Prestige beauty is in the eye of the in-store beholder

Anchored by a champagne bar and set over three floors in its Liverpool department store, Harvey Nichols’ new Beauty Bazaar emporium promises premium beauty brands and the latest aspirational glamour. The retailer’s confident move in the midst of an ongoing economic recession has been planned carefully, recognising that technological innovation and strong emotional connections are both big drivers of prestige beauty purchases, according to new research.

In-store, beauty has to be about the feel-good element, Harvey Nichols group concessions and beauty director Daniela Rinaldi argues. “In the midst of discounting and a ‘cash and wrap’ approach, we are taking beauty back to its luxury heritage,” she says. “People gravitate to places and people who give them real attention, not half measures.”

Harvey Nichols’ new store concept responds to several consumer trends in the sector, identified by a study carried out for Marketing Week by research firm NPD Group. Among them is the importance of new launches and product innovation in pushing up sales in the prestige beauty category. According to NPD, new launches account for 14 per cent of the total UK makeup market share.

NPD director June Jensen says: “The UK consumer loves newness. That’s what drives them through the door and whether they purchase a new product or an old product really depends on the consultants and the brand’s emphasis on personalisation.”

New beauty products are crucial because they are showing growth while established products are not. For example, Benefit’s Hello Flawless Oxygen Wow foundation has been a key driver of growth for the brand. Across the total skincare market, however, growth in 2012 fell to 3.4 per cent year-on-year due to a 6.7 per cent decline in sales from new launches. This decline is down to fewer new products reaching customers, NPD says.

Fragrance brands, which find it difficult to create newness, have also suffered as a result of this trend. NPD’s research found that the fragrance market has experienced a similar year to makeup, with growth slowing to 2.8 per cent year-on-year to September 2012.

“If you have a lot of new products coming to the market, it really fuels the whole category,” says Jensen. “After that initial excitement and high sales, brands have to keep the attention on the product for the long term in order to develop that into a hero product or beauty classic.”

Hero worship

The current emphasis from retailers such as Harvey Nichols on surprising and delighting with a carefully curated store tallies with further findings uncovered by the NPD report. In examining the strategies used by successful beauty brands, it finds that developing ‘hero products’ and increasing personalisation are two effective methods of attracting consumers in the face of increasing competition.

Jensen says: “With more retailers targeting the premium beauty market, the availability of products is much higher than before. It is not just advertising but the stories behind the products that are really supporting the growth.”

Personalisation is a tactic that allows both retailers and manufacturers to build trust with the consumer, and encourages them to form a wider relationship with the brand. “It is about educating the shopper and making it personal,” says Jensen. “For example, retailers and brands are using customer relationship management to a higher degree to connect with consumers.”

NPD cites brands such as Murad and Elizabeth Arden as leaders in providing customised advice and skincare routine recommendations based on an individual’s skin concerns. In addition, NPD found that within the prestige makeup segment, brands have had to enhance their offers for foundation products.

“Consumers are no longer satisfied with foundation that matches only their skin tone,” says Jensen. “They now see matching their skin type as equally important and brands increasingly organise in-store events focusing purely on foundation matching to ensure customers feel as though the product has been custom-made for them.

“What we are seeing is two types of consumers. Those who are interested in value for money and those who are very loyal to the brand but want something exclusive.”

Extending a ‘hero product’ into a new product line is a relatively recent phenomenon for the prestige beauty sector. However, hero products and their contribution to the sector overall provide significant value for manufacturers, according to NPD. Once a brand has a product that consumers trust, it can build a whole franchise based on that product.

The research cites Clinique Even Better serum as an example of this strategy. The product was initially launched in only 30ml quantities. At the launch anniversary, a 50ml version was released. Now the range includes foundation, eye concealer, hand cream and eye cream.

NPD also notes this strategy is in action at fashion house YSL in the way that it markets its Touche Éclat hero product. Available initially in only in one colour, it has extended the product to different colours and this year to a foundation.

“It is the same story,” says Jensen. “The brand has one product that consumers really trust and then you build on top of that and extend into the wider range. You can go back to using this formula with other products because the trust is already there.”

Fringe benefits

Advertising, PR and in-store promotion play a key role in the beauty sector. However, NPD examined how prestige beauty brands without big advertising budgets inspire and excite customers with unique marketing activities that build awareness with the right audience, as well as driving footfall and sales growth.

“Benefit Cosmetics has enjoyed some of the most successful product launches in recent years without any TV or press support,” notes Jensen. “For example, its ‘They’re real’ campaign was the best mascara launch NPD has researched, thanks to social media, in-store focus and PR activities only.”

NPD says Benefit is savvy with social media and executing engaging events such as the ‘Mascarathon’ charity run, which saw people making their way from Scotland to London this summer. The report says Benefit creates a fun atmosphere around its products and the strong identity of the brand translates to all touchpoints.

The research also shows that persuading customers to give beauty products as gifts can help sales. The fragrance category is a leader in this approach, with 21 per cent of total fragrance sales in 2011 coming from gift sets. Other beauty categories are also beginning to use gifting to their advantage. NPD notes that in 2011, prestige skincare saw 14 per cent of its value sales coming from gift sets, which is up 21 per cent year-on-year in value and 12 per cent year-on-year in unit sales.

Brands should also remember that the in-store experience can significantly augment interest in prestige beauty. Bobbi Brown is one brand using such methods to drive growth, notes NPD. For example, if the customer is looking for an eye concealer, the consultant will match the shade and demonstrate it together with an eye cream to ensure that the final result is as good as possible. The customer is likely to leave the counter with more than one product.

According to NPD, consumers still want a treat despite sensing that their pockets are feeling the pinch. With beauty showing resilience during tough economic conditions, careful development of the category smooths the way to sales.

“Brands have to be clear about their strategy, why they are marketing a specific product and what the aim is with that product,” says Jensen. “Whatever offer you want to present you have to have a very clear vision on who you want to target, who your consumers are and where you are heading.”