Beauty Store Business: How has the economy shaped today’s new breed of consumer, and how does she differ from the consumer of the past? WALSH: The shopper is now firmly in control. She has reshaped the entire retail order, and she doesn’t want to return to the way it was before the economy plummeted—to make the same mistakes. The old retail hierarchy was very vertical—retailers at the top wielded all of the power. Shoppers simply followed as they did in feudal times. However, today we live in a flat retail world. By flat, I don’t mean flat sales. It’s more horizontal—the shopper sees everything. Technology enables her to be more informed, and the foundation is a social culture with information coming from family, friends and even strangers who help shoppers make more informed decisions. Today’s shoppers have so many more choices with more stores and channels continually appearing. Since shoppers can now purchase anything, anywhere and at any time, they expect retailers to seamlessly deliver it to them. It’s “retail on demand.”
What has today’s consumer come to expect from her retail experience? Today’s consumer expects everything because she knows that she can. She’s seeking the most value for her dollar, and she wants to learn everything that she can about her purchases so that she can make smart decisions. She wants lots of choices and availability, and she wants a great in-store experience.
Overall, how has the industry evolved, and where do you see it going? The future is already here. Things have fundamentally changed, and it’s not just about the economy. Companies are reinventing themselves and retail is blurring. I refer to it as “The Sephora Effect.” Channels are dead and everything is fluid. Retailers are being forced to evolve their offerings. Also, in an effort to attract new customers, mass retailers are going more upscale. Just take a look at the LOOK Boutique at Walgreens and Duane Reade. Women can get their nails and eyebrows done or their hair styled while they’re picking up prescriptions. At the same time, department stores are working to become more accessible—service guaranteed any way the shopper wants it. The expanded Selfridges in London is breaking down the typical stereotypes and encouraging shoppers to participate rather than look at products behind glass counters. Our “2012 Megatrends” study indicated that women are shopping in more and more places. Online shopping has increased significantly and is now the No. 4 channel shopped in the past three months behind supermarkets, mass
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merchandisers and drugstores. While online retailers have become the No. 4 channel, pure-play online retailers—such as Amazon.com and BeautyBar.com—are facing the need to act on their online limitations. BeautyBar.com opened a retail store to enable shoppers to touch and feel the products. Amazon.com has opened lockers for easy delivery. As we say, follow the shopper and she’ll lead you to the future.
Overall, what changes have impacted the beauty business at chain stores? The biggest factor is probably that the Internet is now the No. 4 channel and growing. In our ongoing “How America Shops” research, we track category interest in online shopping, and we’re seeing more beauty categories moving online. Among beauty, lip care is seeing the greatest boost among categories that shoppers intend to buy online at 49%— up 8 points since 2011. Facial skin care, cosmetics and hair care are all next to climb—with 40% to 60% of shoppers
saying that they are “very/somewhat likely” to switch most purchases of these products online. As Web-based retailers become a real threat in the beauty space, chain stores have been forced to evolve their beauty propositions in order to give shoppers more reasons to visit the store. Duane Reade’s LOOK Boutique more closely resembles a department store than a traditional drug chain. The new space is filled with a mix of mass and niche, as well as exclusive brands and Beauty Advisors. Some stores even offer full-service hair and nail salons. Then, there’s all of the latest technology such as the “Find Your Look” kiosk that enables shoppers to take photos of their face and scan the bar code of any product to virtually try it on. Overall, the beauty industry leads the way in adopting new technology and innovation to enhance the shopper experience. Sephora stands out among any retailer—beauty or other—for its intelligent use of innovation in-store. Tools are available to help shoppers educate
All images courtesy of WSL Strategic Retail
Cynthia Walsh, vice president of consulting services at WSL Strategic Retail
Today’s shopper also expects value. Of course, value is not always about price. Value also takes shape in great service, a unique product offering or an engaging and meaningful shopping experience. With countless places for shoppers to make purchases, it’s become increasingly important to provide more reasons to keep them returning to the store and its brands. Today’s hyper-channel shoppers purchase goods and services from many different places—traditional retailers, Web-based retailers, virtual stores, big boxes and small, and value and luxury, and they feel equally comfortable buying from just about all of them. As they move seamlessly between them all, the delineation between channels fade, and there’s the expectation of receiving the same great shopping experience regardless of channel growth. Today’s shopper expects a retail experience that’s all about her—anytime and anywhere.
themselves, explore new products and receive tailored recommendations. Mobile devices in the hands of sales associates give shoppers an easy, line-free checkout experience. What’s more, Sephora.com creates the same experience on its website, providing discovery, help, advice, samples and a fun shopping experience. Experiences that today’s hyper-channel shoppers have at retail destinations such as Sephora have raised the bar in terms of what consumers expect from beauty across the board.
How has social media impacted the industry? What do you see happening as we move forward? What we found in our latest “From Buzz to Buy Report 3.0” is that despite all of the hype, social media is actually the least persuasive tool for assisting consumers with choosing what to buy—it’s behind manufacturer and retailer websites, TV/ magazine ads and even the forgotten sales associate. The future of shopping, though, is better seen by watching Millennials. For them, their social networks are more important for shopping information. While we saw that only one-quarter of people think to go to their social network to find more information about something they want to buy, that influence grows to 40% among Millennials. The bottom line is that digital and traditional sources of information impact buying decisions and retailers need to present their messages everywhere—on their websites, in emails and on Facebook too. What we need to focus on is the continued importance of friends and family. We like to say that friends are actually the new sales associates. Peer reviews are playing a huge role whether through social media, on retailer sites or even in the store. One-third of people overall have increased their use of peer reviews in the last year. But the importance of peer reviews is that they do influence buying. We see that 7 in 10 people who read reviews feel better informed and are ready to make a buying decision after reading them. Retailers recognize the importance of peers and are increasingly incorporating reviews into their websites and even in the store. Whether it’s Kiehl’s 46 July 2013 | beautystorebusiness.com
in Bloomingdale’s displaying the “Top Reviewed” brands from its website or C&A Brazil, which has a running total of Facebook “Likes” on merchandise hangers in the store, it begs the question: Who owns your brand message?
How has technology impacted the business, and what do you foresee concerning it? Technology is changing everything, and it’s happening very quickly. In-store selfcheckout kiosks and sales associates armed with mobile devices are eliminating the need for traditional checkout lines and the space for “impulse buys.” Tablets and touch screens are everywhere. New technology is giving shoppers easy access to product information, self-assessments for tailored recommendations and links to locate products online, which may not be available in-store. Interestingly, these are all things that shoppers would traditionally rely on the sales associate for, but as more technol-
ogy is deployed in-store, the role of the sales associate is changing. The sales associate’s role will definitely not disappear, but it will certainly evolve. As everyone knows, technology breaks and malfunctions, and it can’t fully take the place of a warm, knowledgeable and helpful interaction with a real person. In fact, we saw in “Buzz to Buy 3.0” that onethird of women look to sales associates for shopping information. That’s actually up 4 percentage points from 2011. The future of beauty retail will be a mix of the old and the new. The ideal balance is being able to offer shoppers service any way they want it—the tools to help educate and inform, and the right staff available to answer questions, assist with technology and to further personalize the entire experience. An ideal example is Sephora’s Fragrance Finder—a large touch screen enables a shopper to take a brief quiz that identifies her personality. Based on the profile, tailored product recommendations
are provided. Then, in enters the friendly, knowledgeable sales associate who talks the shopper through the short recommendation list to assist in further narrowing down the options. Two to three fragrances are then pulled to sample. If the customer is still not ready to commit, the sales associate will provide her with a small sample to take home, try out and buy online or in-store when she’s ready. Technology certainly adds a new layer, but traditional methods won’t go away.
Since price is so important to beauty consumers, what about the use of coupons? Are there any new innovations? Women have an entrenched value mindset today. They’re truly value-obsessed, and it’s not just about the recession. They’re always seeking ways to be a smart shopper, and there are new ways emerging to help them be even more educated. Granted, we see in our ongoing PULSE research that 7 in 10 still regularly use coupons; but 43% look online for discounts before even getting to the store. The return of coupons came in 2010 as part of shoppers’ coping mechanism to deal with the recession. But even today, 4 in 10 shoppers report using more coupons and almost no one—9%—is using fewer. Younger women are most likely to have increased their coupon usage. It’s not just about getting the information before they shop; it’s now while they shop as well. Mobile has become the new shopping buddy. Women use mobile in all sorts of ways in the store—from getting coupons and product information to taking photos and making price comparisons right at the point-of-purchase. Today, 4 in 10 women use their smartphones in-store to shop. We compared that to our “From Buzz to Buy” study in 2011 and saw the number had actually declined 6 percentage points. We couldn’t understand how that happened. Then we saw that 15% now use tablets/e-readers to shop, which explained the decline. It’s pretty clear why Apple introduced the iPad mini. It comes as no surprise that retailers are jumping on the latest technology to take advantage of this new mobile consumer. They’re now targeting shoppers 48 July 2013 | beautystorebusiness.com
with coupons and deals through “geofencing” when they are simply near their stores or even a competitor’s. A great example is Starbucks in London. When customers come within about a halfmile of a Starbucks, they receive a text message with a discount on Starbucks VIA coffee. Another great example is Ruth’s Chris Steak House, which targets customers within 100 feet of competitive establishments during dinner hours with a special offer. It’s targeting on steroids.
Finally, what do you advise beauty brands and retailers do to boost their businesses in the next few years? What are the must-have factors? There are five things beauty retailers must do to get to the future. First, reinforce value in everything they do in every way they do it. That means valueadd, not price. Think of Sally Hansen’s premium-priced Complete Salon Manicure. It’s positioned as a way to save money, since women don’t have to go to a salon. Be everywhere she is. The shopper doesn’t think about channels. She can get her hair done at Duane Reade and buy dinner at Bed Bath & Beyond. She’s in charge and values her time. Next, beauty brands and retailers need to fight against commoditization. They can’t simply open one more of the same store and expect to grow anymore. Even iconic Starbucks has differentiated flagships that look totally different in each country. Fourth, remember to give her more reasons to buy—all day, every day. Quidsi.com didn’t stop after it conquered the diaper category. It learned about its shoppers’ lifestyles and created sister sites to meet her other needs—from Soap.com to BeautyBar.com and Wag.com. Finally, they need to build emotional engagement. Think about Zappos.com. It may seem like it’s about buying shoes, but in the end, it’s about delivering happiness—from free shipping and returns to talking to a customer-service person 365 days a year. That’s what loyalty is all about. Remember that the future is already here—and there’s no going back! ■ Regina Molaro is a freelance journalist based in New York City.