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Reimagining Retail: The Future of Beauty Experiences

 

Following our first piece Reimagining Retail: The Future of In Store Experiences, where we identified how retailers will have to reimagine in-store experiences to survive in the post-COVID-19 world, Holition's UX & Strategy team have conducted industry research to tackle the emerging technology trends that are shaping the future of beauty retail and how brands, retailers, and business leaders can adapt to this post-pandemic new normal. 

 

Here is the second article of our new series of articles, exploring the future of Beauty Retail.

 

 

1. Introduction: Overview of beauty industry trends and customer behaviour

 

Representing a worth of more than $420 billion in 2018, the beauty industry is booming and forecasts continued growth over the next few years to reach $716.3 billion by 2025


With the plethora of information available online, today’s consumers are more knowledgeable about products, brands, trends and their needs. However, this increasing amount of available information and products can also lead to choice paralysis and, therefore, customers will need personalised information and tailored product recommendations to make the right choice. 

With Generation Z consumers coming into purchase power, consumer behaviours are changing even more significantly. According to this study, today’s consumers prefer a highly-personalised in-store experience, with numerous touchpoints prior to purchase. As reported by IBM, 67% of Generation Z shoppers prefer shopping in store than online. They appreciate trying products before buying them, they value transparency, as well as well-informed in-store sales assistants. 


This complex and multichannel consumer journey emphasises the importance of integrating an omnichannel strategy, which will be necessary to seamlessly transfer content and actions generated by consumers from one platform to another, especially since many brands are developing their online presence due to the closure of stores following the emergence of COVID-19 crisis. Tech-savvy consumers and millennials will also be looking for more immersive experiences combining both beauty and technology, hence, Augmented Reality or Artificial Intelligence will increasingly be considered by retailers to enhance the customer experience. 


Moreover, with the outbreak of COVID-19, adaptation to the new norm will be a prerequisite for retailers to survive. New trends have emerged such as physical distancing or the accelerated adoption of e-commerce, which will massively impact the beauty retail sector as physical retail used to be the main touchpoint in the purchase journey. Brands will be forced to adapt and innovate to offer more engaging and personalised experiences and products, while keeping physical distancing measures in place. 


From technologies and phygital to online retail and direct-to-consumer approach, this article explores and reimagines the new trends that are shaping the future of beauty retail. 

 

 

 

2. Augmented Reality, Artificial Intelligence and the Phygital experience: what awaits us in the future of beauty retail

 

Augmented Reality

 

Among the new technologies that will support the future of beauty retail, Augmented Reality (AR) is emerging as one of the most valuable and promising for brands and consumers alike. Within the beauty sector, Augmented Reality technology can be applied to power virtual try-on experiences, which entail digital overlays on physical or material objects. In seconds, virtual try-on allows users to virtually test different makeup looks effortlessly, a process that required time, effort and sometimes experience too. For instance, Rimmel collaborated with Holition to develop a brand new experience supported by augmented reality and virtual try on, which enabled users to snap a photo of any face and steal that look to virtually try on (with Rimmel products) and purchase.

screenshot 2020 06 26 at 13 48 58

screenshot 2020 06 26 at 13 48 58

Rimmel | Steal The Look Diagnostic Tool & Image Analysis

Mobile applications are not the only use cases of AR and virtual try on. Indeed, these technologies can be integrated into e-commerce websites, allowing consumers to virtually try on products from the website. With its rapid deployment web application, Holition Beauty offers a unique and revolutionary solution that can be integrated on any website, combining both personalised product recommendations based on skin tone and face shape analysis and allows users to try products on within the same experience, thus solving pain points surrounding the lack of try-before-you-buy possibilities and choice paralysis.

 

Another application of virtual try-ons includes in-store magic mirrors, which can enhance the experiential beauty retail journey. These augmented reality magic mirrors enable users to virtually try on different makeup looks in-store, without having to actually apply and remove makeup between each look. Although these mirrors already exist, they will continue to be improved with ever more features and connectivity. Not only will they improve the customer experience, but they will also bring new solutions to overcome the emerging hygiene concerns, avoiding contact between products and potentially sick customers. For instance, the Charlotte’s Magic Mirror developed for Charlotte Tilbury enables users to instantly try on 10 of Charlotte Tilbury’s famous makeup looks virtually. This mirror is also equipped with a selfie and share function, plus an algorithmic recommendation tool to help users find the perfect look.

charlottes magic mirror holition

charlottes magic mirror holition

Charlotte Tilbury | Charlotte's Magic Mirror

According to our study on the use of in-store magic mirrors, these mirrors are perceived to create an enchanting, playful and convenient experience for customers, leading to high purchase and reuse intentions. This study highlights that, according to users, Augmented Reality adds a playful and fun dimension to the customer experience, which is particularly appreciated by users who feel amazed when first using the virtual try-on. Also, because the makeup is virtual, users like to play with the virtual try-on and experiment with colours and looks to a much larger extent than with physical products. This technology will therefore play a major role in solving choice paralysis and the lack of try-before-you-buy incentives. The increasingly demanding consumers will also be able to enjoy a playful and innovative experience meeting their expectations.

 

Accelerated by the emergence of Covid-19 pandemic, a touch-free approach will gradually be considered for magic mirrors. Thanks to voice-operated systems or gesture technology, touchless magic mirrors will transform the way we shop by offering a more hygienic and innovative customer experience by eliminating absolutely all contact between shoppers and products, thus avoiding any risk of contamination.

 

Hence, these technologies have countless benefits, such as helping to save time, enhancing customer experience, boosting conversion rate, and also solving consumer pain points surrounding choice paralysis, the lack of try-before-you-buy incentives and hygiene concerns. In a post-COVID19 world, hygiene concerns will be more present than ever and beauty retailers will be forced to adapt to the new norm by offering more hygienic solutions.

 

 


Artificial Intelligence

 

Artificial intelligence (AI) is a technology that will be more present in the future of beauty retail. By 2022, the global spending for AI in retail should reach $7.3 billion, and the beauty industry will also be affected by this growth.

 

In an industry offering an endless choice of products and brands, customers may have difficulty making the right choice. According to Harvard professor Clayton Christiansen, approximately 30,000 new consumer packaged goods are introduced into the market every year, thus creating a “paradox of choice” for consumers. Considering that these consumers are also more demanding and sensitive to personalisation, retailers must find solutions to simplify, personalise and optimise the customer journey and AI will be one of them.

 

Several tools powered by AI will be implemented to a greater extent, such as personalised recommendations tools used to suggest suitable products thanks to skin diagnostic tools or questionnaires. These tools will be precious resources for retailers to satisfy the increasing demand for personalisation and innovation, and to solve choice paralysis thanks to the tailored recommendations. In a world where 69% of consumers feel they are not treated like full-fledged people but more like mere numbers, and 56% feel that companies they buy from don’t know or understand who they are, AI solutions could make opinions evolve thanks to these tailored experiences. The Fragrance Bar developed by Holition for the beauty retailer Faces illustrates how AI can offer more personalised experiences and products by helping customers match to their desired perfume using unique algorithms and product tagging based on emotion and behaviour, yielding not only accurate but hyper-personalised results.

faces fragrance bar

faces fragrance bar

Faces | Store of the Future - Fragrance Bar

AI can also be applied in virtual try-on experiences, adding a new layer of beauty diagnostics capabilities, thus providing relevant makeup recommendations and highly-personalised beauty experiences such as in the Max Factor’s My Makeup Artist application, which scans over a hundred points in a users’ face to give accurate and hyper-personalised product recommendations.

facial diagnostics holition ar maxfactor

facial diagnostics holition ar maxfactor

As a cross-platform virtual try-on and diagnostics tool, Holition Beauty offers innovative solutions powered by AR, AI and machine-learning algorithms that can help brands to adapt to the future of beauty retail by solving choice paralysis thanks to virtual try-on capabilities and by satisfying the increasing demand for personalisation thanks to the tailored recommendations.

 

On top of that, voice-based artificial intelligence will bring new perspectives to the beauty retail industry as well, enabling new touchless experiences that will help to adapt to the new hygiene concerns. AI will also be integrated into products such as the Foreo Luna AI-powered facial cleansing brush, that analyses skin and provides tailored massages.

 

On one hand, Artificial Intelligence will support the emerging personalisation trend and enable users to enjoy tailored recommendations and experiences that will specifically meet their needs. On the other hand, AI will enable retailers to overcome the new challenges raised by the emergence of COVID-19. As a result, the customer journey and decision making process will be simplified and safer, and customer satisfaction and brand loyalty will be increased.

 

As we look to the future of retail, we foresee many other use cases of AI. Indeed, this technology will be used in performance marketing measurement platforms to simplify campaign measurement. On top of that, AI will be integrated in demand forecasting and supply chain tools to enrich customer data and therefore understand the needs and anticipate the demand. AI will also help to collect in-store data thanks to beacons and sensors, which will enable retailers to anticipate needs and preferences, and offer a personalised journey. For instance, Sephora is currently using beacon technology to send tailored ads to customers and to track their movements in the store.
Eventually, we will see an increase in the use of chatbots powered by AI, that will answer questions, guide visitors and recommend products based on the consumers’ characteristics. The beauty brand Younique has already implemented an AI-powered chat tool within its Beauty Guide experience, thus allowing users to benefit from tailored recommendations based on the conversation between the user and the chatbot.
Thanks to these cutting-edge technologies, retailers will be able to anticipate needs and personalise recommendations for the new generation of increasingly demanding consumers.

 

 

 

Phygital

 

Phygital will be used to connect both online and offline worlds to offer a complete and cutting-edge experience by taking advantage of the best of both worlds. Although customers are asking for an increasingly connected experience, they still value physical and emotional interactions. In one of our studies, 72% of consumers surveyed said they want an in-store beauty experience to be a mixture of both physical and digital elements in order to make it feel more real and believable. Therefore, this is where the phygital experience comes in. These phygital experiences, that are particularly appreciated by Millennials and Generation Z consumers, will mix digital and its advantages, namely immersion, innovation, speed, or entertainment, with the physical world that allows customers to physically interact with people and products.

 

Phygital experiences can be implemented thanks to several tools, among which we will find Augmented Reality and Smart Mirrors. The Bourjois’ World's First Blended Reality Magic Mirror illustrates how these technologies can be leveraged to offer an outstanding phygital experience. Indeed, this experience connects AR makeup try-on to physical products: when a shopper picks up a physical lipstick, the chosen lipstick color virtually appears on its lips, thus allowing a more immersive and innovative experience.

bourjois 1b

bourjois 1b

Bourjois | World's First Blended Reality Magic Mirror

To create phygital experiences connecting online and offline worlds, applications allowing users to scan physical products through their smartphone camera to easily collect information on the scanned product will also continue to be developed, thus introducing a more phygital approach in the customer journey.

 

Another example inspired by the beauty retailer Faces is the ‘Test Bar’. This revolutionary concept is a phygital ‘test and play’ approach to a connected shelf, empowering customers to creatively learn about ingredients, customer reviews and packaging information for products they interact with.

screenshot 2020 06 26 at 14 30 28

screenshot 2020 06 26 at 14 30 28

Faces | Store of the Future - Test Bar

3. Online beauty retail channels and Direct-To-Consumer approach: new considerations that are shaping the future of retail


So far, as customers prefer to try products before buying to ensure the suitability of the product, the majority of purchases were made in physical stores rather than online.
But nowadays, trends are evolving. Accelerated by the outbreak of the Covid-19 crisis, E-commerce websites are gaining momentum and this change will impact the future of Beauty Retail, with much more brands willing to develop their online presence. To support this change and enable users to find suitable products even without physically trying them, brands will leverage new tools such as web applications, which are providing virtual try-on features powered by AR and AI to ensure an optimised customer experience and satisfaction.

 

Moreover, new beauty retail channels are gaining popularity, such as for instance Instagram. Unimaginable a few years ago, the social media platform is now aiming to integrate a real e-commerce functionality in its platform through, for example, in-app purchases, augmented reality try-on or in-app notifications for product launches.
Other social platforms are also taking advantage of the AR technology to power virtual try-on, such as Pinterest that allows users to virtually try on different lipsticks shades directly through their Pinterest camera, or Youtube that has also implemented an AR beauty try-on enabling users to virtually try makeup on through the platform while watching a makeup tutorial video, thus increasing the engagement rate.

 

On top of that, traditional retail stores are becoming more strategic and are improving their customer experience, while some brands are also developing a direct-to-consumer (DTC) approach supported by the opening of new DTC stores and a stronger digital presence.


Eventually, connecting online channels to physical stores thanks to an omnichannel strategy will be an essential consideration, thus enabling the transfer of content and actions generated by customers from a platform to another, and, therefore, a more seamless customer journey.

 

Concluding Thoughts


With the new concerns related to the post Covid-19 world and the new generation of increasingly demanding and knowledgeable customers, beauty retailers will need to innovate in order to offer a seamless and exclusive customer experience. In the beauty retail industry, a new landscape is emerging supported by new trends and innovations.


Technology will have an important role in the future of beauty retail, especially with Augmented Reality and Artificial Intelligence technologies. Simplifying the decision making process, improving satisfaction, enhancing customer experience, boosting conversion rate, and solving hygiene concerns, these benefits will convince more and more beauty retailers to integrate these technologies in their customer experience and strategy. The focus will also be on beauty personalisation, phygital experiences, and, eventually, online beauty retail channels, Direct-To-Consumer approaches and omnichannel strategies.

 

Let Holition Beauty help you reimagine your brand's virtual cosmetics and digital retail experience. Contact us for more details.

Staying on the Pulse of the Future of Retail

This is Part 2 of a new series of articles authored by our UX & Strategy Team, which tackles emerging technology trends that are shaping the future of retail and strategic recommendations on how brands, retailers, and business leaders can adapt to this post-pandemic new normal. 

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