Customer experience is the new battleground for differentiation among beauty brands. Companies like Sephora and Target are employing a variety of high-tech digital capabilities to bring people into their stores, and it’s influencing smaller brands like SK-II, MAC, NYX and more to experiment, as well.
SK-II, the Japanese luxury cosmetics brand, recently unveiled a pop-up “smart store” in early May in Tokyo that’s serving as a learning lab for the brand. The two-level store features facial recognition technology, as well as artificial intelligence and Internet of Things (IoT) connected product bottles. The brand is hoping to better understand consumer needs and create an experience that will help them in their shopping experience as well get better-personalized skincare, said CEO Sandeep Seth.
“This is something we will continue to learn [from] and push the boundaries so we can create new prevailing experiences that can then be scaled beyond just a pop-up environment,” he said.
Larger retailers, such as Sephora have been instrumental in creating a trickle-down effect for other retailers, according to CB Insights intelligence analyst Anagha Hanumante. Similar to how Apple revolutionized the storefront for the purchase of tech devices, Sephora has created a new standard for in-store offerings, she said. Target also launched its own Target Beauty Studio, an AR technology tool that will be integrated into select brick-and-mortar stores and on its desktop and mobile site earlier this month. And standalone brands like MAC Cosmetics and NYX Professional Makeup have also begun incorporating augmented and virtual reality, respectively, into their retail strategies.
At SK-II’s Tokyo store, which it’s dubbed the Future X Smart Store, the customer begins their experience by interacting with a digital wall that uses facial recognition to create art. When a customer stands in front of the wall and moves, the art wall creates a responsive art piece that reflects the movement. Following this, a customer can enter into a photo booth-like setting for a skin analysis that does not require physical contact. The results from the facial scan can then be viewed in the upstairs area, where digital surfaces provide more information about products. On the same floor, SK-II is selling an IoT bottle featuring sensors to know when the bottle has been opened or closed — daily usage is tracked with a companion app to maximize the product experience. SK-II wanted to bring its proprietary skin analysis together with newer technologies like facial recognition to test out how to create personalized recommendations for customers, Seth said.
“From a consumer point of view, the expectations on how they interact with a brand is changing quite dramatically. If I look at how consumers now interact with technology … it’s pretty much embedded in everything they do, and more than listening to what a brand is doing, they also want to experience it for themselves,” he said, adding that there are beauty consultants on hand to help people, but only as needed so as to avoid customers feeling pressured. The idea is to recreate the customer–beauty counter relationship so that salespeople act more like Apple “geniuses,” helping to navigate the technology rather than sell products.
“I feel the retail environment will be moving toward that seamless integration of technology in the offline [world],” Seth said, adding, “It’s going to be the way forward, and when I say that, I am talking about the next six, 12 or 18 months, not the next three to five years.”
But the bar will continue to be set by larger retailers with the capacity to innovate and iterate faster. Sephora has an internal San Franciso-based Innovation Lab, created in 2015, dedicated to exploring technologies that could be leveraged across web, mobile and in-store to create a more integrated shopping experience, and is where the Sephora Virtual Artist app was produced. L’Oréal Group also has a Technology Incubator that launched in 2012, and in 2016, Target launched Target Takeoff, consisting of 10 startups — while last year’s teams were focused on health and wellness tools, this year they will experiment with beauty-oriented tech solutions and programs, Glossy previously reported.
“Sephora’s Innovation Lab definitely has helped the company keep an eye on what technologies are out there and when it might be the right time to integrate them into their story, to take their beauty innovation to the next level and establish a strategy for online or in stores,” Hanumante said.