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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
D E B O R A H W EI N S W I G
M a n a g i n g D i r e c t o r , F u n g G l o b a l R e t a i l & T e c h n o l o g y d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m
U S : 6 4 6 . 8 3 9 . 7 0 1 7 H K : 8 5 2 . 6 1 1 9 . 1 7 7 9
C H N : 8 6 . 1 8 6 . 1 4 2 0 . 3 0 1 6
• This is the second report in ourMillennials Series. In thisreport, we explore how millennials are reshaping thebeautysector.
• Currently,millennials in theUS and theUK spend less onbeauty than older generations do, largely because theyhavelowerincomes.
• Amajorityofmillennialsprefertobuybeautyproductsin-store, and they expect to have the same experience in-storeastheydoonline.Thegenerationismorelikelythanoldergenerations to research beauty products online andtheyusesocialmediamoreactivelyaspartoftheshoppingexperience.
• As the “selfiegeneration,”millennialshavemademakeupthe fastest-growing cosmetics categoryglobally, accordingto L’Oréal. In the coming years, millennials will be morelikely than older generations to buy all-natural beautyproducts.
• Price is a keypurchase driver formillennials shopping forbeauty products, and they are more likely than oldershoppers to bothvisitdifferent stores in order to get thebest deals and use coupon codes when buying beautyproducts.
THE MILLENNIALS
SERIES: M i l l e n n i a l s a n d
B e a u t y
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
THE MILLENNIALS SERIES: M i l l e n n i a l s a n d B e a u t y Millennials are typically defined as those born between 1980 and 2000.Given the generation’s 20-year age span, millennials make up a sizeablechunkofthepopulation.FungGlobalRetail&Technologyestimatesthat, in2014,millennials represented27%of the total population in the combinedUS andmajor Europeanmarkets,making the group the second-largest agesegmentinthesemarkets,afterGenerationX.
Figure1.GenerationsasPercentofTotalPopulationintheUSandMainEuropeanMarkets,*2014
GenerationZerswerebornin2001orlater,millennialsbetween1980and2000;GenerationXersbetween1960and1979andbabyboomersbetween1946and1959.*ThemainEuropeanmarketsrefertotheaggregatepopulationinGermany,France,Italy,SpainandtheUK.Source:Eurostat/USCensusBureau/FungGlobalRetail&Technology
Becausemillennialsrangeinagefrom16to36,theyconstituteaconsumersegment that isofgrowingvalue inmostmarkets.Whilemanymillennialshavelessmoneyandfinancialsecuritythanoldergenerationsdo,theyaretypicallyinahigh-growthphaseintermsoftheirearnings.Millennialsareinalifestagewheretheyare,orsoonwillbe,developingtheircareers,movingup the professional ladder and settling down into double-incomehouseholds.So,yearoveryear,theirspendingpowerwillbeincreasing.
Thisdemographicissignificantnotonlyduetoitssizeandgrowingspendingpower,butalsobecauseitsconsumerdemandstendtodiffernotablyfromthoseofpreviousgenerations.Whilesuchalargegroupisinevitablydiverseandcomplex,thereareneverthelesssomeidentifiablemillennialtrends:
• They are highly adept at using technology and are very active socialmediausers.
• Theytendtobemoresociallyconsciousthanolderagegroups,andareinfluenced by product offerings marketed as ethical, sustainable orenvironmentallyfriendly.
Manymillennialsareatthestageoflifewheretheirincomeisrampingupandtheirspendingisaccelerating.
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GeneragonZ Millennials GeneragonX BabyBoomers
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
• Theyaremorelikelythanolderagegroupstofocusonhealthandwell-beinginareassuchasfoodandphysicalactivity.
• Theyaremoreconcernedwithvalueandbargainhunting, inpartoutofnecessity,astheireconomicopportunitieshavedecreased.
• There is evidence thatmillennials aremore interested in spendingonexperiencesthanonpossessions.
• Similarly,thereareindicationsthatsomemillennialsareshiftingtowardrenting instead of owning belongings, from cars to clothes, althoughthismaybeinfluencedbythegroup’srelativeeconomicinsecurity.
• Because they are often pressed for time, millennials are likely to belookingforconvenience,especiallywhenshopping.
These preferences and behaviors are substantially affecting product andservicemarketsworldwide,notleastbecausemillennials’spendingpowerisincreasing. Major brands and retailers need to adapt to cater to thedemandsofthisincreasinglyvaluableconsumersegment.
At the same time, established brands and retailers are likely to facecompetitionfromnewercompaniesthattargetmillennials’demandsmoresharply.FromASOStoZipcar,nimbler,tech-enabledyoungercompaniesareoftenfocusedonservingthisgroup,whichmeansthattheycanchipawayatlegacybrands’currentandfuturecustomerbases.
Source:Onwardstate
The first report in ourMillennials Series covered the grocery category. Inthissecondreport,weturntobeauty. MILLENNIALS AND BEAUTY
• This is the second report in ourMillennials Series. In this report, weexplorehowmillennialsarereshapingthebeautysector.
• Currently,millennials in theUSandtheUKspend lessonbeauty thanoldergenerationsdo,largelybecausetheyhavelowerincomes.
FromASOStoZipcar,nimbler,tech-enabledyoungercompaniesarefocusingonmillennials,whichmeanstheycanchipawayatlegacybrands’customerbases.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
• Amajority ofmillennials prefer to buy beauty products in-store, andtheyexpecttohavethesameexperiencein-storeastheydoonline.Thegeneration is more likely than older generations to research beautyproductsonlineandtheyusesocialmediamoreactivelyaspartoftheshoppingexperience.
• As the“selfiegeneration,”millennialshavemademakeup the fastest-growing cosmetics category globally, according to L’Oréal. In thecomingyears,millennialswillbemore likelythanoldergenerationstobuyall-naturalbeautyproducts.
• Price is a key purchase driver for millennials shopping for beautyproducts, and they are more likely than older shoppers to both visitdifferent stores in order to get the best deals and use coupon codeswhenbuyingbeautyproducts.
MILLENNIALS AND BEAUTY
In the first report in our Millennials Series, we discussed how thisgeneration, typically defined as those born between 1980 and 2000, ischangingthenatureofgrocery.Inthissecondreportoftheseries,wefocusonthebeautycategory.Muchofthepublisheddataonmillennials’beautyshopping habits focuses on the US. However, we incorporate notableregional and global data where appropriate. The main emphasis of thisreport is on the retailing of beauty products, but we cover millennials’impact on the beauty industry as a whole, too. Specifically, this reportexamines:
• Millennials’ growing importance to the global beauty market:Globally, the beauty product market has the potential to double invalue in the coming 10–15 years, a period during which millennials’spendingpowerwillincrease.
• Millennials’ cross-channel approach to beauty shopping: Themillennialgenerationexpectstohavethesameshoppingexperienceindifferentsaleschannelsandisdrivingtheconvergenceofnewchannelsofcommunication,commerceandservice.
• Changing beauty trends: Millennials’ beauty perceptions differ fromthose of older generations—younger shoppers prefer living in themomentandnotworryingaboutthefuture,andtheyaremorelikelytobuyall-naturalcosmeticsthanoldergenerationsare.
GLOBALBEAUTYPRODUCTSALESGROWINGSTRONGLY
First, we offer some context on the scale of the global beauty market.Despite being a huge, mature category, beauty is still showing stronggrowth. According to L’Oréal, the global cosmetics market increased invalueby3.9% in2015,atconstantexchangerates.Thiswasupfrom3.6%growthin2014.BasedonL’Oréal’sestimatedvalueoftheglobalmarketatwholesale prices,we estimate that category sales reached $375 billion atretailpricesin2015.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
Figure2.EstimatedGlobalCosmeticsMarketSize(USDBil.,atConstantExchangeRates)
Marketsizeatretailsellingprices.Consistsofskincare,haircare,makeup,fragrancesandhygieneproducts.Excludessoaps,oralhygiene,razorsandblades.Source:L’Oréal/FungGlobalRetail&Technology
MILLENNIALSSPENDLESSTHANOTHERAGEGROUPSONBEAUTY
Itwouldbereasonabletoassumethatyoungerconsumersspendthemoston beauty products. But, in fact, data for the US and the UK show thatmillennials tend to spend less than other age groups do, except for theoldestgroup(thoseaged75andover).
USPer-HouseholdSpendingonPersonalCare
Below, we show data from the US Bureau of Labor Statistics’ 2014Consumer Expenditure Survey (latest available), which shows averagehouseholdexpenditureonpersonalcareproductsandservicesbyageofthehead of household. This survey indicates that younger households spendless on personal care products and services than do almost all olderhouseholds.
Figure3.US:AverageAnnualHouseholdExpenditureonPersonalCareProductsandServices,byAgeofHouseholdReferencePerson,2014
Source:USBureauofLaborStatistics/FungGlobalRetail&Technology
$307 $321 $336 $349 $361 $375
2010 2011 2012 2013 2014 2015
$307
$533
$741$793
$674$692
$499
Under25 25-34 35-44 45-54 55-64 65-74 75+
YoungerhouseholdsintheUSspendlessonpersonalcareproductsandservicesthandoalmostallolderhouseholds.
Weestimatethatbeautycategorysalesreached$375billionatretailpricesin2015.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
It isworth noting that relatively few households are headed by someoneyoungerthan25,asmanyveryyoungadultsarelikelytoliveinhouseholdsheadedbyaparent.Thegeneraltrendisneverthelessindicative.
Theaverageannualexpenditurefiguresabovedonotmakeanydistinctionbygender,butwomengenerallyspendmoreonbeautyandpersonalcareproducts thanmen do. AccordingNielsen, in 2014,women accounted for81%ofthedollarsspentonbrandedhaircareintheUS,andwomen’sshareofcategorysalesinmanybeautycategorieswasbetween79%and90%.
UKPer-PersonSpendingonBeauty
Thepatternofmillennialsspendinglessthanotheragegroupsisalsoborneout by data from the UK. According to British online beauty retailerEscentual, in2015,Britishwomenages19–24spent£1,759 (US$2,689)onbeauty products, on average, and women ages 25–34 spent £2,045(US$3,126)onaverage.Bothgroupsspentless,onaverage,thandidotheragegroups.Womenages45–54spentthemostonbeautyproducts,£2,238(US$3,421).
In total, women ages 19–34 (which broadly matches our definition ofmillennials) accounted for 32.9% of total UK beauty spending by womenages 19–64. Escentual’s figures exclude women under the age of 19 andovertheageof64,sothespendingbyagegroupdoesnotreflecttheactualshare of spending of the total population. However, we estimate thatmillennials accounted forapproximatelyone-thirdofbeautyproduct salesintheUKin2015.
Figure4.UKFemaleConsumers,byAgeGroup:AverageAnnualBeautyProductExpenditure(GBP,LeftAxis)andasShareofTotalSpending(%,RightAxis),2015
Source:Escentual/OfficeforNationalStatistics/FungGlobalRetail&Technology
WhyDoMillennialsUnderspendonBeauty?
One reason millennials tend to underspend other age groups is becauseyounger consumers tend to earn less. Millennials are at the stage of lifeduringwhichtheirincomeisgrowingatthefastestratetheywillexperienceintheir lifetime.Averagegross lifetimeincomepeaksbetweentheagesof55 and 59, according to Euromonitor International. Yet,whilemillennials’incomemaynotbeashighasof thatofoldergenerations, itwillclimbastheymoveuptheprofessionalladder.
£1,759
£2,045£2,183 £2,238
£2,190
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19—24 25—34 35—44 45—54 55—64
Weestimatethatmillennialsaccountedforapproximatelyone-thirdofbeautyproductsalesintheUKin2015.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
Currently,millennials underindex on retail spending (in all categories, notjustinbeauty)relativetotheirshareofpopulation,accordingtodatafromAccenture and the US Census Bureau. However, by 2020, they willoverindexonretailspendingandaccountfor30%oftotalretailsalesintheUS, according to Accenture, while accounting for just 27.2% of thepopulation.
Figure5.USMillennials:ShareofTotalRetailExpenditureandShareofPopulation,2013and2020E(%)
Source:Accenture/USCensusBureau/FungGlobalRetail&Technology
Millennials’ share of total beauty sales may not be as high as oldergenerations’ indollarterms,buttheyaremore likelytobuymoreunitsofbeauty products. According to research onUSwomen’s cosmetics buyingbehavior from Tabs Analytics, in November 2015, consumers ages 18–34accounted for 47% of all heavy buyers. The survey looked at 19 types ofcosmeticproducts,andclassifiedheavybuyersasthosewhopurchased10ormoretypes.
Figure6.US:ShareofWomenWhoAreHeavyBuyersofCosmetics,byAgeGroup,November2015(%)
Source:TabsAnalytics
Millennials’ importance to the beauty industry is driven in large part bytheir spending potential. As they enter their peak earning years, their
13.5%
30.0%28.8% 27.2%
2013 2020E
Millennials’ShareofTotalUSRetailExpenditure
Millennials’ShareofUSPopulagon
44%40%
31%
23%
16%19%
18—24 25—34 35—44 45—54 55—64 65—74
Millennialsareatthestageoflifeduringwhichtheirincomeisgrowingfast.By2020,theywilloverindexonretailspendingintheUS.
Millennialsaremorelikelytobuymoreunitsofbeautyproducts,comparedtooldergenerations.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
spendingonthecategoryisexpectedtoaccelerate.And,intheyearahead,justasmillennialsareforecasttooverindexonretailcategoriesintotal,so,too,aretheyexpectedtooverindexonbeauty.
PRICEISAPURCHASEDRIVERFORMILLENNIALS
Millennials are more likely to stick to a tighter budget than are oldergenerations.Accordingtoa2015surveyofAmericanwomenbymediaandmarketingcompanyMeredith,60%ofmillennialspolledsaidthatpriceisapurchase driverwhen buying beauty products, compared to 38% of babyboomers.
A US survey by Coupons.com similarly showed that millennials are muchmore likely thanGen Xers and baby boomers to take a frugal attitude tobeauty shopping. For instance, some 39% of US millennials say they usecouponcodeswhenbuyingbeautyandpersonal careproducts, comparedto26%ofGenXersand15%ofbabyboomers.
Figure7.US:BeautyandPersonalCareShoppingBehavior,byAgeGroup,July2015(%)
Source:Coupons.com
In order to redeem coupons and make their relationship with a retailermorepersonal,millennialsarewillingtoshareprivateinformation,whereasoldergenerationsaremoreprotectiveoftheirpersonalinformation.Mintelreports that 60% of millennials are willing to provide details about theirhabitsandpreferencestomarketerssothemarketerscanunderstandtheircustomersbetter.
MILLENNIALS’CROSS-CHANNELAPPROACHTOBEAUTYSHOPPING
ShoppingBehaviors:MillennialsVersusOlderGenerations
Millennials generally like to use technology when making purchasedecisions, and they actively take a cross-channel approach to beautyshopping. Survey data show that millennials are much more likely thanolderagegroupstoresearchtheirpurchases,usetechnologytohelpthemmake shopping decisions and use social media as part of the purchaseprocess. At the same time, a majority of shoppers of all generations saytheyprefershoppinginstorestoshoppingonline.
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UseCouponCodesinCategoryforaMajorityofShoppingOccasions
GotoaStoreThatIWouldn'tNormallyGotoforaDeal
UseCouponsinCategoryforaMajorityofShoppingOccasions
CheckMyBudgettoSeeHowMuchICanSpend
Millennials GenXers BabyBoomers
Millennialsaremorelikelytosticktoatighterbudgetthanareoldergenerations.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
Figure8.US:BeautyandPersonalCareShoppingBehavior,byAgeGroup,July2015(%)
Source:Coupons.com
ShoppingBehaviors:BeautyVersusOtherCategories
Another way to view this data is to compare millennials’ behavior whenshopping for beauty products to their behavior when shopping for otheritems.Theseconsumersaremorelikelytoresearchpurchasesinthebeautycategory than in the other categories shown in the graph below—but onmeasures of digital adoption, such as use of technology or social media,beautylagsapparel.
This could be because more apparel brands than beauty brands have astrong socialmedia presence. According to a 2015 study by Yes LifecycleMarketing,98%ofapparelbrandsintheUShadapresenceontwoormoresocialmediachannels,while91%ofbeautybrandsdid.
Figure9.US:Millennials’ShoppingBehavior,byCategory,July2015(%)
Source:Coupons.com
10%
37%
25%
42%
78%
20%
51%
44%
52%
66%
32%
53%
57%
63%
73%
IOqenUseSocialMediaasPartofMyShoppingExperience
IComparePricesoftheSameItemsatDifferentRetailersOnline/onaMobileDevice
IAlwaysUseTechnologytoHelpMeMakeShoppingDecisions
IAlwaysSpendTimeResearchingMyPurchases
IPreferShoppinginaPhysicalStore
Millennials GenXers BabyBoomers
31%
51%
49%
50%
81%
39%
58%
61%
57%
64%
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IOqenUseSocialMediaasPartofMyShoppingExperience
IComparePricesoftheSameItemsatDifferentRetailersOnline/onaMobileDevice
IAlwaysUseTechnologytoHelpMeMakeShoppingDecisions
IAlwaysSpendTimeResearchingMyPurchases
IPreferShoppinginaPhysicalStore
Beauty&PersonalCare HouseholdGoods Apparel Grocery
Consumersaremorelikelytoresearchpurchasesinthebeautycategorythaninothercategories.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
CHANGINGBEAUTYTRENDS
According to L’Oréal, in 2015,makeupwas the fastest-growing cosmeticscategory globally for the third year running. The growth was largelyinfluenced by millennials’ interest in taking selfies and sharing them onsocialmedia.
The NPDGroup notes that the growing trend of focusing on living in themoment comes at the cost of anti-aging skincare. The segment was thefastest-growingcosmeticscategoryinthelastdecade,butitssalesgrowthisslowingdown.
As discussed in our reportMillennials and Grocery, millennials are healthconsciousandoftenpreferbuyingorganicandnaturalproductswhentheyareavailable. Thisdemand fornatural products is also seen in thebeautycategory.According toa2015 surveybynatural skincarebrandKariGran,women ages 18–34 are the most active buyers of all-natural beautyproducts overall. Makeup was the only category in which the 35–44 agegroupshowedhigherinterestinbuyingall-naturalproductsthanmillennialsdid.
Figure10.US:ShareofWomen,byAgeGroup,WhoSayTheyWillOnlyBuyAll-NaturalBeautyProducts,byCategory,June2015(%)
Onlinesurveyof1,104Americanwomenages18+.Source:KariGran/HarrisPoll
Kari Gran’s survey also highlighted thatmillennial women aremore likelythanolderwomentopurchasemoreall-naturalbeautyproductsinthenexttwo years. Half of thewomen ages 18–34whowere surveyed said theyintendtobuyall-naturalproductsinthecomingyears,ahighersharethaninotheragegroups:
• Ages35–44:44%
• Ages45–54:31%
• Ages55–64:34%
• Ages65+:30%
32%
28%
15% 15%
12%
30%
18%17%
9%10%
17%
13%14%
8% 9%
15%
9%7%
6%4%
19%
10%12%
8%
2%
Skincare Haircare Makeup Fragrance Nailcare
18–34 35–44 45–54 55–64 65+
Millennialsarehealthconsciousandoftenpreferbuyingorganicandnaturalproductswhentheyareavailable.
Thegrowingtrendoffocusingonlivinginthemomentcomesatthecostofanti-agingskincare.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
AccordingtoL’Oréal,millennialsvaluesimplicity,andtheylookataginginadifferentwaythanolderconsumersdo.Perceptionsofbeautyarechanging,andyoungergenerationsmaynotbeasconcernedaboutsignsofagingontheirskinasprecedinggenerationshavebeen.
BEAUTYCOMPANIESANDMILLENNIALS
Some of the largest beauty retailers and brands have identified how theindustryisbeingimpactedbymillennialsand,tosuccessfullyremaininthegame,theyareinvestinginsatisfyingtheneedsofthisagegroup.
L’Oréal is the world’s largest beauty company, and its brands includeLancôme, Maybelline New York, NYX Professional MakeUp and UrbanDecay.NYXProfessionalMakeUp,withits100%-digitalcommunications,hasbeenoneofthebest-performingbrandsinthemarketplace,with78%year-over-yeargrowth in2015.Thecompanysays it isoneofthemostpopularcosmeticsbrandsintheUSamong15–24-year-olds.
On L’Oréal’s Makeup Genius, a free virtual makeup app that uses facerecognition technology,userscanvirtually tryonL’Oréal’scosmeticsusingtheirsmartdevices.Thecompanysaysthattheapphasbeendownloadedmorethan15milliontimesin62countriessinceitwaslaunchedin2014.
Source:L’Oréal
According to an August 2015 study on brand engagement by researchcompany Brand Keys, 94.5% of US 18–34-year-olds found LVMH-ownedcosmetics retailer Sephora to be engaging well with millennials. Sephorawasthehighest-rankedbeautybrand/retailerinthestudy.
To keep up with fast-changing retail and e-commerce trends, the beautyretailer opened its first digital store in Paris in October 2015. The storebrings online-style information and experiences into physical retail. It isfilledwith technology, suchasNFC-taggedperfume testers, touch screensandselfiemirrors.
In2015,makeupwasthefastest-growingcosmeticscategoryglobally.Thegrowthwaslargelyinfluencedbymillennials’interestintakingselfiesandsharingthemonsocialmedia.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
Online,userscanexchangebeautytipsinSephora’sBeautytalkpeer-to-peeronline community. Lithium Technologies, the company that provided thesoftwareforBeautytalk,saysthatmembersofthecommunityspendtwiceasmuchonSephoraproductsastheaveragecustomerdoes,andso-calledsuperfansspendupto10timesmorethantheaveragecustomer.
Source:LVMH
AmericanbeautycompanyEstéeLauder,whichisthefourth-largestbeautycompany in the world, says millennials are one of the largest and mostsignificant forces transforming the beauty industry. Estée Lauder’s brandsinclude Clinique, MAC and Origins. The 70-year-old beauty company haspartneredwithpopularYouTubevloggerssuchasChriselleLimandmodelssuchasKendallJennertoattractayoungeraudience.
Source:EstéeLauder
UltaBeauty,whichisthelargestspecialtybeautyretailerintheUS,hasseenits net sales grow by double-digits in recent years. E-commerce has beenthe company’s fastest-growing sales channel in the last five quarters, butrepresentslessthan6%oftotalsales.
Ultahasmergedtraditionalretailwithvalue-addedservicesandtechnology.Eachofthecompany’sstoreshasan in-storesalonfeaturinghair,skinandbrowservices.Ulta’siPadandsmartphoneappsletsusersexchangebeautytipsand,iftheysignupfortheUltamateRewardsloyaltyprogram,theycanearnfreegiftsandvouchers.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
Source:BeautyXposé
HOWBEAUTYRETAILERSCANWINWITHMILLENNIALS
Several industry bodies forecast that the beauty sector will continue toflourish in the next decades. Millennials currently spend less than oldershoppersdoonbeautycategories,butastheirpurchasingpowerrises,theywill overindex on retail spending, including, we expect, on beautycategories.As a result, it is increasingly vital for companies andbrands totarget their products and marketing to this demographic in the mediumterm.
Whentargetingbeautyproductstomillennials,itisimportanttorememberseveralthings:theylikedoingresearchonline,butstillprefertobuybeautyproducts in-store; they value experiential retail environments; they likenatural andethical cosmetics; andprice isoftena keypurchasedriver forthemwhenbuyingbeautyproducts.
Sephora and Ulta are good examples of beauty retailers that havesuccessfully attracted millennials by introducing the kinds of value-addedservices,in-storeandonline,thatmillennialsappreciate.
Thebeautyindustrycouldwitnessitsmostsignificanttransformationinthecoming decade, largely influenced by millennials, who will be thedemographicspendingthemostonbeauty.Thegenerationwantsthesamebeauty shopping experience in-store and online, the chance to try anddiscover new products, personalized services, and alternative productoptionsthatmatchtheirlifestyle.
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JULY18,2016
DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comJanneEhoResearchAssistantTomPearceResearchAssistantHONGKONG:10thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223002470LONDON:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NEWYORK:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017FBICGROUP.COM