The beauty industry has shown resilience over the past year, holding its own amid a difficult consumer crisis that has severely impacted other sectors. For the coming year, the beauty industry looks stronger than ever, with rapid digitalization and loyal consumers supporting Statista’s projected annual growth rate of 4.64 percent, with the market already worth US$528.6 billion (5037.84 billion euros).
FashionUnited combed through multiple reports to uncover key industry trends, all aimed at boosting consumer engagement, building trust and closing satisfying transactions.
Hyper Personalization
Personalization has become an extremely important factor in the beauty industry as more and more consumers expect personalized interactions from companies. In fact, according to a study by McKinsey & Company, 71 percent of consumers expect such a service, while 75 percent are more willing to make a purchase when given personalized recommendations.
As part of its report, Shopify highlighted several methods that have proven effective in personalization, including Sephora’s app, which allows customers to provide options like hair and skin type and to answer questions. to get recommendations.
According to Revieve, a digital-first solutions provider, this trend is being driven by the use of selfies, which, when optimized, can offer customers personalized product recommendations before they make a purchase. In its report, the company states that users who performed self-assessment performed 53 percent more purchase-related actions than those who did not, resulting in a 60 percent higher conversion rate than other shoppers .
brand loyalty
Loyalty programs and initiatives represent a major opportunity for cosmetics brands, according to Shopify, as they allow them to personalize their offerings and retain more customers over the long term. The company added that consumers will continue to shop from brands that offer rewards in the coming year. 56 percent of consumers stated that they would rather buy from a brand with such a program. Many also indicated that automatically applied bonuses and personalized bonuses are the main reason for using such programs.
Revieve also confirmed that building relationships with customers is one of the most important factors, although the industry often relies on simplifying transactions. In its own report, the company said that building loyalty will be “key to the future success” of the industry, and highlighted its own efforts in consumer goal setting initiatives and routine referrals.
AI, AR and VR
Almost every industry has faced the need for rapid digitization this year, a trend that will undoubtedly intensify in 2023. More and more cosmetics brands will increase their efforts in the use of artificial intelligence (AI), augmented reality (AR) and virtual reality (VR), each of these technologies offering a variety of benefits to those who optimize them. AI is useful for helping online shoppers find the right products for them and can be used as a vehicle to create custom formulas and encourage customization. Shopify highlighted Proven’s AI technology, which allows users to get seasonally appropriate products for their own skin type and lifestyle.
Additionally, many customers have already encountered AR or VR capabilities while shopping, as more and more social media platforms begin to integrate such elements into their offerings. Beauty retailers can use these features to demonstrate their products, allow customers to try on items virtually, and engage with audiences in their own homes. According to Shopify research, products with 3D/AR content had a 94 percent higher conversion rate than those without.
The company has already launched an AI skincare consultant and other AR-powered solutions that help brands build a loyal customer base. The company has found that, on average, users are two to three times more likely to become repeat customers when they encounter such programs.
This translated post previously appeared on FashionUnited.uk.