The new digital face of the beauty and personal care industry
The beauty and personal care industry has been among the first to adapt to changing consumer behavior in times of lockdown.
Beyond the initial limitations of the supply chain and the closure of physical stores, BPC brands around the world have had to create an emotionally charged offline shopping experience within the confines of a web browser.
Brands in the Global Cooperation Council region have captured the hearts and wallets of consumers. Increased product awareness has whetted their appetites.
According to a recent survey, Saudi and Emirati women are the biggest spenders on makeup and skin care products in the world, spending around $700 to $900 a year. Apart from increasing per capita spending in the region, the industry is still in a growth phase with the PCB market size in Saudi Arabia expected to grow steadily at a rate of 6.4% through 2026 and reach more than 7 .5 billion dollars.
While many underlying forces are driving increased spending in the Kingdom, one of the main reasons is the growing purchasing power of Saudi women. Currently, a third of women in the country are active in the labor market, compared to only a fifth in 2017.
This rise was accompanied by a higher spending capacity and a direct stimulation of the PCB industry. Additionally, changing consumer trends are expected to continue to drive the region’s growing share of consumer wallets.
For companies in this segment, the growth in purchasing power protects them from the effects of inflation. After adjusting for inflation, PCB products in the Kingdom are expected to grow by 5-8% over the next five years compared to other consumer categories like food and beverages.
PCB Industry Trends
While many aspects have historically guided product choices, value for money and brand remain the top two dimensions in their decision to choose a brand, according to consumer research.
A recent e-commerce study found that 60% of women say brand is the top consideration when purchasing a product. Moreover, about one in three women prefer to buy high-end products.
Eco-friendly products are a popular niche, but 63.5% of shoppers say they’re willing to spend money in this segment only when they feel the eco-friendliness premium is reasonable .
However, consumers and BPC brands have to make big decisions in the face of rising inflation. Consumers are spoiled for choice. There’s a product for every skin type, tone, style, and price. With this, it will all come down to relationships and value propositions. Brands need to raise the bar and refine their propositions for the local market.
While multinational brands have tried and failed, it turns out to be much more feasible for local brands that truly understand the pulse of their market. In fact, some have even been wildly successful and have reached global audiences.
Find the right place
New market entrants will struggle to make waves in the crowded and highly competitive high-end and mass market segments. However, it is not impossible. The essential attribute they must have is a listening ear.
In addition, consumer trends vary by category. For example, the premium segment holds 23% of the skin care market but only 5% of the hair care market. Thus, consumers are looking for compelling value propositions that meet their unique interests and needs. Most of the new BPC brands that have shown strong resonance with customers offer affordable pricing, higher quality ingredients, strong brand positioning focused on inclusion, direct-to-consumer distribution, increased consumer engagement and quality packaging.
New entrants in similar markets have achieved significant success due to their intense relationship with customers and their unique stories.
In the coming years, we expect many other similar brands with exciting features to take the market by storm in the region.
The key to winning in the market is hitting the sweet spot to appeal to the masses with a prestigious or high-end product. These brands are beginning to gain substantial market share. This segment, dubbed “masstige,” is making waves around the world through strategic partnerships, high-quality products, and influencer marketing.
Adopt a channel strategy
Consumer habits have undergone a fundamental transformation and brands are adapting their commercial strategies to remain competitive.
One method that has shown incredible results around the world is a direct-to-consumer strategy. When implemented online, D2C bypasses the middleman and establishes a direct connection between a business and its customer.
When a D2C channel is implemented with the customer journey of the target segment in mind, it can unleash the full potential of the brand and show more resilience in the market.
Success with D2C or e-commerce requires replicating the experience of history in online channels. For example, physical beauty booth attendants have immense knowledge and experience and the ability to “try before you buy” allows for a personalized experience that is difficult to emulate digitally.
However, beauty brands have ingeniously developed ways to do just that. For example, virtual makeup try-ons from brands such as MAC and L’Oreal Cosmetics are becoming increasingly popular, allowing customers to upload their images or use live video features to add makeup “filters” value the result of a particular product.
D2C is a strategy that’s here to stay, and while companies may have already started their journey down this path, there are plenty of ways to unlock the potential.
In fact, pure digital businesses can get the most out of their investment by investing in the digital customer journey and product development. These companies can actively engage with customers during product development by keeping an open feedback loop.
D2C BPC brands collect large amounts of data, which they can use to personalize products and shopping experiences. For example, Purplle, an online BPC retailer in India, differentiated itself by leveraging technology and customer data to provide recommendations based on skin traits. As a result, the business has grown around 100% year over year.
Influencer and customer engagement through online platforms is also a key differentiator. For example, Huda Beauty has leveraged prominent micro-influencers to engage with customers and appeal to a wider audience, bolstering its inclusive image.
Like other emerging markets such as India and China, which have seen sudden growth in local beauty players, the BPC sector in the region is also expected to be on the verge of disruption.
Whether it’s a new, existing, or massive brand armed with D2C strategies, an omnichannel approach and an open attitude to customer feedback is paramount to taking the industry to the next level.
• Ali Shahid is director of consumer and retail practice in Kearney, Middle East, while Tamanna Padhi is director of the same practice.
Disclaimer: The opinions expressed by the authors in this section are their own and do not necessarily reflect the views of Arab News