Sasha Radic, managing director of investment bank Jefferies, believes that beauty is one of the most exciting and “special” sectors in retail for two big reasons: his deep connection with happy moments and it’s amazing sustainability. Based on these characteristics, beauty brands of all sizes can differentiate and grow, especially as more shoppers join and participate in online communities.
“These brands are associated with a positive experience for consumers, and I really think that makes them extremely sustainable,” Radic said in an interview with Retail touch points. “When things are going well, people want to enjoy and participate in them [those beauty moments]. And when things feel a little tougher, beauty and health are little indulgences that can create a little positivity in people’s lives. That’s what makes the category so special.”
As consumers gravitate to digital channels and platforms in search of these moments of joy, brands have a new, dynamic means to connect with consumers, cultivate passionate communities and create innovative experiences using technology. In fact, Radic believes it beauty brands are some of the top innovators in consumer products and retail today — and that while community is at the core of any valuable brand, technology is a facilitator of those community moments and a vehicle for deeper brand engagement.
“It’s a way for brands to amplify and really get their message across, whether it’s on a shelf with a visible presence that shows what brand you are, or online through social networks with branded and user-generated content,” explained Radic. “At the most technological end, you can have a customized business model like Prosewhere you really use technology at the product level to show that personal connection with the consumer, where you create products specific to their needs.”
Prose leverages its deep data and analytics capabilities to achieve this level of personalization. While this is useful for any brand, it’s not a requirement—there’s a whole spectrum of strategies, from dynamic storytelling to robust personalization. The bottom line: there’s no one linear “path” that beauty brands must take to prove they’re creating products and experiences that consumers will love.
However, it does it helps if brands understand how consumers currently shop for beauty products, and the tools and capabilities that best support them online and in-store.
How do beauty consumers shop?
Research of 1250 US Beauty Consumers, conducted by Harris Williams, found this 95% plan to spend the same or more money on beauty in 2024 compared to 2023. Overall, respondents ages 18 to 34 over-indexed on these responses. The report found that product efficacy and functional benefits were the main drivers of purchases, with TikTok as a key channel (53%) for users aged 18 to 24 to discover products. Across all generations, shoppers preferred to purchase beauty products at mass retail stores (87.1%), On Amazon (79.6%), in specialized beauty shops (79.5%) and through mass online retailers (76.8%).
A much larger study of 26,000 Beauty shoppers, conducted by PowerReviews, identifies the content and channels that influence purchase decisions:
- Customer ratings and reviews (88%);
- Customer photos and videos (67%);
- Referrals from friends/family (63%);
- In-store recommendations from in-store experts (63%);
- Instagram (34%); and
- TikTok (33%).
Social media provides a vehicle for community and creativity
When looking at all the different ways beauty brands can embrace digital, social media comes to the fore as an obvious touchpoint. Each platform—from Instagram to TikTok, Threads, and more—offers its own unique features and value drivers. But at the core of all of them are hardcore users who are passionate about sharing their feedback and experiences.
“Over the past few decades, social media has had a huge impact on how beauty connects and communicates with consumers,” said Radic. Their obvious value is that these platforms are designed for discovery and educationand many consumers take to social media to learn about new brands and beauty brands. That makes social media “a really important place for brands to tell their story, to build communities around them in their products and really enable their growth,” she noted.
Although many beauty brands use social media to cultivate community, Radich pointed out Elven beauty like the “cute Gen Z” that has taken social media by storm — especially TikTok, which is a “huge driver of beauty transformation,” according to Radic. “You can see the incredible growth and results of a public company like Elf Beauty, a brand that speaks to its power and ability to use TikTok to drive communication and engagement with the next generation of consumers.”
A big reason why the brand is so successful on social media is its ability to “lean the elf” and constantly reinvent itself.
“If we had a playbook, it would be published there. But there’s no playbook because we’re constantly reinventing ourselves,” Lori Lam, chief brand officer at Elf Beauty, explained at the 2023 Retail Executive Forum in New York. “The pages will have to be printed and pulled out every day and with every comment we get from our community.”
Lam added that while Elf Beauty likes insights, he doesn’t wait for signals — and that speed to market and passion for creativity are an asset, every time.
“Everything we’ve done is built on insight, but then you have to take your gut, put the two things together and run full speed,” Lam explained. “You start to go deep into insight, but then you turn your head to the stars and start dreaming of what that could be.”
Many campaigns showcased the power of Elf Beauty on social media, including integration with Augmented Reality (AR) digital try-on and filters via Snap. But one if its more recent media initiatives demonstrate the brand’s commitment to community-driven innovation. Toilet table talk was an entertainment-focused digital series where celebrities like Jennifer Coolidge sat down at the Elf vanity to chat about their daily lives, favorite objects, and other topics. The kicker? They breezed through their interview while applying Elf’s latest and greatest products. It was a social initiative, meaning the show was expanded and repurposed on YouTube, Instagram and TikTok.
Metaverse platforms become a hub for co-creation
Many beauty and skincare brands are building their e-commerce expertise to support their communities. For example, Covey Skin Care integrates its social content and community feedback into its website and encourages its Flock to engage through physical and virtual activations. These activities are part of a longer-term “club” strategy that will help the brand grow and nurture its community.
“The best brands, the ones that really understand and build a community, really try to be more than products that go on the shelves,” Radich said. “Having a great product is fundamental, but creating a brand that has meaning and a broader sense of purpose is critical to differentiation within a relatively crowded landscape.”
But gaming platforms in the metaverse (think Roblox and Decentraland) take the idea of community to the next level, creating opportunities for users not only to communicate and collaborate with each other, but also with brands.
Rihanna’s Fenty Beauty is a brand that has built an incredible story and in turn community around its mission of inclusion – and the brand has successfully carried that mission and vision into the metaverse. For a special Roblox activation, Fenty Beauty created a series of games and interactive scavenger hunts that inspired consumers to learn about the brand’s products and ingredients.
The Fenty Beauty + Skin Experience, which was only available from June 30 to July 30, 2023, also featured a virtual beauty lab where visitors could create custom versions of the Gloss Bomb Universal Lip Luminizer by choosing its ingredients, effects, bottle, cap and applicator. After naming their shade, they were able to place their new creation in a virtual retail display called the “Sephora Experience,” where others could vote for their favorite user-created item.
Behind the scenes, Fenty Beauty and Fenty Skin are leveraging a lot of data to build their Gen Z digital community. Specifically, the company is moving toward a micro-community strategy that fosters more intimate connections, according to Sapna Parikh, chief digital officer of Kendo Brands. LVMH, the parent company of Fenty Beauty and Fenty Skin.
“We can no longer talk to [Gen Z] as one big group of people,” Parikh said during the 2023 Retail CEO Forum in New York. “We have to really understand each of our cohorts. And what [Gen Z is also] the requirement for us is to really be on top of the channels that are out there [in terms of] the way we communicate [them]. The micro community strategy requires us to be smarter with our data and smarter with our insights.”