Channel Checks: Digital Beauty Stores
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1 ` Channel Checks: Digital Beauty Stores Deborah Weinswig Managing Director, Fung Global Retail & Technology US: HK: CN: Our Channel Checks reports feature observations from our recent store tours. In this report, we look at new digital store formats in European beauty retailing. 1) Beauty stores are using digitalization to create captivating in-store experiences. The technology in use ranges from interactive mirrors to screens showcasing social media content. 2) The Estée Edit store in London uses a selfie-taking mirror alongside interactive screens and in-store tablets to create a strong digital experience. Other London stores such as Fabled similarly leverage social media and provide digital in-store makeup tutorials. 3) The Sephora Flash store in Paris bridges physical and digital shopping channels with its use of large-screen browsing and buying points, as well as a three-hour click-and-collect service. 1
2 Introduction In the past year, our European team has seen a glut of new beauty specialist store formats that integrate digital technologies to differentiate their experiences and engage customers. In this report, we showcase some examples from our recent store visits in London and Paris. We begin by providing some context on online and offline retail in the beauty category. In Context: The Digitalization of Beauty Stores Beauty e-commerce continues to grow rapidly: Euromonitor International expects UK online beauty and personal care sales to climb by 10.5% this year. Yet, only 12% of UK beauty and personal care sales will be made online this year, indicating the stronghold physical stores still enjoy in the category. Online and offline channels are increasingly blended, however, as smartphone-equipped shoppers browse and buy across channels. This is prompting retailers to create captivating in-store experiences for consumers that combine analog and digital experiences. In late April, for instance, British department store Debenhams announced its strategy shift to become a Destination, Digital and Different retailer that connects with customers more via smartphones and creates a more social shopping experience, including in the beauty category. And online connectivity is about more than just e-commerce. Social media plays a vital role in the beauty industry, especially for millennials and Gen Zers who often look to social media for information when deciding what products or brands to buy. According to a 2016 UK survey by Imogen Matthews Associates, 27% of consumers go on social media or watch online videos to find out about beauty products, whilst 35% of consumers are inspired by how-to makeup guides to find out more about beauty products. See our report, Gen Z and Beauty: The Social Media Symbiosis for more on this topic. In this context, it is not surprising that brands and retailers are starting to leverage social media in-store, from interactive photo booths to screens showcasing content from Instagram. In 2016, the Charlotte Tillbury brand blazed a trail by using augmented reality (AR) magic mirrors in selected UK stores. The mirrors allow customers to try on different makeup looks in seconds, then compare looks side-by-side, and ultimately creates an engaging and realistic experience. Not only does this increase up-selling, but it can boost customer satisfaction and save time for make-up artists. While this is not a new concept in the beauty industry, it was a wake-up call to other retailers to innovate their instore experiences. 2
3 Channel Checks: Digital Beauty Stores The Fung Global Retail & Technology team visited new concept stores in London and Paris. In London, we went to The Estée Edit, Fabled by Marie Claire and finally the new UK flagship store for NYX. In Paris, we visited the Sephora Flash concept store. The Estée Edit The Estée Edit opened on London s Carnaby Street in November The standout feature at The Estée Edit is the selfie-taking mirror which produces two instant photographs one for the customer and one for the selfie wall. Interactive screens display Instagram content, which uses the brand s in-store hashtag, and counters feature tablets with how-to tutorials for customers. A strong digital platform to present beauty tutorials encourages shoppers to experiment with new products and styles. 3
4 The Estée Edit, London Fabled by Marie Claire and NYX NYX uses Instagram content from influencers in its window displays. Fabled by Marie Claire, London Fabled by Marie Claire opened on London s Tottenham Court Road in August NYX opened in the Westfield Stratford City mall in April Like The Estée Edit, Fabled by Marie Claire and NYX integrate tablets throughout their stores to show customers makeup tutorials. Fabled by Marie Claire even has displays showing which brands are best suited for each look. Reflective of the social-media-savvy brand, NYX uses Instagram content from influencers in its window displays. Using its Tag Us marketing tactics, NYX is able to create effective, free content for their brand a popular tactic amongst beauty stores. 4
5 Fabled by Marie Claire, London 5
6 NYX, London 6
7 Sephora Flash Sephora Flash, Paris Sephora Flash opened in October 2015, making it one of the first digital beauty store formats. The small, 140-square meter store features near-field communication (NFC) technology: this enables shoppers to view information about fragrance products on in-store tablets simply by placing NFC-tagged products next to the screen. Shoppers can then add the product to their online basket. The store also includes large selfie mirrors, touch-screens for browsing and buying from the Sephora website, and phone-charging points. The store also boasts an impressive free three-hour click-and-collect service. Sephora Flash, Paris 7
8 Sephora Flash, Paris Find more images from our store tours worldwide on our Facebook page, at facebook.com/fungretailtech. 8
9 Deborah Weinswig, CPA Managing Director Fung Global Retail & Technology New York: Hong Kong: China: John Mercer Senior Analyst Katie Marshall Research Assistant Hong Kong: 8th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: London: Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0) New York: 1359 Broadway, 9th Floor New York, NY Tel: FungGlobalRetailTech.com 9
Channel Checks: UK Apparel Stores Boost Beauty Offerings
Channel Checks: UK Apparel Stores Boost Beauty Offerings Deborah Weinswig Managing Director Fung Global Retail & Technology deborahweinswig@fung1937.com US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016
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