CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL

BEAUTY

Comment Keeping up Inside 2 Retail insights Travel retail

3 Tech bytes Netwatch 5 Trending Companies to watch

6 Data

7 Interview L’Oréal Travel Retail Americas managing director Yannick Raynaud

8 Zoom in on Better editing assortment

9 In case you missed it

INSIGHT

Most companies these days say that they are in the midst of a digital transformation. But there seems to be some vagueness about how this

transformation will be done and what will emerge at the other end. There is often also a sense that this transformation is not happening fast enough. Analysts say that this is because many players have waited too long to

transform themselves and have simply not kept up with consumers’ changing needs and habits. As a result they are now feeling the squeeze from emerging brands and are unsure about how to keep on top of digital while doing (and maintaining) the day-to-day business. There are also many question marks about how to integrate digital into their teams and company structure. In short, there is uncertainty about how to change the business model. German group Beiersdorf announced last week that it would throw money at

the problem. The company said that it would invest €70m to €80m a year to open new markets, improve its employees’ skills and in digitalization, all in a bid to address what it calls the “profound transformation” of the industry. Whether this strategy will allow Beiersdorf to make the changes it needs to

its business model remains to be seen. However, pouring money into products, marketing and perhaps new routes to market is seen by many as key to positioning the company for the future, even if it does temporarily hit profits.

#185

www.bwconfidential.com - Beauty Insight - March 5-April 1, 2019 #185 - Page 1

The leading publication on the international beauty industry

Oonagh PhillipsEditor in Chiefophillips@bwconfidential.com

Subscribe

Follow us on:

INSIGHTINSIGHT

Comment Retail insights & Travel retail

Tech bytes & Netwatch

Trending & Companies to watch

Interview Zoom in on In case you missed it

Data

Retail insights• Amazon’s beauty brick-and-mortar ambitions. The Wall Street Journal reported that the internet giant is looking to open grocery stores in dozens of US cities and plans to sell beauty in these new stores, given the higher margins these products offer. This marks Amazon’s clear interest in beauty and is a sign that the company believes in brick-and-mortar. Could an acquisition of one of beauty’s struggling physical retailers be next?

• Matching consumers with products. Walmart has acquired Aspectiva, a start-up that uses AI and natural language processing to analyze user-generated content (such as product reviews) and combine it with shopper browsing behavior. The result is that it can make product suggestions to shoppers both online and in-store. Shoppers can also search and filter products based on the criteria they choose. Aspectiva likens the technology to being accompanied by a personalized, knowledgeable in-store assistant while you shop.

• Retailers as billboards. Technology is offering a host of new ways for brands to advertise in-store, through wall projections that display ad campaigns, digital doors on merchandising units and smart shelving. And that is in turn opening up a lucrative new revenue stream for retailers in the form of advertising.

• A new take on product testing. Decathlon’s new ‘store of the future’ in Singapore allows shoppers to truly try out the product. This includes testing running shoes on four different running tracks or trying walking shoes on a gravel path. The store also allows consumers to have medical conditions checked and offers free sports and fitness lessons.

Travel retail

NPD Travel Retail shares the key drivers for purchasing skincare in duty free

• Nearly two-in-five purchases, for both male and female skincare, are made by those aged between 26 and 35. • Some 80% of female skincare purchases are made as a gift, while 93% of male skincare purchases are made as a gift.• The split between impulse-driven and planned purchase for male skincare is relatively equal, as 56% buy on impulse. • Some 58% of female skincare is bought on impulse. • Male skincare buyers are slightly more attracted by promotions than the standard beauty buyer (21% vs 16% of beauty buyers). • Female skincare buyers are less price conscious and less attracted to promotional offers than male buyers—16%, in line with beauty. • The most important brands for female skincare are: Lancôme, Estée Lauder, Clinique, L’Oreal and Clarins. For male skincare, they are: Biotherm, Chanel, L’Oréal, Lancôme and Kiehl’s.

All data comes from NPD Travel Retail’s Segmentation Study. For more information click here

www.bwconfidential.com - Beauty Insight - March 5-April 1, 2019 #185 - Page 2

Comment Retail insights & Travel retail

Tech bytes & Netwatch

Trending & Companies to watch

Interview Zoom in on In case you missed it

Data

San Francisco-based Tribe Dynamics shares exclusive data about beauty trends and brands making waves on social media

Too Faced fêtes Tutti Frutti Collection with Newport Beach getaway In January, Too Faced brought a squad of French bloggers including Gloria Nabonne (@gloria_nbr on Instagram) and Horia Ben Brahim (@horia_insta) to Newport Beach, California, to celebrate the launch of the Tutti Frutti Collection. Buoyed by getaway content, the range powered $687.5K earned media value (EMV) as the brand’s number-one product,

while mentions of #TooFacedTutti garnered $677.3K. In all, the brand collected $4.0m EMV, climbing two ranks to reign as this month’s number-one brand in France.

Tribe Dynamics is a San Francisco-based software company that helps beauty, fashion and lifestyle brands drive and measure digital earned media at scale. For more stories and rankings of top brands and products in international beauty, check out Tribe Dynamics’ January Tribe Top 10 report for France here.

Tech bytes

• The Beauty3000 Instagram filter (pictured above) continues to create a buzz, having garnered more than 200 million impressions. Created by artist Johanna Jaskowska, the filter (she has also created others) is designed to look like a surreal, sci-fi-inspired plastified mask. Other artists have come out with similar face filters using face mapping and AR. The filters are said to represent a move towards more experimental and artistic looks. They have found favor with influencers and celebrities.

• Video is hot. Home shopping channel QVC launched a new iPhone app with an expanded feed of shoppable videos. Called Q Anytime, it includes on-demand video segments of five-to-eight minutes. When the consumer taps the videos she can buy the product or access information on it.

• Also in video, Amazon is looking to take on QVC with the recent launch of Amazon Live, which features live-streamed videos from brands. Brand hosts demonstrate products for sale on Amazon. Shoppers can browse product details and make purchases. In more video news, Chinese group Alibaba took an 8% stake in local video platform Bilibili.

• Facebook is looking to come up with a smart digital assistant with enough common sense to converse with someone on any subject—something the company says would be big progress on today’s voice-controlled devices. However, analysts say computers that respond in such a way are still a long way off.

Netwatch

www.bwconfidential.com - Beauty Insight - March 5-April 1, 2019 #185 - Page 3

Comment Retail insights & Travel retail

Tech bytes & Netwatch

Trending & Companies to watch

Interview Zoom in on In case you missed it

Data

SHANGHAI2019 April 10|11

Shanghai ExhibitionCenter

MakeUp in @makeupin_world

in@MakeUpInWorld

@MakeUpinWorld @MakeUpinWorld @makeupin_world @MakeUp in

makeup-in-shanghai.com

MakeUp in Shanghai is the exclusive BtoB eventwith global make-up and skincare

offers from ingredients, formulation,design, packaging, accessories to full

service suppliers.

Trending

Companies to watch

By Humankind. This US-based personal-care brand is out to reduce single-use plastic waste. It uses refillable packaging that is kept by the consumer and guaranteed to last for life. The first time consumers order online they receive a refillable container and their first refill. Then, they receive product refills on either a subscription schedule or on an à la carte basis. One dollar of each purchase goes towards removing plastic from the ocean. The brand launched in 2019 with three products: A deodorant, bar shampoo and mouthwash in tablet format. All products are claimed to have clean formulas.

The Inkey List. This UK-based brand aims to simplify skincare. It says it cuts through skincare jargon by focusing on the key ingredient each product contains. Products are priced at between €5 and €15, which co-founder Mark Curry says is down to direct sourcing from raw ingredient suppliers. The Inkey List positions itself as a fast beauty company that is tuned into consumer trends and can turn around a product in 18 weeks. “We have been inspired by tech companies, and so rather than wait until a product is perfect, we get it to market fast to test it,” Curry explains.

Lab to Beauty. This new company launched at the end of 2018 positions itself as the first CBD (cannabidiol) brand to enter the prestige beauty market. It claims to offer clean skincare centered on the healing effects of CBD, which is said to help fight inflammation and acne and stimulate collagen and reduce wrinkles. The collection includes facial washes, serums, masks, moisturizers and supplements.

Expect growth in mineral-based sunscreen. More of these

alternatives to traditional sunscreens are set to hit the market following

increased consumer awareness about the possible toxicity risks of chemical

sunscreens. This has been fueled by recent measures from the FDA in the US to regulate sunscreen by

highlighting the potential dangers in the active ingredients.

Some say brands’ focus on speedy product launches to create a buzz among influencers is leading to

poorer quality merchandise or me-too products dressed up as innovations. Dissatisfaction with this trend could

see more demand for carefully crafted products that are a long

time in the making.

Pastel shades are set to be the next big colors in make-up, if the New York Fall Fashion shows are anything to go by. The shows featured models

wearing soft-tone lip colors and eyeshadows in pale lilac, blue

and yellow.

More attention is set to be given to the importance of sleep for health and

beauty. This goes beyond just sleeping masks or nighttime moisturizers, to products that combine helping consumers

fall asleep and improving sleep quality with ingredients that work best while sleeping.

www.bwconfidential.com - Beauty Insight - March 5-April 1, 2019 #185 - Page 5

Comment Retail insights & Travel retail

Tech bytes & Netwatch

Trending & Companies to watch

Interview Zoom in on In case you missed it

Data

Data

Influencers in France

• Some 36% of French people discovered a new product or brand through an influencer, according to a new study put together by industry association CEW France and influencer marketing software and analysis company Wearisma.

• French mega-influencers with more than one million followers have the highest media value (€131,200 on average), while French influencers with less than 20K followers achieve the highest engagement rates (4.99% on average), according to the Wearisma study. The beauty category that engages the most influencers is make-up.

Skincare in the UK

• The UK is the top market globally for facial skincare launches targeting the skin microbiome, says research company Mintel. Over 37% of the world’s launches targeting skin microbiome in 2018 were in the UK, followed by the US (25%) and France (15%).

• Mintel said in the next five to 10 years the skincare industry will expand from focusing just on the microbiome to also include the exposome—external environmental factors like pathogens, fungi, pollution and plants that interact with DNA and affect health.

Comment Retail insights & Travel retail

Tech bytes & Netwatch

Trending & Companies to watch

Data Interview Zoom in on In case you missed it

APRIL 10 & 11, 2019S H A N G H A I E X H I B I T I O N C E N T E RLos Angeles . New York . Monaco . Shanghai www.luxepack.com

This

doc

umen

t is

pub

lishe

d by

What can brands and retailers do to attract the US shopper in travel retail? Not only do Americans account for the largest share of international travelers in the Americas (over a third), they also traveled in 2018 more than the previous year with a growth ahead of the average in the region. But despite being the biggest beauty shopper worldwide, only 2% of Americans buy in duty free (Source: m1nd-set). First, at home they have a plethora of great options [to buy]. Then, their behavior in airports is radically different. Their basket in beauty consists of fragrances at 70%, while at home 50% of the spend is on make-up. Their perception of duty free has not moved from what it was decades ago. And they tell us that the reasons not to engage are a lack of interest, a perception of low value versus their local market and a lack of relevant offers, brands and shopping experience. So, all of us—retailers, airports and brands—need to re-enchant this shopper and make her/him want to come, enjoy and experience duty free. We have a collective duty to do so. How big is the potential?With 37% of the traffic and only 2% of them buying in duty free, the potential is sizeable. We need to show them the brands they like, that they don’t normally see from afar; we need to offer products or formats that are relevant to their needs (convenience); we need to break the paradigm that ‘everything in an airport is more expensive than in the high street’. We also need to create a more relevant experience, specific to the unique traveler’s mindset and make shopping at the airport something to look for. For that, the airports need to get passengers through the security line faster. We have done several pop-ups that disrupt traffic and entice passengers to discover

exclusives, personalization and an immersive brand experience. They have been successful in recruiting Americans who would not have entered the duty-free shop otherwise. Is it worth working on given that other traveling groups—the Chinese, for example—may be easier to attract?As an industry, we have historically been focused a lot on the “non-Americans” [Chinese, Brazilian, Argentinian and so forth], who because of higher taxes in their country of origin or lack of product/brand availability in some cases have shopped in duty free. In our region, their spend per enplanement has lowered in recent years, so we need to remain vigilant. While changing the mindset of Americans in duty free is more difficult and time-consuming, we cannot be complacent. In airports, we have the unique opportunity to have consumers ‘captive’ in our environment for a generous amount of time, so let’s leverage it as a trinity with retailers, airports and brands. n

”L’Oréal Travel Retail Americas managing director Yannick Raynaud

[US travelers’] perception of duty free has not moved from what it was decades ago. And they tell us that the reasons not to engage are a lack of interest, a perception of low value versus their local market and a lack of relevant offers, brands and shopping experience

“

Interview L’Oréal Travel Retail Americas md Yannick Raynaud

L’Oréal Travel Retail Americas managing director Yannick Raynaud tells BW Confidential why it’s the industry’s collective duty to re-enchant US shoppers in the duty-free channel

www.bwconfidential.com - Beauty Insight - March 5-April 1, 2019 #185 - Page 7

Comment Retail insights & Travel retail

Tech bytes & Netwatch

Trending & Companies to watch

Interview Zoom in on In case you missed it

s YSL’s Lip Vibes pop-up at LAX

Data

Zoom in on: Better editing assortment

Unity Marketing founder Pam Danziger“It’s never been such a critical problem for retailers [as it is today] because consumers have to sift through all the junk to find the treasures in beauty. Retailers need to start thinking about the store in a different way. Online is where customers can search easily and quickly and sift through the burgeoning range of products. But when it comes to the store, retailers need to think of creating stories, which means a curated selection and using

this valuable physical space to shine a spotlight on the best products. Retailers are having a very difficult time; they’re thinking and talking about it, and trying

to use data to understand how to adjust the assortment, but I still don’t think that they’re willing yet to dispel the false notion that retail is a product business. Today, retail is a people business. Products are involved, but retailers need to focus on the people side, on curation and focusing on the best of the best. If brands force retailers to take the whole product line, then make their whole line

available online, but choose the best of the best to feature in the store. It’s the paradox of choice, giving people more products to choose from creates problems for them. Retailers know it, but they’re still scared to really implement it in the store. What’s hot one day can be not so hot the next, but planning for and recognizing that, and leaving spaces to slot in the hot brands today and bring in the hotter brands tomorrow, is a very good model.”

Beauty retail expert and former Neiman Marcus vp and dmm for beauty Kelly St. John“If you rewind 10 or 15 years, there was no question about curating an assortment. But the brick-and-mortar business has changed and online has grown, everybody is hyper-focused on the P&L and profitability and driving revenue. It put everybody in a situation of [thinking that] it makes sense to curate the assortment not only for store and online, but also for different regions of the country. Retailers have to continue to evolve in

that way. It has to be a discipline that happens each season. It’s a lot of heavy lifting to do that, especially with a retailer that carries a couple of hundred brands. Online allows them to tell the brand story, to be able to showcase the entire collection, and then in a brick-and-mortar store they can be hyper-focused on creating an assortment that is the highlight of that brand and the most important skus. The data and the retailer’s ability to analyze selling by market supports the fact that an

edited assortment makes sense. Flexibility in terms of merchandising and presentation is key. [One barrier is that] the investment required to transform some of these long-time beauty departments into the way the customer of the future really expects and wants to shop is very intense. There’s an explosion of new brands today, so the successful retailer has worked out how to edit that assortment on a seasonal basis, so what’s not resonating with the customer comes out or gets less space. And it allows them to allocate X amount of space to up-and-coming brands or the hottest trend. Retailers need to be more disciplined about evolving their assortment and about the brands that aren’t working” n

Two industry observers reveal their thoughts on how retailers could better edit their beauty assortments

www.bwconfidential.com - Beauty Insight - March 5-April 1, 2019 #185 - Page 8

Comment Retail insights & Travel retail

Tech bytes & Netwatch

Trending & Companies to watch

Interview Zoom in on In case you missed it

Data

CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL

In case you missed it

Beiersdorf launches investment program to address industry changes

Macy’s to make cuts in top management

Elf to close its retail stores as sales, profits fall in fourth quarter, cfo leaves

Boots to cut 350 jobs

Shinsegae to launch its Chicor brand in duty free

JD.com to merge Toplife into Farfetch China

Yves Rocher to close UK market

Glossier to launch new beauty brand in March

Avon to launch content studio

Carine Roitfeld to launch fragrances

Firmenich names Mehdi Lisi vp of Paris fine fragrance creative center

Nocibé suspends marketing director following abusive comments

Perfect Corp launches digital try-on app for retail

Lancôme marks Lunar New Year with pop-up at King Power Rangnam

Go to bwconfidential.com for full stories and daily news updates

The leading publication on the international beauty industry

In the next issue of BW Confidential’s Beauty Insight to be published April 2, 2019:

Ulta’s strategy

PLUS: • The latest retail and tech news • Interview • Travel retail data • Beauty trends • Social media insights

Subscribe

Comment Retail insights & Travel retail

Tech bytes & Netwatch

Trending & Companies to watch

Interview Zoom in on In case you missed it

BW Confidential 17 rue Louis Rouquier, 92300 Levallois-Perret, France contact@bwconfidential.com Tel: +33 (0) 1 74 63 49 61 www.bwconfidential.com ISSN: 2104-3302 Publisher: Nicolas Grob ngrob@bwconfidential.com Editorial Director: Oonagh Phillips ophillips@bwconfidential.com Journalist & Copy Editor: Katie Nichol knichol@bwconfidential.com Journalist: Monica Defrances mdefrances@bwconfidential.com Contributors: Sophie Douez, Alex Wynne, Renata Ashcar, Mayu Saini, Corinne Blanché, Naomi Marcoulet, Kevin Rozario, Tina Milton Subscriptions 1 year: Beauty Insight (20 issues) + Print Magazine (4 issues) + This Week in Beauty + Daily News + Collector’s Guide + Beauty & Travel Retail Special Edition: €549/US$769 subscribe@bwconfidential.com Advertising advertise@bwconfidential.com BW Confidential is published by Noon Media 513 746 297 RCS Nanterre Copyright © 2019. All rights reserved. Reproduction in whole or in part without permission is strictly prohibited.

Data