George Henry, Associate Analyst at GlobalData, explains how digital technologies and personalization are meeting individual consumers’ needs in the cosmetics sector

Personalized beauty is the design of products and experiences tailored to meet individual needs and creates a two-way relationship between brands and consumers. Personalization has become a core focus for the beauty industry, as digital lifestyles present consumers with greater options that align with individual needs and preferences. Manufacturers that create bespoke products gain ‘granular’ levels of customer information that most traditional brands would not have access to. This allows companies to gain unique insights from their consumer base and use this data to better optimize their product offering. From self-learning algorithms to data collection for hyper-specificity, personalized beauty has revolutionized the cosmetics industry; and will remain a core consumer trend going forward.

Personalized beauty has emerged to meet the demands of previously neglected consumer segments of the cosmetics market. It has gained momentum in the mass-market as consumers crave products tailored for specific needs; particularly as cosmetics are inherently individualistic. In turn, more brands are striving to reach consumers that have previously not been catered to by generic products produced for the mass-market.

Apps can make use of biometric facial recognition and 3D scanning to deliver granular levels of personalization (Photo © Shutterstock.com / america_stock)

Halal beauty is one instance of personalization that has emerged in response to a specific need for ingredient-conscious Muslim consumers.Other examples include hair care for women with African-Caribbean hair, as well as skincare products for Asian men.

‘Beauty tech’

The Internet has removed many previous inhibitors to traditional brand relationships as consumers are now able to communicate directly with manufacturers through platforms such as social media. Digital technologies are becoming vital to the consumer relationship – indicating the influence beauty technology continues to have. Direct to consumer (D2C) relationships will continue to grow as customers share their personal insights as standard. Such ‘beauty tech’ has led manufacturers to develop product experiences that cater to processes, rather than just the transactional retailing of mass-produced products. Major players are creating their own tech-enabled devices to better the individual steps in personal care routines.

Smart mirrors exemplify the move to digital lifestyles, providing users with updates on personal data and information (Photo © Shutterstock.com / metamorworks).

For example, new technologies, such as genomics, enable unprecedented levels of analysis at a granular level. The integration of these sciences can be used in cosmetics to identify various individual skin needs, including sensitivities and allergies, and other important details that enable brands to optimize individual formulations. DNA-based skincare is another pioneering category of the beauty market, with market entrants already showcasing the potential that a deeper understanding of genetics can have on personalized beauty.

Technology helps manufacturers align with what customers deem to be important. Ethical consumerism includes the reduction of single-use plastic and is one such trend that can be confronted by brand investment in sustainable alternatives. One example is L’Oréal’s investment in biotech start-up, Carbios, which develops plastic recycling technologies. L’Oréal’s commitment to move to 100% recyclable or compostable packaging by 2025 is supported by the influence these new sciences have on beauty products of the future.

Emerging technologies such as Artificial Intelligence (AI), Augmented Reality (AR), and data analysis, empower brands to create ultra-personalized personal care solutions direct to consumers. L’Oréal Perso was unveiled in January 2020 as an AI-powered device that creates personalized skincare, foundation, and lip make-up on-demand. This is supported by omnichannel integration with its Modiface AR app and social media.

L’Oréal’s Perso can also analyze trending images online to help users mix and match the lipstick colours of their favourite influencers. AI’s ability to personalize formulas enables consumers to broaden their access and try out new trends at their convenience. Its functionality, therefore, resonates with the 23% of global consumers that somewhat/completely agree that “beauty/grooming products in unusual colours appeal to me” as reported in GlobalData’s 2019 Q3 global consumer survey.

Ambient commerce and experimental retail

Ambient commerce and experimental retail are two developments that increasingly present tailored product choices to consumers before they purchase them. This process is based upon an analysis of past spending patterns, detections of customer location, and stock levels of goods. With past spending data, brands can create strategies for repeat purchases, or disrupt the purchasing occasion for challenger products.

Sephora is one brand that utilizes ‘moment marketing’, seeking to identify the ideal moment to deliver real-time content to consumers. The use of Bluetooth beacon technology triggers in-app offers like discounts and personalized content when shoppers approach its stores. Furthermore, consumers can be tracked in-store so that targeted brand information can optimize their retail experience. Personalized content has the potential to improve conversion rates and present brands with opportunities to cater to the 65% of global consumers, more often than not, who are influenced by how well beauty and grooming products are tailored to individual needs and personality.

Beacon integration can personalize rewards programmes, allowing brands to empower customers with the ability to find nearby stores, earn loyalty points, and redeem rewards. For the brand, the collection of customer data allows it to accurately market services to their target audience, and identify which locations are most popular amongst its customer demography. This, in turn, allows a company to further optimize its services accordingly.

A consumer uses an augmented reality concept to change the colour of her fingernails without the need for physical application. (Photo © Shutterstock.com / BeeBright)

A new form of customer loyalty

As product personalization becomes popularized, brands are acknowledging the evolution of traditional transactional relationships that breed a new form of customer loyalty. With complex technologies like emotional AI now available in some commercial products, cosmetics brands must, at the very least, embrace basic digital tools to ensure consumer-centric personalization. With widespread Internet penetration, brands cannot afford to miss out on opportunities like analytics and the insights gained from data.

Increasing personalized beauty approaches will lead to a further proliferation of independent brands, empowered by the specificity that digital technology offers and the digital experience has become crucial to product appeal. Smaller brands today have improved routes to market access and are increasingly well-positioned to respond to demands from niche market segments. The rise of the digital consumer has encouraged market movement beyond mass-produced products – giving both manufacturers and customers greater opportunities for personalization.
Further information
www.globaldata.com