Welcome to AllWork’s Instant Insight Series!
We’ve started this series as a way for industry professionals to provide quick insights across beauty and retail. Each week, AllWork’s VP of Business Development, Wendy Gottfried will be posting a short interview on LinkedIn with each expert to share industry knowledge.
First up is Rich Gersten, Founder & Managing Partner of True Beauty Capital. With over 20 years as a private equity investor, we’ve asked him to share insight on brands’ growth & survival strategies in response to the pandemic.
Wendy: What’s on the minds of indie & start-up beauty brands?
Rich: Brands are focusing the most on three things: cash preservation and management, their ability to access capital at a small size, & how they can invest more in their digital capabilities.
Wendy: As you speak to brands who have or are interested in raising growth capital, what are the three most common things you are hearing from them in terms of how they are changing their strategies as a result of the pandemic?
Rich: 1) There is more of a focus on their digital/DTC capabilities while still pursuing omni-channel strategies in the long-term. 2) Brands are learning to operate with less operating resources than before. 3) They’re trying to understand how Amazon fits in with their distribution strategy & creating an important balance of cash with inventory.
Thank you, Rich!
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Wendy: We continue to see brands try to gain influence with younger customers by acquiring indie/clean beauty brands. What do you think is fueling this trend?
Marigay: People continue to want niche & new. With the focus on clean & conscious beauty today, the consumer is more about mindful consumption & cares about the why, what, when, and who of a brand.
Wendy: Is this the same trend you’re seeing across other consumer goods industries?
Marigay: This trend is also present in fashion. The consumer cares about origin & heritage in this space so sustainability & clean fashion are growing trends. The nature of digital is also accelerating this trend.
Wendy: What do you think about the recent acquisitions of L’Oréal with Thayers Natural Remedies & COTY with KKW Beauty?
Marigay: L’Oreal has been focused on clean beauty for a long time. Let’s not forget their acquisition of The Body Shop followed by Kiehl’s. For Coty, KKW beauty makes complete sense in the influencer space. The data & the followers alone give COTY a much wider, & younger, base.
Thank you, Marigay!
Wendy: How can teams sell in a contact-less world? What new techniques have you seen?
Kelly: Reducing touch and consultation and in-store testing means retailers and brands need to pivot quickly. I am very encouraged by the number of emerging venture-backed technology companies who are using AI to offer digital concierge services and online beauty assessments.
Wendy: How has the training of in-store associates changed?
Kelly: With travel restrictions and retailers limiting individuals in a store, brand educators will need to shift to a virtual training format. Brands who are able to articulate and engage with associates via video and pivot to produce additional video content will win.
Wendy: In this new “hands-off” world, what do you think is the future of beauty sampling?
Kelly: Because demonstrations and testing are restricted, sampling will become increasingly important. Brands will need to allocate budget to sampling, especially one or two-time use samples. We will also see an increasing trend in customers seeking out travel size kits.
Thank you, Kelly!
Wendy: What suggestions do you have for brands to increase customer engagement during and post pandemic?
Richard: For e-commerce, a clear message of “we want to know you better” should be communicated upfront. For brick & mortar, retailers need to employ staff at curbside stations who can represent the brand & quickly engage customers.
Wendy: What are the key things that selling associates will need to change moving forward to reengage the consumer?
Richard: Associates should have access to both the technology & training they need to leverage a combo of online and brick & mortar in order to provide a seamless experience. The strongest loyalty is created between two people, not a person and a bot.
Wendy: As a professor at FIT, what do you tell students are the most important things for the future of customer loyalty?
Richard: Customer loyalty is about the ability to create & sustain relationships. Human interaction is key now & will be in the future. Brands that know how to inject the human element at the appropriate time will be loyalty winners.
Thank you, Richard!
Wendy: How has the launch & distribution strategy of a new brand changed this past year?
Abby: When we set out to re-invent the customer experience in fragrance, our strategy was to think about it from every touchpoint. Our launch & distribution strategy for our brand Sparti Scents was to start D-to-C. COVID has allowed us to use different virtual events, methods, & media platforms to drive interest, build buzz, & sales.
Wendy: How does your media background prepare you for launching a D2C brand?
Abby: As a creator and producer, I always think about the customer first and the value that I am offering them when creating content. Sparti Scents is about creating a strong community around compelling content to drive commerce.
Wendy: What are three things that you have learned that are crucial to the success of a new product?
Abby: Testing and focus groups with real customers for meaningful feedback. Authentic conversation and engagement in the real and virtual world. Reaching your audience where they are and being inclusive.
Thank you, Abby!
Wendy: What trends have you seen in fragrance during this time when people are staying home?
Caroline: As the home has become the new headquarters, scent has taken on new significance. The use of scent at home can help us in many ways by establishing sensory cues throughout the day that move us from one activity to another.
Wendy: What are the 3 most important factors to consider when creating & launching a signature scent?
Caroline: Conduct an in-depth DNA analysis to align with brand values, create an olfactory brief that we call a “ScentScape”. Determine scent applications/uses. Develop a focused marketing strategy including target market, communication methods, and sampling vehicles.
Wendy: What role do you see sensory marketing/scent branding playing in the future of retail?
Caroline: Scent marketing has become a key part of the marketing mix as brands seek to differentiate themselves and foster long-lasting experiences. In our ‘no-touch’ world, ambient scent diffusion will become a key way for clients to try fragrances & experience brands.
Thank you, Caroline!
Welcoming Maggie Ciafardini to AllWork‘s Instant Insight series, previously CEO YSL Beauté & Executive Director International Bobbi Brown. As a current executive consultant, we’ve asked Maggie to share her expertise on branding, distribution, & retail strategy.
Wendy: What is the retail buyer experience going to be like to source new products moving forward?
Maggie: Buyers are curating brands more closely & their budgets are even tighter. Customers’ needs are evolving & new categories are emerging. Self-care & clean beauty have become essential and brands must have a distinct & focused raison d’etre.
Wendy: How do you see distribution channels changing in response to the pandemic?
Maggie: Online & DTC beauty were important pre-COVID and they have escalated to major channels in the past 6 months. Keep the messaging simple & straightforward. Focus on satisfying and delivering on all levels of customer expectations.
Wendy: As a consultant, what are the top three pieces of advice you give to indie brands right now?
Maggie: Make sure you have a clear and distinct point of difference. Stay focused on your hero product & keep telling that story. Ensure you have the funding to go with the patience you will need to build your brand!
Thank you, Maggie!
Wendy: In today’s climate, what are the top 3 goals founder-lead beauty brands should be focusing on?
1. Learn to love instability! – This year has shown us how much agility is needed to harness opportunity so that we are not just surviving but thriving.
2. Staffing – Creating a sense of stability and strength from the helm is imperative to keep everyone focused.
3. Long-term strategy – We have all seen a surge in the digital space so it’s imperative to evaluate how we balance our brand experience & distribution.
Wendy: I see you launched a new skincare tool, what trends are you seeing in skincare & beauty tools?
Tracey: We are thrilled with the launch of our device! Today’s consumer is relying on results at home, so partnering our device with some of our key heroes has enabled us to fill the “at home” space.
Wendy: What role have you seen beauty influencers play during the pandemic?
Tracey: For Lancer, we’ve been very strategic about investments with influencers, with a keen eye on measurable results. We will be focusing on our direct communication & brand experience with our consumers where ever they chose to be.
Thank you, Tracey!
Wendy: As an omni, D2C native brand, how are you preparing for a new year during COVID?
Amanda: First, by making strategic hires to ensure we are well-positioned. We’re focused on being flexible & resilient knowing that our customer shopping behavior will continue to evolve.
Wendy: What are your top 3 strategies as stores remain restricted?
Amanda: 1) We are still providing store support, focusing on fewer stores more often. This way we provide a best-in-class experience while also adhering to health & safety measures.
2) Education is more important than ever. We’ve rolled out several new education initiatives both in-store & virtually.
3) We conducted a “Confidence Survey” with 10,000 of our loyal customers. Our response was to launch #EmbraceYourSkin to remind our community that they are enough at every stage of their journey.
Wendy: How are you balancing digital & brick-and-mortar? What new technology are you implementing?
Amanda: We have in-store product experts positioned to offer their knowledge to consumers. We also brought this expertise online & implemented a Skincare Advisor live chat service on TULA.com along with relaunching our digital skin quiz experience.
Wendy: What does retail work look like in the store of the future?
Milton: Employee and customer data and analytics, including AI, will help humans become more efficient and effective at their work and interactions.
Wendy: Can you share some examples of how retail employee work will change?
Milton: Associates will no longer complete as many rote tasks such as measuring inventory and replenishing store shelves. Those are tasks that machines and algorithms can do far better. Instead, associates in experiential stores with high value, high emotional purchases will focus on building deep, customer relationships and using their skills to make clients feel special.
Wendy: What does the experience look like for customers?
Milton: Customers will choose in advance, or on-premise, how much engagement and assistance they want during their experience. Associates will engage them using the rich insights based on brand transaction and interaction data to create a truly unique, joyous experience.
Thank you, Milton!
Wendy: In what ways has driving customer loyalty changed for retailers this year? What’s next?
Trevor: Nearly every retailer relaunched their loyalty programs to compete for shoppers. Loyalty will dovetail into retailers processing payments directly to capture processing fee margins, adding buy now pay later options, & capturing additional SKU level purchase data.
Wendy: How are you seeing customers interact with technology today to purchase products in-store?
Trevor: Surprisingly, touch screen usage is at or above pre-covid usage as customers increasingly demand digital content or expert advice to make shopping decisions. Retailers are using QR codes, NFC, & applets to help complete the fulfillment journey & collect data.
Wendy: What are the top 3 technology trends that retailers & brands should be aware of?
1) 5G is going to change the connectivity of the store, with Walgreen’s enabling 5G across 9,000 of its stores specifically for interactive displays, smart shelves, robots and so much more.
2) IDC predicts a 10x increase in IoT in-store in the next 4 years alone, and combined with computer vision, they will bring more data and understanding to the billions of interactions that shoppers have in-store. At Perch, we think of touching products as the online equivalent of clicking on them – with billions of in-store product clicks each day.
3) And all of this will be powered by unimaginable amounts of data processed by AI. Walmart currently processes 1,500,000,000 IoT messages per day, and that number will increase 100% YoY.
Thank you, Trevor!