Beauty market

How beauty brands are building their tech muscle

KEY IDEAS

  • Beauty companies are bolstering their tech offerings, not just in product development, but in the services and tools they offer consumers
  • However, for a beauty brand to build a successful technology operation, the priority should not be to implement the most advanced technology, but the option that best matches what a brand’s particular consumers are looking for. .
  • Brands also need to consider whether they want to grow their technology operations in-house or find an external partner, a decision that should be made based on long-term goals.

Today, the process of finding the right serum for your skin type or foundation shade might seem like something out of a science fiction novel.

Increasingly, beauty brands are starting to look a lot more like tech companies, with their own tech incubators, artificial intelligence capabilities and more. L’Oréal was one of the first to follow the trend when it acquired augmented reality technology company Modiface in 2018.

The momentum has only accelerated since then. Last year, cosmetics brand Il Makiage bought hyperspectral imaging computer vision startup Voyage81 (after acquiring Israeli AI company Neowize in 2019); Ulta Beauty has invested in AI retail technology company Adeptmind and launched a new virtual try-on partnership with Google; Estée Lauder rolled out the AR trial across its entire portfolio; and Clinique is building on a beauty lab in the metaverse to promote a new serum. Just last week, L’Oreal announced a partnership with Alphabet-owned precision health company Verily that will see the two study skin concerns and explore new product development.

Previously in beauty, advancements in technology meant product development – ​​as was the case with microbiome-focused skincare from Orveda, which was acquired by Coty in November 2021, or in the capabilities Patented Olaplex Bond Repair. This definition has expanded to include how brands use advanced technologies such as augmented reality and artificial intelligence to create hyper-personalized experiences, products and devices for consumers.

“When we first went to the Consumer Electronics Show, there were no beauty companies there…now there are so many,” said Guive Balooch, incubator manager. technology from L’Oréal.

The relationship between beauty and technology has changed as brands stake their future on the best gadgets, data and interfaces. The pandemic has heightened the importance of digital channels and contactless product testing, making technologies like virtual testbeds stakes. Now, to win over consumers, beauty brands must develop technological prowess in everything surrounding the product, and not just in the product itself.

“It’s not just a nice thing to have anymore,” said Sampo Parkkinen, CEO and co-founder of AR and AI wellness tech brand Revieve. “Beauty technology has the power to fundamentally transform the way brands serve customers.”

Find the right fit

Technology, Balooch said, has the power to solve several challenges beauty consumers face, such as finding the right skincare regimen or foundation shade, or being able to try rouge. lipstick without having to buy a new tube.

“What Silicon Valley has been doing for the last 50 or 40 years is using technology to solve some of the big tensions in people’s lives…with beauty, the big challenge has been how to solve the big issues people and consumers are facing today?” said Balooch.

But even though some digital capabilities, like virtual fitting, have all but become mandatory, Parkkinen said, beauty tech isn’t a one-size-fits-all solution. Understanding what consumers want from a brand means a lot of experimentation and testing.

“What you should be thinking about as a brand is: what do we stand for? What is the experience we need to offer the customer? ” he said. “What is the feeling I want the consumer to have when interacting with me?”

According to Prama Bhatt, chief digital officer of Ulta Beauty, Ulta first thinks about the experiences it wants to create, then determines the technology it needs to execute. Galooch, similarly, asserts that technological solutions must start with a problem and not exist solely in virtual space.

“You still need the makeup, you still need the actual product,” Galooch said.

Where brands often go wrong is when they replicate what works for a competitor without considering the particular needs of their own consumers, says Parkkinen. Depending on the target audience, sometimes it matters that the technology works rather than being the most advanced. A luxury brand, for example, might not want to use a fully automated AI-powered experience.

Failure and constant pivoting should be an expectation, according to Bhatt. The retailer evaluates new technology in terms of cultural fit and against a financial model of what it expects from the results, measuring metrics such as incremental sales, frequency of visits and engagement levels.

“If we believe in the desired experience, we will continue to adapt and change,” Bhatt said. “The [are] other times we might just pause and say “No, we learned”. Now is the time to move on.

How brands develop their capabilities

How a company approaches its technology transformation signals what it is banking on for its future and differs by agreement.

“Some will develop [their technology] internally because they want to beef up their tech assets, and some brands will say that’s not our DNA,” said Audrey Depraeter-Montacel, head of beauty at Accenture.

With L’Oréal’s acquisition of Modiface, which provides AI capabilities to retailers like Sephora, the company was saying “leveraging this technology is going to be strategically important to us, so we’re actually going to take this in-house ‘,’ Parkkinen said.

Developing a technology internally or acquiring a company to internalize it takes more time and money. But brands that do — rather than partner with an outside vendor — see that IP as important to their future. At L’Oreal, the main consideration is whether he has expertise in a certain area and the immediate abilities to invent something independently, Galooch said. If not, he finds an outside partner – for his first augmented reality app, he worked with Modiface and Image Metrics, a company known for facial mapping in movies and video games, and for the portable UV sensor from La Roche-Posay. which tracks exposure to UVA and UVB rays on a corresponding app, he partnered with John Rogers, physical chemist and professor at Northwestern University, whose research and intellectual property helped inform the development.

Galooch cites the Verily link as another example. “Without us they wouldn’t have the skin information, without them we wouldn’t have the information to create this ecosystem because they do it so well in [medicine],” he said.

For Bhatt, partnerships aren’t just about technology, but about the founders and teams that Ulta Beauty can add to its roster. The brand made two tech-focused acquisitions in 2018, AR and AI startups QM Scientific and GlamSt.

“Whether it’s a strategic partnership, investment or full acquisition, they all say the same thing: the beauty market is changing rapidly,” Depraeter-Montacel said. “The traditional beauty market must follow this trend, move and develop its strengths.”

The road to follow

Despite the investment, Parkkinen said some important developments have yet to hit consumers. This is due to several factors: consumer hardware on mobile phones is not up to scratch, and there is sometimes a knowledge gap between brand executives and technology developers.

The success of some other types of boundary-pushing technologies cannot be measured immediately with a simple adoption rate. For example, L’Oréal’s UV sensor will help the brand unpack all the individualized factors that can contribute to melanoma and skin aging. What matters is the fact that with this information the company will be able to make better products down the line, not today’s sales.

As technology becomes an increasingly important part of the industry, beauty executives will need to be more tech-savvy. For a brand manager, a few years ago, it was enough to know the customers and know the products, says Parkkinen.

“Today I also have to be a tech savvy,” he said. “I would have to be someone who spent several years in Silicon Valley to understand all this.”

The potential of “that stuff” really has no limits. Innovation around product chemistry will continue – but L’Oréal’s Galooch sees a future where every product is surrounded by services, and formulas could even be designed specifically for the technology.

“The more science advances, the more we will be able to come up with new products,” Depraeter-Montacel said. “I think there’s a lot ahead of us and brands know that – that’s why they’re investing.”