The digital landscape has effectively altered consumer attitudes and behavior, and as the pace of disruption is getting faster, businesses need to prepare for explosive change—or it won’t survive. Such was the message at the third annual Professional Beauty Association (PBA) Executive Summit, which focused on understanding consumer dynamics and potential implications for the industry. This year’s topic was designed to be an extension of the previous year’s themes, but with a look at how the consumer perceives the beauty industry.
“It’s important to have a forum where senior executives can come together outside a tradeshow floor and have content and data that addresses the changing consumer so we can successfully adjust our traditional ways of doing things to meet new demands,” noted Rueben Carranza, Vice Chair of PBA Board of Directors and Group President of Luxury Brand Partners.
Held in Scottsdale, Arizona December 1, the event attracted more than 150 top executives from the professional beauty industry including Estée Lauder, Drybar, Joico, Kao, Sally Beauty Supply, Ulta Beauty and Zotos. Of note is that 40 percent of the crowd were first time attendees.
The speaker series was kicked off by leading Consumer and Shopper Behaviouralist, Ken Hughes, who highlighted the necessity of creating experiential equity to build value, differentiation and emotive loyalty with consumers.
“Many people think of technology as disruptive, but it’s consumers that are the disruptive force and they are getting more demanding than ever before,” he said. “Anything you do needs to be consumer centric as they are the ones driving change.”
According to Ken’s research, consumers are seeking genuine experiences, personalization, contextual communication and authenticity.
“If you are authentic, you have no competition,” he said.
Additionally, Ken noted that peer-to-peer interaction has become one of the strongest assets of brand building, as is having a social media presence and working with vloggers. It’s also critical to create memorable and shareable experiences in-store and online to make people talk about the brand.
Carrie Mellage, Vice President, Consumer Products at Kline Group, debuted the results of a comprehensive study, Kline PRO, featuring hard, transactional data from a nationally projectable panel of salons. Here, some of the highlights:
- Total service revenue if up 3 percent for the first half of the year (vs 2015), with hair coloring accounting for 33% of service dollar shares.
- The top trends in hair color are men’s lightening, +110 percent; balayage, +71 percent; bleach and tone, +22%; semi-permanent, +20% and demi-permanent, +20 percent. In terms of color, silver is the most popular trend, +80 percent.
- The fastest growing segments based on sell through (register rings) are curl care, +19 percent; clarifying, +15 percent; thermal care, +12 percent and multipurpose, +11 percent.
- Two new segments have been added to Kline’s data analysis this year: cleansing conditioners, which has seen a sales spike of +315 percent, and dry conditioners, +11 percent.
- Growing hair care brands to watch include Revive, Obliphica, HBL Hair Care and True Keratin.
- Market opportunities are seen in the areas of eyes, gift cards and men’s grooming.
- Eyebrow tinting is up 9 percent and eyelash services has seen a 5 percent increase.
- Gift cards are experiencing triple digit growth both in terms of revenue and transaction count. The average gift card price has risen from $29 to $44.
- Men’s services have seen triple-digit growth across several areas including thinning hair, finishing, shine and kits/promos. Men’s brands to watch include Layrite, Jack Black, Baxter of California, Vaughn and 18.21 Man Made.
Claude DeJocas, VP of Beauty, L2 Inc., shared the results of a digital analysis of more than 100 brands and identified winning business models, as well as the underlying consumer behaviors that have enabled them. Here are some of L2’s observations:
- Hair care underperforms more than any other category, with only 4 percent of beauty sales online. Brands can unlock this white space by investing in content/conversion assets such as diagnostic tools, tutorials and live chat as part of the consumer purchase funnel.
- The blurred lines between consumer and professional hair care has driven growth for new professional brands. For example, Ulta Beauty’s website removed the professional hair care category and now groups products by functionality, allowing users to discover brands based on their hair care needs.
- Amazon is easing indie brands’ entry into the hair care category without having to follow traditional retail models or opening a salon. It has become a one-stop shop for sales and awareness.
- The viral video is a myth. To achieve significant scale, branded YouTube videos require significant amount of financial support. For indie disrupters, there will be a shift to video platforms, such as Snapchat, that are able to offer organic traffic.
- Small indie brands are over-indexing on social media and are being driven by powerful influencer strategies.
The event concluded with an inspirational speech by Abigail Posner, Head of Strategic Planning, Google, who discussed how individuals could tap their innate creativity for greater productivity and growth.
For additional information about the PBA Executive Summit, please click here.