Customers of cosmetics and beauty products, particularly those in the prestige segment, anticipate a very high level of personalization, both in terms of products and services. Often, successful brands are the ones that offer their customers high-touch experiences. Best-in-class premium beauty brands go beyond simple active ingredients and products to make customers feel good, improve their appearance and boost their self-esteem. Recent advances in the consumer and technological landscape are rapidly changing the way beauty products are offered and consumed by customers.
What is Driving this Change?
The changing demographics of digitally native consumers have enabled brands to engage with their customers in new ways and develop unique product offerings. The onset of the pandemic accelerated this technology-driven transformation. Technologies like social listening enabled a deeper understanding of customer needs at a faster pace enabling brands to tailor their products accordingly. Further, the rapid proliferation of e-commerce and multi-channel sale platforms have fundamentally altered the way cosmetic products are marketed to customers.
The Emergence of Beauty Tech
In a new development, Industry 4.0 is impacting the beauty industry. Technology experts and cosmetics brands are collaborating to create Beauty Tech – an innovative new landscape that is better at serving customers. Advancements in areas such as artificial intelligence and machine learning (AI/ML), data and analytics, cloud computing, augmented reality and virtual reality (AR/VR) and the internet of things (IoT) have aided the development of Beauty Tech. Beauty Tech products aim to make immersive experiences as realistic as possible. Here are some of the most important advances in Beauty Tech:
Augmented Beauty Innovation
AR/VR technologies have revitalized the beauty industry by bringing in the latest innovations in the augmented beauty space. Augmented beauty products like virtual try-on applications and smart mirrors are allowing the customer to enjoy touch-free beauty. Augmented beauty apps are based on several technology platforms including:
Smart Sensors and IoT Devices
The emergence of smart sensors and IoT devices has taken the game to the next level. The sensors now record real-time data like UV exposure, skin hydration and skin health levels and then come up with customized products. Smart devices in salons are helping beauty professionals make high-end measurements on skin and hair conditions and provide smart solutions.
Advanced Cosmetic Product Formulators and Smart Applicators
Advanced product formulators are being developed to deliver real-time customized products. These gadgets are IoT devices that collect real-time customer data through various sensors and tailor products accordingly. Also, cosmetics brands are developing smart applictors for hair and skin products to improve product efficacy.
Advanced Customer Relationship Management (CRM) Technologies
To complement the developments in the Beauty Tech space, companies are enhancing CRM competencies and integrating these into devices. The new CRM solutions use AI/ML techniques to make smart product searches and help customers place orders in real-time.
Major Players in the Beauty Tech Ecosystem
Pure-play Beauty Tech companies including ModiFace and Perfect Corp. have been market leaders in the augmented beauty space. While Perfect Corp. has offered solutions to major beauty companies such as L'Oréal, Estee Lauder, and Sephora, L'Oréal's ModiFace technology has been used by L'Oréal owned brands such as La Roche-Posay and L'Oréal Paris. These technology stacks have been seamlessly integrated at the point of sale, whether it is e-commerce, omnichannel, or physical stores.
Aside from pure-play Beauty Tech firms, high-tech companies are entering the Beauty Tech space with game-changing innovations. Spoiledchild is a product that uses an artificial intelligence system to map a consumers' facial blood flow, monitor heart rate and create melanin and hemoglobin maps for product recommendations. Droplette, a cosmetics product delivery system, employs a science that combines fluid dynamics, the piezoelectric effect, and Fick's diffusion laws to create tiny droplets of serum that can penetrate 20 times deeper. The Chronobiology Sleep Mask from Panacea Nobilis uses Nobel Prize-winning chemist Sir Fraser Stoddart's Organic Super Molecular Vessels (OSMV), which are 10,000 times smaller than a skin cell.
Of late, IT giants including Alphabet Inc., Microsoft, and Meta Platforms, Inc. have entered the fray, leveraging their in-house platforms, data and AI/ML capabilities. Tech majors have been open to a wide range of business models, including open innovation models, collaborations, financing in tech incubators and investments in early-stage Beauty Tech start-ups. A few of the major advancements include a strategic alliance between L'Oréal and Verily, Alphabet’s precision health company for precision skin health offerings; ModiFace's adoption of Google's Vertex AI to strengthen its machine learning model by adding more data points and the Ultra Beauty collaboration with Google to offer virtual try-on.
Corporate Goals and Beauty Tech
Beauty brands today are challenged to balance product performance with sustainability goals. While well-informed digitally native customers seek high-efficiency products, they also demand transparency in naturality, fair trade and traceability of raw materials used in product recipes. On the corporate governance side, corporations have the responsibility to address concerns about biodiversity, reduce net waste and adopt socially responsible practices in business. Integrating effective blockchain technologies with product life cycle and product date management tools in product development has addressed the majority of these concerns at the consumer end. At the same time, advances in product chemistry with natural and biodegradable alternative ingredients have solved environmental concerns at the corporate level.
Regarding sales and profit margins, beauty brands leveraging Beauty Tech tools have experienced better profit margins due to lower product return rates and better inventory management. Personalization and better shade matching improve brand loyalty and repeat purchases. Further, the adoption of Beauty Tech tools allows brands seamless technology integration with other marketing technologies. Increasingly, Beauty Tech is becoming a key enabler for beauty companies to achieve triple-bottom-line goals.
In summary, the changing market landscape in the cosmetics industry has compelled beauty companies to invest in cutting-edge technologies. Furthermore, the onset of the pandemic posed a technological challenge to businesses. In this scenario, the emergence of Beauty Tech provides businesses with a direction and opportunity for process recalibration and product rejuvenation. Aside from effectively responding to industry disruption, developing processes aligned with Beauty Tech products supports cosmetic brands in achieving long-term corporate goals.
Senior Consulting Partner, Wipro, Limited
Vinay is a Senior Consulting Partner and works with a portfolio of retail and consumer product clients in B2B and B2C e-commerce, omnichannel, Industry 4.0 and supply chain.
Principal Consultant, Wipro, Limited
Jagannath works as a Principal Consultant in Consumer D&C. He has over 12 years of experience in the consumer goods industry. His areas of interest include innovation management, product lifecycle intelligence and emerging digital technologies in the consumer goods domain.