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How Beauty Retailers Can Respond to the Growth of Online

This week, we are privileged to feature an exclusive guest post from premium beauty industry consultant, journalist and researcher Imogen Mathews of Imogen Matthews Associates. Imogen looks at how the beauty industry can move forward in a market where consumer shopping habits are changing and how retailers can enhance both online and in-store experiences to provide a unique buying environment for the consumer.

Women’s beauty shopping habits are changing.

More are shopping online and finding it a better environment than trekking off to the high street.

This is backed up by research in this year’s Premium Market Report 2013, which confirms that 25% of women think shopping online for premium beauty products is more convenient than going to the shops.

Women aged 25-54 are even more likely to prefer the convenience of online shopping. As they represent the core target for many premium brands, this must surely be a matter of growing concern for high street retailers.

If it isn’t, it should be. The latest Springboard data for the UK showed a 1% drop in high street footfall and a 1.7% in visits to shopping centres in May.

How should the beauty industry move forward?

The past 18 months has seen a huge change in retailers’ response to the growth of online sales, which now account for 1 in 5 women’s beauty purchases.

Unsurprisingly, most of the major retailers, including Boots, Debenhams, House of Fraser and Superdrug, now operate dedicated e-commerce sites.

The advantages are many.

They can reach customers who might not be able to visit their physical shops. It also enables them to compete on equal terms with the new breed of online only beauty etailers, such as Feelunique, which is projected to turn over £47m by the end of 2013 – (the etailer was in The Sunday Times Fast Track of the top 100 fastest growing companies in 2012 and 2011).

On the face of it, it looks like the march of online is unstoppable. Yet it does have its downsides.

One area that is a cause of much consumer frustration is the unreliability of delivery.

Only today, I placed an order with a well-known high street retailer that the parcel will have to be signed for. Of course I was told this after I had paid for it.

I wasn’t given a time on Friday when it’s meant to be delivered. I work from home, but will be out at meetings that day. I can’t rely on friendly neighbours to take in my parcels. If I’d known, I probably wouldn’t have placed the order.

Delivering items to the consumer is the most challenging part of the supply chain and the reason why many retailers are now looking for alternative delivery systems.

The Click & Collect model works well for people who are close enough to a store to pick up online purchases. John Lewis successfully does this with collection points at local Waitrose stores.

Amazon is going a step further by trialing locker banks (already a successful model in Germany) and partnering local shops where the shopkeeper signs for packages.

Network Rail has announced that it is to roll out a trial for its electronic lockers, which have been running in Victoria station for three years. It plans to install ByBox locker banks in 62 locations in and around London with a view to rolling them out nationwide. The service isn’t free – customers are charged between £2 and £2.50 per delivery.

Will consumers be prepared to stump up an addition delivery charge to get their goods when they want, where they want? Or will the novelty of online wear thin and drive them back into stores?

In reality it’s likely that online and offline will have to find a way of becoming perfect bedfellows.

While beauty retailers find the best way to tackle online, perhaps they should focus more on doing what they do best – providing a multi-sensory shopping environment that simply cannot be replicated online.

This means listening to customers and giving them a reason to come to their store. Here are some things that they may want to consider:

• Provide exemplary service: train sales assistants to be experts about the products so they can dispense useful advice
• Offer product exclusives
• Create exclusive events where consumers are invited to sample the latest products
• Turn down the music {or best of all, turn it off before it turns off the customer}
• Close the doors {especially in winter}
• Don’t expect consumers to queue up, especially those making an expensive purchase
• Make the customer feel special, by wrapping purchases {as they do for free in so many European shops} and slipping in a luxury sample of something they will value

For further beauty industry insights from The Premium Market Report, visit The Premium Market Report.

The Red Tree is the UK’s leading international beauty brand consultancy and a powerhouse of ideas, insight and inspiration. For an informal discussion on how we might help you, please contact us.

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