Traditionally, luxury beauty brands have strived to strike a balance between providing impeccable service and consumer experience, while retaining brand history and integrity in a swiftly changing market.
One of the biggest changes to the luxury beauty competitive landscape is the rise of “masstige” brands, which market products that are considered premium yet attainable. Pre-Covid their popularity was rising, particularly for Millennials who sought high-end beauty products still within their budgets, ensuring they were getting the most value for money. During the pandemic this trend has further gained traction as incomes tightened.
The rise of masstige beauty will impact the luxury beauty industry's recovery in a post-pandemic recession as masstige new product development (NPD) will make premium indulgences more affordable and accessible. These brands are readily accessible from beauty counters like Sephora, come with adopted formulas, and are often built with Instagrammable packaging and/or celebrity endorsements, which are all redefine beauty under a budget.
Despite the pandemic, Fenty Beauty, a celebrity-endorsed brand known for its all-skin colour makeup line, has launched its personal care range through Sephora Asia. Another brand trending in popularity is Drunk Elephant, which positions itself between masstige and luxury with its high-quality skincare products that are priced close high-end beauty product without being out of reach. These emerging NPDs and masstige brands are putting premium beauty brands on the defense for differentiating themselves in a newly competitive market.
The beauty industry today has transformed at a rapid speed facing a competitive environment, and the pandemic has only expedited the competition as new, disruptive products launch. The challenge to remain premium continues as luxury beauty brands embrace digital channels while also maintaining exclusivity and desirability—and doing so without compromising their brand values.
We look at three strategies that luxury beauty brands introduced during the pandemic that will continue to shape their long-term marketing approach in a post-Covid world.
Luxury beauty brands have been seasoned in physical retailing where their service has been the advantage to justifying their premium price point. Covid-19 has changed retailing, creating a digital-first world, and its impact on e-commerce is bringing challenges to online selling and service no one could have anticipated. Now brands are using multichannel as a means to guide and influence the choice for the consumer. Premium beauty players have expanded their digital world presence, engaging consumers through various activities, emphasising their premium status with the luxurious shopping experience.
Lancôme debuted its virtual retail store in Singapore during the lockdown period where consumers can access the flagship store through a link. Live chatbots and hotspots were installed within the virtual retail to guide the consumers across its five zones designed to encourage customers to explore their #LiveYourStrength campaign.
However, online stores set limitations and do not replicate the in-store experience brand experience. Such gaps are now filled by contactless beauty consultations—such as Estée Lauder's chatbot, 'Liv' on WhatsApp. Liv provides seamless, customised beauty advice on the same platform as customers use it for their daily conversations with friends and family. This innovative approach of leveraging an existing platform to instantly engage with consumers, value-adds to the brand, increases its high touch identity and justifies Estée Lauder high price point.
Transforming the Target Audience
Premium beauty continues to identify and optimise their potential in markets through different trade strategies.
First, by targeting the economy driver: China. The Chinese contributed about 90% of the global luxury sales last year, and 70% are made overseas. With travel restrictions, we will see a reinvestment to trade within the country. Mintel further reports that 70% of Chinese women agree that prestige skincare brands feel better on skin. Leveraging this trend is a brand called By Terry, a French premium cosmetic that pursued the Asian market despite the pandemic, beginning its launch from China in mid-2020. If brands don't find a way to reach their Chinese audience, they risk a revenue sum with negative results.
Next, by offering discounts and targeting the mass: as a general strategy, many big brands have avoided significant price reduction, considering that the move could lead to status erosion. However, in Singapore, Clarins' luxury cosmetics have offered discounts and welcome gifts for first-time buyers, a somewhat defunct trade habit amongst premium brands. This strategy can often lead to more questions about the changes to luxury beauty's status quo—are these short-term contingencies to clear stocks or will it be their true long-term viability in the market post-Covid?
Powerful Brand Stories
How can beauty brands emphasise their products amongst other essential items? A meaningful brand story that withstands the current and post-pandemic market.
A brand story related to your customers is a crucial component of returning consumers' confidence in luxury beauty and maintaining loyalty. It creates a strong value proposition and builds the foundations for powerful marketing campaigns. A typical statement such as "we empower women," no longer holds a distinct value. Instead, customers want authentic and precise information about what the brand offers through a strong, inspirational story that connects with the customers and their locality.
Creating an authentic and honest brand story is especially important for targeting younger consumers—the powerful buying market of Millennials and Gen-Z. Through digital, brand storytelling helps to compete with the growing number of NPD and masstige, which provides more context for a luxury brand’s higher price point. When quality is not a point of difference influential brand storytelling will set it apart.
Luxury beauty was facing a tough fight from the rise of NPDs and masstige. But the pandemic is ubiquitous and its impact on the luxury industry resulted in a drive toward developing strategies that are practical to sustaining the dynamic world with ever-changing events and lifestyles. Innovating physical retail on digital, agile marketing to the world’s highest luxury spenders and authentically telling your brand story are essential to finding success in the face of rapidly shifting retail environments and preserving the premium shopper community.
About Kathryn Sloane
Kathryn has lived and worked in Hong Kong, Singapore, Shanghai and Melbourne. With 20+ years of experience (6 in Europe. 14 in Asia) in brand strategy, design strategy, workflow optimisation and change management. Kathryn has partnered the likes of J&J, Coty, P&G, Unilever, Beiersdorf, Mary Kay, Martha Tilaar and Watsons.
Kathryn is now the Managing Director of APAC/MEA, helping drive growth in APAC, through creating, building, and protecting brands across channels, markets and sectors.