The Cosmetics Industry: My First Look

My Make-Up Story

I’ve been interested in make-up pretty much for as long as I can remember: I started wearing eye shadow as a young teen in the late 1980s.  Before the days of the Internet, my first magazine subscription was to Allure, where I would skip straight to Kevyn Aucoin’s monthly column.  I will never part ways with his book, Making Faces; Maman gave it to me for Christmas some 20 years ago.

Over the years, I graduated to Vogue and InStyle, discovering the great Pat McGrath and mogul Bobbi Brown.  I remember dragging my girlfriend Sarah to meet Laura Mercier at a Neiman Marcus event in DC 15 years ago and being intrigued by her fascinating journey from painting and drawing to celebrity make-up artist and business woman.

My own make up practice evolved as I tried on the trends.  No longer exactly a trend follower, yet still trend-aware, I am, to this day, passionate about expressing myself through fashion, hair style and let’s be real, like one out of three women in the US, I almost never leave the house without some kind of make-up on.

I’ve recently started to consider career opportunities that would take me out of the German automotive industry, one I have been integrated in for the last 6 years.  To address feelings of both apprehension for leaving what I know and excitement of joining a different industry, I embarked on a small research mission about the make-up business.  What would it be like if I worked in this industry? 

Like Mark Twain said: “The secret to getting ahead is getting started.”

The Basics

I first had to get my brain organized and anchored in the key cast of characters of the industry.

Make-Up Brands

For simplicity, I organized make-up companies in one of the following three major buckets:

1. Mega: e.g. L’Oréal, Estée Lauder, ShiseidoThese mega-companies own most of the brands we, the end-customers, know from our department, specialty, grocery and drug stores.  Check out this INSIDER article for an excellent summary.  While I was aware of the holding company model in the industry, I was surprised to see so many brands under so few leaders.2. Boutique: e.g. Anastasia Beverly Hills, Charlotte TilburyThese independently-owned brands usually offer signature products to a niche market with a focus on innovation and specialty design to create a unique experience.3. Start-ups: e.g. Glossier, ColourPop, Milk Makeup

These newer companies offer a range of products that are usually available online and are often coupled with a valuable digital platform or presence (and even sometimes corresponding services).

Manufacturers

While some brands make their own products, many outsource their engineering, preparing, blending, compounding, testing and packaging to manufacturers.  For example, Kim Kardashian doesn’t make her own KKW Beauty products; she works with Seed Beauty.  Research indicates a trend favorable for manufacturers for the next 5 – 7 years.

Make-Up Customers

Obviously, none of these companies would be relevant if they didn’t have customers to serve.  I clustered make-up consumers in three groups:

1. End-customers: people like you and me who visit department, specialty, grocery and drug stores, spending in the US in 2016, $7.6 billion doing so.

2. Make-up professionals: those individuals who make a career at the craft, science and artistry of selecting and applying make-up on the human body.

3. Brands: the aforementioned Mega, Boutique and Start-up brands that buy products from manufacturers to serve end-consumers and make-up professionals.

Business as Usual?

Traditionally, a pretty straight-forward chain of command has existed between manufacturers, brands, make-up professionals and end-customers: in general, end-customers and make-up professionals buy from brands that buy from manufacturers.  Simple.  (A familiar analogy to the car business: we buy cars from dealers who buy them from original equipment manufacturers.)  That’s how commerce has worked for hundreds of years.

But not so much anymore.

Customer-Centricity

In this digital age of user-generated content and social media obsession, customers are empowered and using their voices to demand different products and experiences that truly meet their individual needs.  Brands that are connected to their customers and swiftly respond with purposeful products and value-add complimentary offerings are being rewarded: Glossier’s recent Series C round of capital influx (@$52M!) is just one industry example.  (And watch, soon we will be able to buy cars online directly from the car companies…).

To remain competitive, it is imperative that companies understand customer trends and proactively develop and commit to strategies that address this shift in customer attitudes and expectations.  Businesses engaging in popular digital transformation and service design initiatives are tenaciously putting humans at the center of their processes and operations, hoping to better satisfy both customers and employees, resulting in turn in loyalty.  These practices are the foundation of customer-centricity.

Lots of Research is Available!

Fortunately, I quickly discovered that the cosmetics business is rich with market research and trend analysis resources.  Given the chance, I would devour a Statista, Mintel, IBIS or NPD report…  However, even without further analysis of the deep data insights these expert advisors provide the industry, some table-stakes and opportunities are clear: addressing millennials while considering the aging population, having a solid social media strategy and execution plan, respecting the environment in every aspect of product creation and go-to-market processes, and thinking about male segment and transgender communities – they have needs too!

Beyond navigating ebbs and flows these macro industry movements and the bits and bytes these end-customer spawned trends offer, brands must also stay true to their unique differentiators, identity and successes with their current customers.  For many Mega brands and manufacturers, an important heritage resides in these carefully created and curated legacies.

What Then?

So how can corporations systematically approach this necessary balance between maintaining their current business and innovating for what customer may want in the future?

I believe cultivating this discipline starts with listening to customers.  Personally, I have a penchant for meeting customers where they are.  So for this research mission, I went on to interview and listen to actual customers.

I met with Meaghan Whalen, co-owner of Baltimore’s Fleurt Beauty Company.   In addition to being an entrereneure, Meaghan is a licensed cosmetologist, skin connoisseure and professional make-up artist.  For the last 8 years, she has shared her passion for make-up with and exercised her artistry on more than 5,000 faces.

I also interviewed Julia Hartgen, a trained aesthetician and professional make-up artist affiliated with the Shiseido group, specifically the Laura Mercier brand.  She has spent 20 years in the industry as a practitioner and teacher, also working in a variety of leadership capacities both at department and specialty stores.

I spent an afternoon (and a couple hundred dollars) at my local Sephora retail store where I interacted with a handful of brand ambassadors and retail associates, all clearly passionate about their career, the industry and the company.  I also spoke to some customers.

And I performed countless Google searches…

My Findings 

1. Focus on Lifestyle-Built, Powerful Products, for Everyone.

Standing in Sephora, I couldn’t help but wonder: with so many to choose from, which concealer am I?  Do I really need two full-size products and a pair of brushes to camouflage my dark circles?  What shade is closest to my skin tone?  And what happens when I start sweating (if summer ever gets here…)?

It’s no secret that consumers today are more mobile than ever before.  We are also more concerned with reducing waste than ever before.  And we are apparently busier than ever before.  We need efficiently packaged multi-purpose products.  For example, a refillable make-up remover that is also a night cream; a men’s moisturizer with a slight tint to it, packaged in a metal, squeezable tube; a concealer + setting powder with built-in brush applicators.

We need products that perform with the individual wearing them, considerate of climate, activities, skin type and context of application.  For example, a date night might require a different formula than a day at the office; a photo shoot requires a different composition than a day in the sun.

We need to put the color back in cosmetics so that our products are available to everyone.  Colors that cover the gamut of skin tones, like all 40 shades of Rhianna’s Fenty Beauty foundation.  Everyone deserves a perfect match and a color palette that compliments their uniqueness.

2. Couple Human Contact with an Intimate Education

While there are plenty of make-up tutorials on YouTube (in fact, 45% of beauty videos are tutorials), that content is only really relevant to one person: the individual applying their own make up, making the video.

In real life, one size does not fit all.  Far from it.

Every professional I talked to for this research project declared that they are in this business because they want to share the artistry of make-up with others and because they like making their customers feel good.  Products turn into magic in the hands of these trained professionals: colors appropriately blended and skillfully applied to precious facial features can light up a visage; the right ingredients on specific skin types can solve often tricky situations; a careful and respectful discussion about routine can enable simple enhancements that make a hockey mom feel like a celebrity.  These moments should occur where customers are already going to feel and try products, where the ritual of the make-up application can be honored and, if needed, redefined, where connection between individuals creates intimacy.  On the ground, the field, in-market.  At the physical point-of-sale.

3. Simplify with Classics

Sure, glitter sparkles, moon beams luster and glass shines.  But those trends are not for everyone.  And while I won’t argue that millennials play an important role in the future of the industry, Generation X and Baby Boomers still make up the majority of key cosmetics markets’ population.  So, I’m thrilled Isabella Rossellini has reunited with Lancôme.  I also love seeing Cover Girl Maye Musk everywhere.  Where basics and simplicity meet, authenticity can be at its maximum.  Beautiful, human interest stories come and can be told from that place…  Classics can be reinvented.  And doesn't everyone loves a classic?

Conclusion

There has never been a better time in history to be a customer experience professional.  Lucky me.  After this research mission and report, I am more curious and enthusiastic than ever about potentially joining the cosmetics industry.  I also aspire to turn this first look into a series.

À suivre.