The big brands board the digital beauty wagon

By Andrew MCDOUGALL

- Last updated on GMT

The big brands board the digital beauty wagon

Related tags: Digital beauty report, Investment, Big-box store

L’Oréal, Estée Lauder and Procter & Gamble significantly upped their digital efforts this year and this will remain a key trend in the future, according to market analysts L2 ThinkTank.

The New York-based researcher has just released its latest Digital Beauty report ranking the activities of the top cosmetics companies in the U.S. and finds that in 2013, the Beauty sector will register 6% growth.

E-commerce in Beauty projected to grow a staggering 29.1% too which is the best growth of all the (soft goods) sectors online.

Lead by example

And it seems the big boys are leading the way in what has become an ‘arms race’ across both traditional media investment and digital channels.

Estée Lauder has made aggressive investments in its online division as it aims to outperform the sector’s e-commerce growth, while L’Oréal increased its media budget to $1.5 billion in the U.S last year and indicates that digital, as a percentage of spend, has grown double digits annually since 2010.

Elsewhere, consumer goods giant P&G, whose beauty business has stalled, recently indicated that 25-35% of its media budget is allocated to digital and that it views investments online and a renewed focus on product innovation as key to turning the tide.

“Online influence across the industry is even greater as more than a third of Beauty consumers research online before purchasing,”​ says L2 chief, Scott Galloway.

“Brand experimentation ranging from live video chat and robust loyalty and auto replenish programs to sophisticated personalization tactics and digital-first integrated media campaigns have headlined the sector.”

Changing channels

The growth of the e-commerce arena has also played its part on the digital playing field as robust gains, high margins and low ship-to-weight ratios helped see a wave of e-commerce investment across Beauty.

Galloway uses the example of Amazon, last month, which launched its much-anticipated Luxury Beauty store, originally slated for April.

He states that although the offering, at present, lacks participation from any major conglomerates, with Amazon media investment beginning to ramp up and gray market inventory selectively being cleaned up, it may just be a matter of time.

“Sephora is not sitting still, exiting Amazon in February and launching its Sephora Flash program in August, mimicking Amazon Prime by offering customers free two-day delivery for a $10 annual fee,”​ adds Galloway.

Traditional department store and big box retailers have also increased Beauty-specific online investments, improving site merchandising and co-op marketing opportunities for brands as they try to get their share.

L2’s fifth report can be seen here​.

Related topics: Digital, Market Trends

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