Experience-Based Marketing Drives Growth
Of Beauty Sections for L’Oreal   

By Pat Lenius

For more than a century, L’Oreal has been synonymous with beauty across all distribution networks: mass market, department stores, pharmacies and drugstores, hair salons, travel retail, branded retail and e-commerce. But that doesn’t mean the mega brand can’t learn new things. 

For example, based on an in-store test of a new beauty department concept in China, L’Oréal has learned that core customers of beauty products are attracted by experience-based in-store marketing. These core customers range from the young members of generation Z and millennial cohorts to senior baby boomers. “Sharing Beauty With All” is L’Oréal’s commitment for 2020. In the larger sense, research and innovation play a major role in the company’s strategy.

Jackson Wang, Vice President of Design, L’Oreal USA, spoke of this learning and strategy in a presentation at the recent 2019 Shopper Insights & Retail Activation conference that met in Chicago. The event was presented by KNect365, which plans to change its name to Informa Connect later this year.

A.S. Watson, the world’s largest international health and beauty retailer, teamed up with L’Oréal, the world’s leading beauty company, to launch Colorlab by Watsons, a new concept makeup store, in China last year. Colorlab offers customers a fashionable and trendy experience-led makeup space, where they can confer with makeup artists and try different products. The makeup counter of L’Oréal Paris and Maybelline, two of the most popular makeup brands under L’Oréal, is one of the most eye-catching areas in the store. The products from those two brands occupy more than 30 percent of the space at the makeup counter.

“Watsons is like the Walgreens of China,” said Wang, noting that L’Oréal worked with the retailer to create a new look and feel for the beauty department. Colorlab provides more shopper engagement and great makeup service, he added, asserting that 91 percent of Colorlab shoppers were “satisfied.” More Colorlab stores were being planned for China.

Meanwhile, Wang said L’Oréal is looking at applying that strategy and approach globally. For example, beauty brands such as L’Oréal might create a special technology driver or provide pop-up events for skin care. Or they could look into different locations that will surprise people.

Wang noted that providing a “different experience” in the in-store beauty department might include classes, clubs, shops, and “gamification.”

Shoppers today have access to more information and more places to shop. Traditional luxury department stores are declining, while specialty stores such as Sephora are thriving, Wang said. Stores like Sephora are doing so well because they make the customer feel good.

“Customers tell us it feels like the store really cares, and offers a temporary escape,” he said. “It’s really about the emotional aspect.”

The beauty market is thriving. Shoppers are spending 20 percent more on beauty products and cosmetics, according to 2017 research. “My observation is the beauty market is still growing,” Wang said, adding that the growth can be traced to “selfies and technology” and people becoming more aware of how they look.

“Women are spending more on beauty, but 51 percent have changed where they buy beauty products,” he said.
Mass retailers represent 75 to 80 percent of beauty product business, but too often the departments appear cluttered and disorganized, with no service and no product trials or education. “How are we helping [the shopper] find the right product?” Wang asked. Both brands and retailers are faced with finding the balance between offering beauty products faster and cheaper, but yet providing an interactive experience and thrills.

“Traditionally retailers have been sort of hesitant to share data and traffic, but we are finding that now doors are opening and they are seeking answers also,” Wang said.

He advised retailers to encourage the shopper to seek out brand categories in the store. Direct the shopper from category to brands to products. Also, purchasing decisions are moving from task-based to occasion-based and responding to trends. “Capture moments that are relevant [to the shopper],” he said. Create excitement, such as pop-up events or conventions. Draw more social awareness.

L’Oréal is now tracking time-of-day traffic, down to what hours in key geographic locations, and how that marries with sales, Wang said.

Adjacency with fashion retailers can also help beauty product sales. “It’s natural to look at cosmetics with fashion. Connect cosmetics with celebrities and the fashion industry,” he noted.

Wang shared eight shopper design principles to consider in the store:
1) Shoppers have a limited ability to focus.
2) Shoppers use peripheral vision.
3) Discontinuity creates triggers in-store.
4) Shoppers use signpost brands to navigate through the store.
5) Shoppers deselect before they select.
6) Shopping mirrors usage habits.
7) Logical adjacencies increase joy and purchase.
8) Information and education changes behavior.

Wang concluded his presentation with future trends: By 2020 more than half of Americans will be minorities. Hispanics will represent a larger segment. Currently they account for 17% of the U.S. population; but soon they may be as much as 30%.  Retailers and brands will need to work harder to comprehend new ethnic majorities and their values so they can market for their new lifestyle events.

“Brand centricity” or “brand purpose centricity” is another future trend Wang shared.

“Consumers will follow the brand that represents positive and sustainable purpose,” he said. For example, L’Oréal wants every woman to feel she is worth it.

The third trend involves building an emotional connection with the shopper. “Consumers want more than a product. We need to connect with them emotionally. Embed brand values into the economic value chain at the local level for growth. Reach the shopper at an emotional level. Retailer reinvention must give shoppers more reasons to come and stay.”

                                                                              August 2019
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