With the retail industry still reverberating from the ripple effect of the pandemic, retailers are now having to additionally adjust to continuous consumer cutbacks following rising inflation and the cost-of-living crisis. According to the ONS, online retail sales fell by 2.8% in November 2022, which aligns with the downward trend triggered in early 2021. The beauty industry in particular suffered a significant blow, with the pandemic leading to a 20-35% decline in the market and brick-and-mortar locations closing.

Beauty brands are therefore shifting their commercial strategy to e-commerce, to be as accessible and engaging to consumers as possible. However, retailers should not fall into the trap of relying on e-commerce as its sole method of addressing changing consumer needs. There should instead be an active effort to differentiate their products and offers in a way which imparts a unified experience.

What is an Omnichannel Strategy?

An omnichannel strategy reaches and entices customers from multiple directions with the same messaging. When a brand uses this approach and integrates it throughout the customer shopping experience, consumers can partake in a seamless shopping experience.

Adopting an omnichannel strategy may therefore be a prime tactic to address the previous and future commercial challenges to come in 2023. In fact, research shows that brands which employ three or more channels of sale, earn 287% higher purchase rates than those which relied upon a single-channel strategy.

Why Implement an Omnichannel Strategy?

  1. Consumer Perspective

    A stringent omnichannel strategy will provide the integral insight needed to understand fluid and changing consumer demands. This data may be key in understanding what brands are attractive and why certain stores are browsed online instead of visited in-person. By delving into the consumer mindset, brands will be able to develop a deeper understanding of changing needs but more importantly, understand why needs or preferences may be changing in the first place.

  2. Engagement

    Marketers have found that brands which use three or more channels in their campaigns experienced 18% more customer engagement, compared to a mere 5% for single-channel campaigns. Consequently, customers purchased 13% more on brands with multiple channels. Customers are more likely to build brand loyalty towards campaigns they feel personally connected to. Personalisation has therefore become ingrained in both customer engagement and expectation. According to McKinsey & Company, 71% of consumers expect companies to deliver personalized interactions and 76% get frustrated when this doesn’t happen.

  3. The “Phygital” Experience

    “Phygital” or the “physical and digital” shopping experience is a form of shopping experience which combines voice, gesture and contactless navigation to facilitate the retail experience, e.g., virtual try-on and sampling. Make-up brands in particular are employing such methods by AR technology to virtually try foundation, lipstick and eyeliner samples before purchasing. This keeps customers engaged while helping them feel part of a personalised and tailored service, despite being online. According to research by CB Insights, buyers are 78% more likely to purchase products with personalised recommendations and experiences.

  4. Data

    Brands can use multiple channels to collate data from a range of valuable sources and use this information to feed into user experience and expectation. Brands can collate both online and offline data to turn this into a “single view” as customers interact across multiple platforms. Significantly, it facilitates brands in learning about customers’ shopping habits, preferences and decisions.

  5. Communication Multi-faceted customer interaction has become a reality. Customers easily interact with brands via social media, mobile apps, television and even gaming. Societal shifts into the virtual sphere means customers now expect and enjoy interacting with brands on these levels, and ultimately, greatly benefit from experiencing the same message on a range of platforms.

Beauty Brands Pave the Way

The pandemic led to a widespread trend of “conscious self-care”, where consumers focused on wholesome and natural ingredients in their extensive skincare and beauty regimes. In fact, 42% of shoppers chose products based on natural and pure components and cruelty-free beauty brands with environmentally-friendly packaging. Subsequently, “clean beauty” became a thriving trend.

Several popular make-up brands in turn became focused on skincare as much as the make-up it sells; a key example of how brands anticipated and honed-in on a popular trend. Some of these brands were in fact born from social media and remained online. The vertical strategy of direct-to-consumer approach enabled brands to retain control over pricing, branding and services. However, it also meant such companies would have missed out on in-store sales and in-person engagement due its exclusive e-commerce methods.

Subsequently, there is now a movement towards partnerships with in-store retailers such as Sephora and Nordstrom, marking the popular implementation of omnichannel strategies. Significantly, these changes in business models also signify the key shift in the way customers are shopping today and the transforming landscape of the beauty industry.

As we look to the future, consumers and brands alike are keen to revitalise the in-person shopping experience while retaining the virtual and technology-based perks expected. As stated by Alia Gogi (Managing Director of Sephora Asia), “Consumers are now operating within a total omnichannel ecosystem”.

To develop and retain its competitive edge, brands should look to expand into an omnichannel strategy to truly understand its customer-base and interact with them in a receptive, insightful, and dynamic way; ultimately succeeding in remaining at the forefront of consumer preference during another challenging year.