themorefrequentthecontactandcommunicationbetweenabrandandaconsumer,themorelikelytodeveloparelationship.Thehyperconnectivityoftheworldweliveinhasresulted
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
inmorelonelinessandlessconnection.Thatisanopportunityforretailersandbrandsasconsumersincreasinglylookforasenseofbelongingandthoselike-minded.
Millennialshavezeroexpectationsofbrands.Theythinkthatretailersandbrandsvalueprofitabilityoverthemandhavinganauthenticrelationship.Only8%ofmillennialsfeelheardbybrands–thatisamissedopportunity.Millennials,whenpolledwouldalsobewillingtogiveupshoppinginstoresiftheyhadonelesshourintheday.
6) TheDigitalizationoftheSupplyChainIsExpectedtoShapetheFutureoftheBeautyIndustry
Digitalizationisimprovingthetransparencyandefficiencyofthesupplychainforthebeautyindustryasitiswiththeapparelsector.ThomasKull,AssociateProfessorofsupply-chainmanagementatArizonaStateUniversity,notedthatanimportantaspectofdigitalizingthesupplychaininvolvesusingpredicativetechnologyandbigdatatoimprovethetraceabilityofbeautyproductsalongthesupplychain.Beautycompaniesneedtobemoretransparentaboutelementsoftheirmanufacturingprocesses,suchasanimaltesting,packagingmaterialsandthepotentialuseofharmfulingredients.Consumersarenowmoreeducatedandhavemoreaccesstomorespecificinformation.Forexample,consumershavethepowertodeterminethepercentageofrecycledmaterialsinbeautypackaging.Onthepositiveside,brandscanleveragetheircleanproductionprocessesasamarketingmessageforconsumersthatcareaboutenvironmentalcauses.
Source:FungGlobalRetail&Technology
Dataisalsoparamount.Becauseoftheaccessibilityofreal-timedata,companiesareabletomakebusinessdecisionsbasedonreal-timeanalyticsversushistoricalinformationandaverageestimates,whichhavebeenreliedoninthepast.Kulldescribeddataasanequivalentofnaturalresourcesforcompaniesinanotherera.Companiesbuiltvastmonopoliesbasedonnaturalresourcesinthepast.Nowtheycanbuildmonopoliesbasedondata.
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Businessescanpotentiallypivottheirbusinessmodelsbasedondatafindings.Therehasbeenatrendof“servitization”acrossindustries,whichrepresentstheshiftfromsellingproductstosellingservices.Forexample,GEswitchedfromsellingairplaneenginestoairlinestoselling“thrusts”ortheuseofairplaneengines.Real-timecommunicationbetweendeviceshasallowedGEtocollectusagedatafromitsairplaneenginesandbillairlinesbasedontheaccumulativeusage.
7) TechnologyHasContinuedtoAdvanceintheBeautyCategoryTheadvancementofaugmentedreality(AR)technologyinbeautyhasallowedconsumerstotryonproductsinafairlyrealisticsetting.Themagicmirrorexperiencehasevolvedfromastaticpicturetoarealisticvideothatcanadjustproductcolorbasedonthelightingenvironmentwheretheconsumeristryingontheproducts.Theincreasinglyaccurateandrealistictry-onexperienceisbasedoncolormappingtechnologywhichcanadjustthecoloroflipstickaccordingtotheanalysisofthelightingenvironmentusingthecolorsofusers’eyesandhairasreferences,accordingtoParhamAarabi,FounderandCEOofModiface.
Source:FungGlobalRetail&Technology
ModifacehascreatedseveralapplicationsincorporatingAR.Thecompanydevelopedastep-by-steppersonalizedlivemakeuptutorialthatteachespeoplevariousbeautytechniques.Ithasalsolayeredgaze-basedanalyticstotrackconsumers’affinitywithdifferentproductswhentheytrythemon.Conversionratesimproveby27%whenbrandsusethisconsumerpreferenceinformationtomakeproductrecommendations,accordingtoModiface.
Artificialintelligence(AI)hasmademasscustomizationpossibleforthebeautyindustry.SmartfoundationmatchappMatch&Co.usesAItechnologytoanalyzeandpredictfoundationcolorchangeforconsumersovertimeandinvitethemtorematchtheircoloreveryfewmonths.Consumers’foundationcolorchangesby20%eachyear,accordingto
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Match&Co.Match&Co’sappwillnotifyuserstodoarematch.ThecompanyiscollaboratingwithBareMineralstooffer“madetofit”personalizedfoundations.
Source:FungGlobalRetail&Technology
8) Influencers,Influencers,InfluencersAtCosmoprofwemetwithTribeDynamics,anindustryleaderinmeasuringsocialinfluencerengagement.TribeDynamicsmeasureshowconsumersrespondtobrandsonsocialmediathrough“earnedmediavalue”orEMV.Thecompanymeasuresanddiscoverswhichbrandsarebeingtalkedaboutthemost.Thebeautyindustryiseffectivelyusingthepowerofsocialinfluencermarketingmorethananyothermethodofmarketing.Thecompanyestimatedthatthebeautyindustrywasatleast3–5yearsaheadofotherindustriesusingsocialinfluencermarketingbecausethecosttopublishandcreateamessageisalmostzerotoday,andbecausetheriseofcontentbeingcreatedisexponential.
TribeDynamicshasdiscoveredbrandsbeforetheywentviralusingitsanalytics.NYXandBECCAcosmeticsareexamplesoftwocosmeticsbrandsthatusedsocialinfluencerengagementtogrowtheirbrandstomultimillion-dollarbrands.NYXdoesnotpayitsinfluencers,andBECCAcosmeticswasunderperformingwhenYouTuberJaclynSmithpostedavideoabouttheirproduct.Thecompanyexperiencedaone-daysalesrecord,showingthetremendouspowerofsocialmediaandinfluencers.ThecompanyhassincecollaboratedwithSmithonanentirelineofbeautyproductsincludingBECCAxJaclynHill.BECCAcosmeticshassincebeenacquiredbyEstéeLauderforover$200millioninOctober2016.
NYXhasgrownorganicallythroughunpaidsocialinfluencerengagementtobecomethenumber-threecosmeticscompanyinsocialengagementwithEMVover$50millionandyear-over-yeargrowthonsocialmediaengagementof97%fromFebruary2016toFebruary2017.
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
9) ChinaIsBecomingtheLargestBeautyMarketintheWorld
WehadtheopportunitytohearapresentationbyTonyShan,SeniorBusinessDevelopment&MerchandisingManagerandtheHeadoftheNewYorkofficeatVIP.com.VIP.comoperatesintheChinesee-commercemarketandhasamemberbaseof300millionmembers.ThatcomparestotheChinesepopulationof1.38billionand450millionChineseonlineshoppers.VIP.comhadrevenuesof$8.2billionin2016andisoneofthetop-threee-commercesitesinChina.Thecompanyoffersend-to-endsolutionsincludingoperations,marketing,logisticsandcustomerservice,andhasaglobalfootprintwith10officesaroundtheworldand28warehousesglobally.
In2016,ChinaovertooktheUStobecomethelargestbeautymarketintheworld.Risingincomelevelsarechangingpreferences.Withtheriseoftheuppermiddleclassandincreaseinspendingpower,theChineseconsumermarketpresentsmanyopportunities,disproportionatelybenefitinginternationalbrandsandverticalssuchasbeauty.Thecompany’scustomersareloyal,withan80%returnrateamongshoppers,andarehighlysticky.VIP.com’scustomersarealsopredominantlywomen,astheycontrolthepurchasingdecisions;80%ofthecustomerbasearewomen.
Source:FungGlobalRetail&Technology
Chineseconsumersareadoptinge-commercefasterthanintheUSandEurope:onlinesalesinChinagrew36%yearoveryearin2015,fasterthanintheUSat14%andinEuropeat12%.ThefastergrowthinChinaismainlyduetothelargerpopulationofonlineshoppersandtheleapfroggingofe-commercerelativetophysicalretail.Inaddition,therewere340millionmobileshoppersinChinain2015,comprising82%oftotalonlineshoppers,accordingtoiResearch.Thisisforecasttoreach510millionin2018,or91%oftotalonlineshoppers.Some90%ofVIP.com’sshopperscomeviathemobilechannel.
Source:FungGlobalRetail&Technology
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Source:FungGlobalRetail&Technology
ChineseshoppersdifferfromtheirWesterncounterpartsinanumberofways:
• Chineseconsumersaremorelikelytoshopontheirmobilephones,giventhehighmobileInternetpenetrationrateinChina.
• Chineseconsumerssearchforproductsdirectlyone-commercesites,whileWesternconsumerstypicallyusesearchenginesasthestartingpoint.
• Customers’expectations:Chineseconsumersaretypicallymoredemanding.Whenshoppingonline,theytypicallyexpectnext-daydeliverycomparedtowesternconsumerswhoarereceptivetodifferentservicelevels.Atthesametime,Chineseconsumersarepricesensitiveandawareofbrands’premiumpricing.
Establishedin2008,theplatformhasbuiltlong-termrelationshipswithover19,000brandsandaccumulated100millioncustomermembers.Vipshopisrankedasthethird-largestB2ConlineplatforminChina,withrevenuesof¥40.2billionin2015.
10) IndieBrandsWorktoGainScaleandCompetewithMassBrandsWhileindiebrandshaveanappealtoconsumersastheylookforup-and-comingandnewandexcitingproducts,smallandindiebeautybrandsstrugglewithhowtotaketheirbrandstothenextlevelandscaletheirbusinesses.WeheardfromseveralbeautybrandsincludingJouerCosmeticsandFABskincare,aswellastheperspectivefromretailersDermStore.comandQVC.
AnumberofthebrandsagreedthatPRisveryexpensiveforyoungbrandsinthebeautyspace,particularlyconsideringthereturntheybringin.JouerCosmetics,inparticular,talkedaboutthesuccessithasseenbyinsteadfocusingonsocialmediaandutilizinginfluencersandmicro-influencerstospreadthewordabouttheirbrandsandproducts.
QVChasseveralplatformsforbeautyproducts,itsmainQVCtelevisionchannelwhichfeaturesbeautyamongstothercategories,a24-hourbeautychannelwhichisbroadcastonFacebookandonlineatbeautyiq.com,anditswebsite.BeautyIQisgearedtowardayoungeraudienceandtendstoskewtowardsocialbrands.ThecoreQVCchannelisbroaderwithalargeraudience.DermStorewaslaunchedbyadermatologistasa
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
skincare-focusedplatform.Thecompanyhasevolvedtoincludecolorcosmeticsandislookingtofurtherevolveandexpandintohaircareandfragrances.
Intermsofthebrandsitselectstobeonitsplatforms,QVCprioritizesstorytelling,particularlysincethechannelisaboutdemonstration,andstorytellingisintegraltothat.Indiebrandscanbenicheandoftenhaveacompellingstoryabouthowthecompanyand/orproductcameintobeing.Theyareoftenbeguntofillaparticularneed.Thecompanyishighlystructuredandmeasuresbrandproductivityindollarsperminute—itpayscloseattentiontowhatitscustomerswant,anddollarsperminuteisthecustomervotinginrealtime.Inadditiontobeingaplatformtosellproducts,QVCoffersbrandexposureandmarketing.
11) K-Beauty’sMomentumContinuesTherecontinuestobestronginterestinbeautycategoryinnovationfromSouthKorea.SouthKoreanbeautybrandshaveseenstrongsalesvolumegrowth,withexportsreaching$2.45billionin2015,andtheyhavehadagrowinginfluenceontheglobalbeautymarketinrecentyears,sparkingthe“K-beauty”trend.Thishasledtomarket-sharegainsintheglobalbeautyandpersonalcaremarket.
K-beautybrandsareknownfortheirinnovation,whichconsumershaveheartilyendorsed.AstudybyNielsenin2015showedthatsixoutof10K-beautybrandshoppersfromGreaterChinaandSingaporeconsideredSouthKoreanproductstobeinnovative.ThisperceptionwasthestrongestamongMainlandChineseshoppers,with68%ofthosepolledagreeingthatK-beautyproductsareindeedinnovative.
Source:FungGlobalRetail&Technology
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July13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Fromproducttoprocesstotechnologytopackaging,K-beautybrandshaveinnovatedonseveralfronts.Innovationinproductdevelopmentisdrivenbycompanies’heavyinvestmentinR&DaswellasbytheexpectationsofthesophisticatedcustomersintheSouthKoreanmarket.Thiscreatesanidealplatformforbeautybrandstocreateandtesttheirinnovations,includingformulas,ingredientsandmanufacturingprocesses.
K-beautybrandsalsohaveashorterproductdevelopmentcyclecomparedwiththeinternationalplayers,respondingmorequicklytoevolvingconsumerdemandsandthereforeremainingrelevant.SouthKoreanbrandshavebeenleveragingthegrowinginfluenceofdigitalmediatoengagewithcustomers,too,whilecapturingtheopportunitiesbroughtforwardfromtheK-beautywave.Manyofthesebrandswerealsoquicktoadoptin-storetechnologies,someofwhichareonparwith,ormoreeffectivethan,thosedevelopedbyinternationalbeautybrands.
AnumberofK-beautystartupshaveemergedthathavecreatedinnovativeproductsusingthelatesttechnologiesandhavemadetheirproductsavailableoverseasthroughe-commerce.
12) InteractiveTechnologyAreaShowcasedtheLatestInnovationsinBeautyOntheCosmoproftradeshowfloor,therewasanareadedicatedtointeractivetechnology.Someofthenotabledemonstrationswesawtherewere:HiMirror:Thissmartmirrorconductsin-depth,at-homeanalysisofusers’skinconditions.Thedevicecantrackredness,hydrationlevel,darkspotsandwrinklesovertime.Userscanusetheanalysistounderstandtheeffectoftheirskincareproductsandadjusttheirskincareregimenaccordingly.Inadditiontoskinconditionanalysis,theconnecteddevicealsodoublesasasmartmakeuptutorandamusicplayer.
Source:FungGlobalRetail&Technology
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Raise3D:This3D-printermakerprovideshigh-qualitydesktop-size3Dprintersthatsmallandmedium-sizedbeautybrandscanusetomakeprototypesofpackagingfasterthantheycanusingfactorysamples.Thesizeoftheprintersandtheiraffordablepricesenablesmallerbrandstoinvestin3Dtechnologyinordertoimprovetheirspeedtomarket.
13) On-DemandStartupsAreDisruptingtheBeautyIndustry
On-demandbeautyservicesappshaveprovidedconsumersamoreconvenientalternativetobookingappointmentsatindividualsalons.Thebeautyservicesindustryisfragmented,withmanyindependentsalonsandstylistsandalackoftransparencyregardingpricingandconsistencyofquality.Itisalsodifficultforconsumerstofitbeautyservicesintotheirbusyschedules.Threeon-demandbeautyservicesplatformshaveattemptedtosolvetheseproblems:
StyleBee:Thisplatformenablesclientstobookprofessionalbeautyservicesattheirhomeoroffice.Theplatformhasanetworkofvettedbeautyprofessionalswhocanprovideservices24/7ataclient’slocationofchoice.StyleBeemaintainsconsistentpricingforitsservices,whichrangefromblowoutstohaircutstomakeupapplications.ThecompanycurrentlyservesSanFrancisco,LosAngelesandLasVegas.
ShearShare:Thisplatformenableslicensedbarbersandcosmetologiststorentspacebyappointmentatestablishedsalons.Itprovidesflexibilityforindependentstyliststobooktemporarysalonspaceandhelpssalonstomonetizetheirexcessspace.Theplatformhasconnectedsalonownersto1millionstyliststofillemptysalonspaceondemand.
BellaonDemand:Thisluxurybeautyappbringsbeautyservicestoclientswhereverthoseclientsare.Sinceitslaunchin2014,BellaonDemandhasexpandedto11countriesanditsnetworknowincludes1,200stylists.Thestartuphasalsopartneredwithbeautybrandsandretailerstobringproductsforsaletoclientsduringappointments.Theconversionratesforsuchbeautyproductsaresignificantlyhigheronceclientshaveseenthestylistsapplythem.
14) Eco-FriendlyandOrganicProductsWerePrevalentatCosmoprofTheheavypresenceofeco-friendlyandorganicproductsatCosmoprofdemonstratesthattheyarenotafadthatisgoingawayanytimesoon.Therewasacuratedareacalled“DiscoveryGreen”onthetradeshowfloorthatwasdedicatedtomorethan50eco-friendly,organicbeautyandall-naturalcompanies.Somenotablecompaniesthatexhibitedwere:
Source:FungGlobalRetail&Technology
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Source:FungGlobalRetail&Technology
Feather&Bone:Aholisticwellnesscompanythatsellsuniquebeautycaresolutionsthroughbothproductandeducation,Feather&Bonelaunchedin2015.Itsfirstproduct,FaceGems,isasingle-use,portabletabletfacialcleansermadefromonlythreeingredients—starch,clayandsandalwood.
EmaniVeganCosmetics:Thiscompanymakescolorcosmeticsusingonlyveganingredientsandsellsthematmass-marketprices.Itsproductsappealtovegansandvegetarianswhowanttoextendtheirlifestylebeyonddiet.Emani’sproductsarecurrentlyavailablethroughitsdirect-to-consumerwebsite,onAmazonandatTarget.
15) BeautyServicesCanChangetheBrick-and-MortarExperienceWhentouringtheshowfloor,wenoticedthattheareafocusedonbeautyservicesgeneratedmuchinterestamongothershowattendees.Theareafeaturedabarbershopaswellasvendorswhoprovidedeyelashextensions,makeupapplication,women’shairstylingandbraiding,nailartandskincare.Forretailerslookingtoenhancethein-storeexperienceandcombatweaktraffic,beautyservicescouldprovideareasonforconsumerstovisitstores.Suchbeautyservicessupportourviewthatstorescanserveasamoregeneralplatform,providingone-stopshoppingandaddedconvenience.Thesekindsofservicescanalsogiveretailersaccesstonewcustomergroupsthattraditionallyhavenotvisitedtheirstores.UltaBeauty,forexample,hasseensuccessthroughthiskindofinitiativebyaddinghairsalonsinitsretaillocations.
BonusTrend:Big-BoxRetailersAreActivelyEngagedwithIndieBeautyBrandsBig-boxretailersareactivelyadaptingtotheworldofindiebeautybrandsbybuildingstand-alone,brandedonlinechannelstoofferindiebeautyproducts.Insomecases,theyaredoingsoattheexpenseofbuildingtheirownbeautybrandsandtheirbig-boxretaileridentities.Forexample,TargetownsandmerchandisesDermStore,anindiebrandstartedbydermatologiststhatwasoriginallyitsown,separatesite.
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comShoshanaPollackSeniorAnalyst
JingWangResearchAssociate
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