The beauty retail industry is growing at an incredible pace and tech is the catalyst. It’s a bold opening statement, but let’s look at the numbers. Currently, the beauty retail industry generates $100 billion worldwide. In 2023, the beauty industry in Southeast Asia is projected to increase by 10.98%, with a market volume of US$ 4.66 billion in 2027.
Grooming services, in particular, have gained popularity in the past few years, grossing over $20 billion. It is also worth noting that Southeast Asia contributes a high market share of 61.6% to the halal cosmetics industry.
What does the data all mean for beauty retail shops? Whether you’re a spa, a salon, or a direct retail shop, we clue you into five trends that may see you grow in 2023.
1. Tech will transform the beauty sector
There’s no question that digital technology is transforming the beauty industry, from the varied “consumer experiences” to the actual products themselves. Connectivity, convenience and community are the buzzwords for 2023 with brands tapping into on-demand apps and connected wearable devices and social commerce.
In 2023, beauty looks central to merging online and offline formats, with the metaverse having a profound impact and consequences for self-expression as we explore 3-D spaces with digital avatars.
Need more proof that the future is ‘phygital’ – melding physical with the digital?
The rise of virtual influencers in beauty. Digital natives like Gen Z and Gen Alpha may find that they can relate just as easily to virtual influencers as they can to traditional influencers. Or perhaps even more so, as sometimes real-life influencers present an aspirational version of life frustratingly out of reach to many.
Virtual influencers generate high engagement rates and offer brands a way to differentiate themselves from their competitors. Interestingly, according to a New Media and Society study, viewers’ parasocial response to virtual influencers doesn’t differ significantly from their response to human influencers.
Never mind the metaverse and virtual influencers, if your business hasn’t got a social media presence in 2023, it’s time to start showcasing your products and your brand on the Internet, on Instagram and on Tiktok.
We can help with this:
- Which social media platform is best for your business?
- Influencer marketing: Why your business needs it
- Better product photography to boost your brand
- How short-form video changed social media
2. Consumers expect personalised offerings
Personalisation has become ingrained in customer expectations. According to McKinsey & Company, 71% of consumers expect companies to deliver personalised interactions, and 76% get frustrated when this doesn’t happen. Mckinsey’s study also found that personalisation fuels performance and better customer outcomes. Companies that grow faster drive 40% more revenue from personalisation than their slower-growing counterparts.
In beauty, consumers who get personalised recommendations are more likely to purchase. Businesses that don’t deliver tailored experiences to individuals risk losing out on customers. According to a recent Optimizely survey, 63% of consumers are more likely to do holiday shopping with brands that customise the experience to their needs.
Increasingly customers demand that brands understand and anticipate their needs – 88% of shoppers feel the experience a brand provides is just as important as its product. So how can beauty retail tap into consumer preferences for personalisation in 2023 and beyond?
Take a leaf from the Beauty brand Sephora which has nailed personalisation thanks to its approach to customer experience. Its high-touch loyalty program is well-organised across all channels. Everything from customer answers to quizzes and regular buying habits is stored and used to personalise interactions.
Every interaction on each of Sephora’s different platforms displays the customer’s loyalty points. Store associates can also see a customer’s profile in-store and track recent purchases and items sampled, making it easier to find and buy them in-store or online. The easiest way to track customers’ preferences? Brands can use smart point-of-sale solutions to store customers’ information, gathering data to recommend treatments for their clients.
3. Loyalty programs continue to win over customers
Loyalty programs represent a massive opportunity for beauty brands to personalise their offering and retain more long-term customers. Pioneering beauty brand Sephora led the way with its ultra-personalized loyalty program, Beauty Insider, in 2007. But in 2023, consumers are still looking to purchase from brands that offer rewards.
Around the world, 56% of consumers said they’re more likely to buy from a brand with a loyalty program. Consumers cite personalised rewards that are automatically applied as some of their top reasons.
So in 2023, it’s time to create your loyalty program if you haven’t created one. Some perks you can include are seasonal savings, birthday gifts, free shipping, points based on customer spending, and more.
Read more: How to run a customer loyalty program
4. Natural, sustainable and halal products
Consumers are increasingly demanding that brands uphold sustainable values that match their own. Conscientious shoppers choose brands based on their environmental impact. A survey by Bain & Co in 2022 shows that about 90% of consumers in Asia-Pacific are willing to pay more for sustainable products.
The Euromonitor report on Trends in Asian Beauty and Personal Care echoes that demand, with words like “natural” and “cruelty-free” becoming increasingly important to consumers when purchasing products in recent years. In Southeast Asia, a trend is rising for consumers to want to choose more sustainable products or products with natural ingredients, that are environmentally friendly.
In another Euromonitor report looking at the island nation of Singapore, it has been stated that when searching for products online, consumers look for keywords such as “natural”, “restore”, and “detox” particularly in skin care and baby products. Similarly, in Thailand, there was a shift towards products with more natural ingredients.
Similarly, according to Euromonitor’s Beauty and Personal Care in Vietnam, consumers are attracted towards products marketed as “natural” and organic, despite their normally higher price tags. Bad press and increased public awareness about the possible toxicity and adverse health effects of beauty products containing artificial chemicals have helped this trend gain traction. Therefore, more consumers are choosing herbal and naturally positioned products over their artificial-based counterparts.
Another trend in the Southeast Asian market is the rise of halal products to cater to the region’s large population of Muslim consumers, particularly in Indonesia, Malaysia and Singapore.
For now, skin care is the largest halal sector within Southeast Asia at 31%, but haircare and body care present opportunities for product innovation. Spas, salons and other beauty retail brands will need to choose lines that represent this demand for ‘natural’ products and add Muslim-friendly lines to their product offerings to capture a market share.
5. Shoppers want a hybrid of both physical and online shopping
There has been a gradual decline in web sales as more users in Asia have become increasingly mobile-first. As more consumers in the region choose to make in-app purchases over the web, retailers need to invest more in enhancing their mobile app customer interface and user experience to aid sales conversion.
More consumers in Southeast Asia are also embarking on shopper journeys across various digital channels – from retailers’ websites to search engines and apps. To stay differentiated with personalised engagements, retailers should look at a full-funnel advertising campaign to ensure relevant ads are targeted at every step of the consumer’s journey.
Shoppers in Asia-Pacific are also leaving more reviews now than ever, with 60% claiming they have recommended a company to someone based on a good experience and 61% claiming to have left a positive review given a pleasant customer experience. Most Asian-Pacific shoppers also reported their preference for retailers to have a good range of products on the website/app and the ability to purchase online and pick up their items in person.
Therefore, this has revealed the importance of physical channels in creating a more unique and festive shopping experience or completing the purchase journey that might have started online.
We see this, especially among the younger generation. During the last year-end festive period, Gen Zs especially reported their intention to spend more time shopping for gifts in-store. This could be attributed to their desire for experiential retail experiences, something that online shopping cannot replicate.
Thus, a strong omnichannel strategy will be crucial for brands to capture as much market share as possible, amid the increasingly competitive retail landscape. This means keeping online transactions smooth and convenient while enhancing consumers’ physical store experiences to close the loop on their purchase journey.
Grow your business with Qashier
Qashier offers multiple digital solutions, including QR code table ordering, table management (F&B), employee management, customer relationship management (loyalty programs), inventory management, data analytics, and cashless payments, in an all-in-one device.
Qashier promises a seamless setup without any need for technical expertise. It boasts a user-friendly interface that is simple for anyone to learn and use. In addition, you’ll find 7 days-a-week responsive technical support from the local team if you require assistance.
One Qashier POS solution comes with integrated payment processing. With just one terminal, you’ll be able to accept an array of payment types, from major credit cards, e-wallets and EFTPOS. Speak to us to see how Qashier Smart POS can meet your business needs. Schedule a meeting with us here, or reach out via email [email protected]