With fewer passengers visiting airport stores, the dip in footfall for duty-free operators is forcing them to look to more omnichannel activities with e-commerce a shining light ahead. From augmented reality and virtual flagships to livestreaming, a laser focus on digital is paramount for the travel retail industry.
Phygital shopping habits are the new normal for travelling consumers as they seek new levels of digital engagement and the beauty category is adopting more agile ways to market its products to global online audiences.
In 2019, the beauty category was the biggest travel retail category (by far), accounting for 80% of global sales, according to Generation Research a market research specialist that has a focus on the travel retail market size and performance. Generation’s 2019 estimate for global sales in the travel retail sector was $38bn, which is up around 20% vs 2018. Perfumes and cosmetics comprised the largest category, with skincare sales of $20bn, after strong double-digit gains; colour cosmetics, with $9bn and robust double-digit growth; and fragrance, with about $9bn and flat sales versus 2018, reported WWD.
The Asia Pacific region again accounted for the largest proportion of sales volume and increase, at $27bn, up more than 30%. Europe followed, with sales flat at $5bn-$6bn; the Americas, at $3.1bn, was down with a mid-single-digit decline, and for the Africa and Middle East region sales were up with a low single-digit rise, at $1.6bn.
Beauty giant L’Oréal attributed e-commerce sales to a lone growth channel during the coronavirus pandemic. The French beauty company said its e-commerce channel posted record growth in H1 2020, up 64.6%. Meanwhile, despite sales being down 3.9% year-on-year in the same period for the Asia Pacific region, its Mainland China sales were up 17.5%, which it said was due to a rebound in the second quarter aided by online and offline shopping festivals contributing to the recovery.
During China’s coronavirus lockdown, livestreaming gained mass market appeal. And now, fuelled by Chinese consumers’ appetites for KOL-endorsed beauty products on platforms such as Douyin (the Chinese version of TikTok), WeChat Mini Programmes (such as GlobuyX), social shopping app Xiaohongshu (known as Red) and video platform Bilibili, the trend for livestream commerce is now proliferating from China to the rest of the world.
iResearch predicts that by the end of 2020, China will have 524 million online livestreaming users. This means 40% of Chinese people and 62% of the country’s internet users will be livestreamers. The total scale of China’s live streaming e-commerce industry reached RMB 433.8 billion in 2019 and is expected to double by the end of 2020.
DFS, the LVMH-owned retailer held its first in-store livestream event in collaboration with WeChat in mid-August and made more beauty sales in one hour than it has ever seen at any of its Hong Kong outlets in one day. The in-store event was hosted over WeChat by DFS beauty experts from T Galleria by DFS, Tsimshatsu East Hong Kong, generating more than 50,000 views, 30,000 likes and more than 12,000 click-throughs as online shoppers pre-ordered and snapped up 50 products on special offer.
“Live streaming has become one of China’s most popular ecommerce trends, accelerated by the COVID-19 crisis,” said DFS Executive Vice President Global Marketing and Beauty Merchandising Christophe Marque. “It is fun for us and for our audience, but also a great way to engage our customers while they are unable to travel.”
With the shift to working from and staying at home, along with online purchases comes make-up tutorials and virtual colour matching for cosmetics. We saw in December 2019 how L’Oréal partnered with Lotte Duty Free to launch ModiFace’s virtual try-on app, which Lotte called Dream Face, to give travellers personalised online discovery for a range of L’Oréal cosmetics brands, including Lancôme, Giorgio Armani, L’Oréal Paris and Urban Decay.
“L’Oréal Travel Retail Asia Pacific and Lotte Duty Free share the same vision that online Augmented Reality (AR) is becoming key throughout travellers’ journey of product discovery and purchase. Our launch of ModiFace make-up virtual try-on further expands our expertise in beauty tech, and I look forward to revolutionizing the travel retail industry with the AR-enabled future we are creating today,” said Emmanuel Goulin, Managing Director of L’Oréal Travel Retail Asia Pacific.
Usage of AR beauty technology has spiked through the pandemic. Perfect Corp’s YouCam Makeup virtual beauty app has seen record high-user engagement. According to the firm, behaviour data showed a 32% rise in daily virtual try-ons, 50% more calls through the free one-on-one advisory service and double the amount of time spent watching YouCam livestream shows.
“This is an opportunity for developers to focus on really nailing some of the virtual try-on capabilities that are currently a novelty. They are fun to play with, but now they need to become two-way interactive tools that take advisory and artistry to the next level. Customers might also be able to get a copy of a recently purchased IRL product for an app that allows them to use the product virtually for their online video-conferencing filters. Virtual try-on in-store could be colour tester stations that project selected shades onto the skin to help customers pick the right colour, and evaluate coverage and effect on the skin.” Wende Zomnir, Urban Decay Chief Creative Officer told online beauty magazine Glossy.
NARS Cosmetics was an early adopter of pandemic-driven digital shopping behaviours and in June, the make-up brand partnered with state-owned Chinese duty-free operator CDFG for a pop-up retail AR campaign.
The NARS Icons promotion at the CDF Mall in Sanya, Hainan, featured a geo-location digital campaign that asked users to scan a QR code, sign up to an AR game, then find as many NARS lipstick motifs as possible on their mobile device screens. ‘Winners’ could redeem vouchers for gifts with purchase at the physical pop-up designed to look like a camera obscura with an interior exploration of some of the NARS bestselling products with safety-conscious iPad make-up tutorials. According to the brand, the campaign resulted in a combined reach of 35.9 million and saw sales of +26% against target for NARS in China.
Since working from home has become the new normal and social distancing rules prohibit any kind of corporate physical events, retail promotions have moved online. This is also a sign of the industry’s shift to focus on e-commerce strategies, with influencers playing a key role. Over the last few weeks we have seen digital examples of launch events from beauty brands that have embraced live Zoom gatherings to launch new products and digital flagships designed to interact with online communities.
For its latest molecule-enhanced version of the bestselling Advanced Night Repair serum Synchronised Multi-Recovery Complex, Estée Lauder held a series of global virtual webinars. Designed for beauty influencers and brand fans alike, the hour-long Zoom events included online tutorials and click-through pop-ups featuring interactive skin diagnosis, updates from lab technicians and face yoga sessions.
In September, Génifique by Lancôme ‘opened’ its first global virtual flagship ‘in Singapore’ that was timed to coincide with the launch of its #LiveYourStrength campaign for the bestselling Lancôme Advanced Génifique Youth Activating serum.
A global first for the beauty brand, the online store set out to marry digital engagement with physical experience. Online visitors could find one-to-one customer service tutorials accessible by chat bots and click-through zones within the virtual store. Lancôme said it wanted to provide an ‘immersive’ 3D shopping experience in a virtual space, in order to bring the store close to shoppers from the comfort of their homes.
With a similar premise, Lancôme Travel Retail Asia Pacific has partnered with Lotte Duty Free to unveil a dedicated Lancôme x Lotte Duty Free Smart Store at the retailer’s Myeongdong main store. The phygital hybrid store mirrors its latest physical retail initiatives with online interactivity.
A key launch at the 520 sq m store is Lancôme’s first in-store implementation of the AR makeup try-on service in travel retail, Modiface – Dream Face for the Lotte Smart Store. Using AI algorithms, shoppers are able to accurately shade match and try on the different Lancôme foundations, lipsticks and other makeup products via virtual mirror from the iPad or by scanning the QR codes next to each makeup icon through the Lotte Duty Free app.
TRP takeout: For beauty brands operating in travel retail, these examples of digital engagement initiatives showcase a new set of consumer expectations. From the influencer-driven Zoom events, online flagships that mirror in-store services, livestream commerce and AR interactivity, they represent a more progressive approach to adopting phygital retail strategies and offer a new spin on e-commerce strategies.