Demand for customisation boosts Hourglass and Tatcha

This Vogue Business Beauty Index article is part of our Advanced Membership package. To enjoy unlimited access to The Long View from Vogue Business and bi-monthly Market Insights Reports and webinars, sign up for Advanced Membership here. This is one of the four chapters comprising the Vogue Business 2023 Beauty Index and should be read in conjunction with the others. Please use the table of contents below to navigate between the chapters of the Vogue Business Beauty Index. Key takeaways: The consumer innovation wishlist is driven by the desire for personalised products and technologies, which ease online shopping journeys, but few brands are offering this, creating a gap between consumer demand and experience delivered. Innovation strategies need to go beyond being localised by region. An increased focus on inclusive innovation must cater for consumers with disabilities and overlooked age groups. As technology intersects with values and purpose, blockchain acts as a sustainability and authentication tool, most popular among men and Chinese audiences. Metaverse collaborations between brands and audiences are democratising the creation of beauty products. Given personalised beauty and the metaverse are most popular among 18- to 24-year-olds, this could increase future expectations around customisable physical products. Facing up to personalisation Beauty’s mission has to be about celebrating and supporting the uniqueness of every one of its customers. This extends to individual consumer preferences, with 76 per cent of respondents surveyed as part of the Vogue Business Beauty Index 2023 saying they would like more personalised product options. Only 23 per cent of brands within the index allow customers to personalise physical products — with only Hourglass and Tatcha offering customisable palettes or travel set combinations and La Mer and Charlotte Tilbury being the only brands to offer product engraving. Fans of DIY dermacare brands, like The Ordinary, know that true empowerment lies in the ability to self-customise ingredients across a skincare routine. Meanwhile, within prestige, the Prada Skin launch is banking on adaptive skincare (Adapto.gn Smart Technology) being the key to delivering bespoke science en masse. Personalised ingredient options are an important component of how haircare and skincare will continue to ride the wave of wellness and self-care. In August 2023, Sephora launched an exclusive collection with custom haircare brand Function of Beauty. Its collection of shampoos and conditioners for different hair types comes complete with a selection of nine hair goal concentrate formulas, which customers can self-prescribe to address specific hair needs. Meanwhile, Drunk Elephant’s concept of customers combining its clean beauty products to make their own “smoothie” recipes sees skincare layering repackaged as a healthy lifestyle choice. Sixty-nine per cent of consumers want AI to analyse their face and give them skincare and colour match suggestions — but only 27 per cent of brands are offering this. Tarte and Nars are two of the brands within the index offering shoppable AI advice for foundation shades. In terms of skincare, Kiehl’s offers an AI Diagnostic experience that maps advice into facial zones, while Charlotte Tilbury’s Pro Skin analysis tool decodes selfies for dehydration, pores, wrinkles and dark circles, allowing loyalty members to save and track progress along their skincare journey. Personalisation often feels more like a service than just a product. Beyond the 27 per cent of brands offering personalised recommendations based on AI analysis, a further 50 per cent utilise simpler quiz-based recommendations. However, digital accessibility is still a personalisation concern for many beauty brands, given that some customers with disabilities may not be able to navigate brand-owned beauty websites, let alone their tools. Only half of the brands in the index — including Huda Beauty, Glossier and Milk Makeup — have publicly stated their digital stores meet the Web Content Accessibility Guidelines (WCAG), an initiative from the World Wide Web Consortium (the international standards organisation for the Internet). Avoiding ageist innovation It’s not just products and digital experiences that need personalising but strategies for innovation too. Often preoccupied with the complexities of Gen Z customers, beauty brands should instead be giving all age groups equal consideration and aiming to eradicate bias when it comes to technology adoption. If not, brands risk missing the innovation sweet spot. At 75 per cent, AI diagnostics is the second most popular innovation in beauty — most popular among those aged 35 to 44, over younger audiences. Whether it’s noticing more signs of ageing or navigating hormonal changes due to pregnancy or perimenopause, this audience is also the first generation to have grown up with the internet. They are early adopters of technology with higher disposable incomes — an intersection that makes them discerning customers and the most enthusiastic about beauty brands being digital service providers. At 65 per cent, AR try-on is charting third in the innovation wishlist. No longer a novelty but a practical innovation within the shopping journey, this technology is again most popular with 35- to 44-year-old audiences — with US customers in this age bracket over-indexing against the global average by 8 per cent. Localised insights from the index show that strong demand for AR try-on also comes from older audiences in the UK and Italy, alongside the Middle East. More than 80 per cent of customers aged 35 to 65 in Kuwait want more/better solutions when it comes to this option. To answer this local appetite for beauty tech, in 2022, Shiseido collaborated with Revieve’s AI Selfie Analysis technology to create a virtual on-site makeup advisor exclusively for the Middle East. In light of the need to refocus on the beauty needs of those aged 35 and over, there is an opportunity for brands to not only re-target their technology pipeline but also the influencer and paid media strategies marketing these innovations. Trinny London is an example of a digital-first beauty brand speaking exclusively to this audience. With the products often modelled on 59-year-old founder Trinny Woodhall herself, Forbes reported its valuation at $250 million in 2019, with Woodhall stating in 2023 that it has achieved 100 per cent growth per annum for the last five years. Unlocking beauty’s path to blockchain Innovation that aligns with values and purpose has the power to strengthen a brand, with one of beauty’s most urgent innovation priorities being the intersection of sustainability and tech. Traceability (delivered by blockchain/RFID) was the most desired innovation by customers within the Spring/Summer 2023 edition of the Vogue Business Index, which ranks the top 60 global luxury fashion brands. Placed at number five for top innovations among consumers, we can expect traceability to continue climbing, given that it is already a more mature technology within fashion and consumer mindsets, around sustainability, transparency and trust. Traceability and the ability to track brand’s products and supply chain (via technology such as blockchain, for example) is popular with 38 per cent of consumers — and when siloed by gender, men rank it higher, with 50 per cent placing it on their innovation wishlist. And, in terms of geography, at 53 per cent, Chinese customers want the ability to track a product’s history and supply chain the most. The idea of farm-to-face blockchain-authenticated ingredients has the added benefit of protection against buying counterfeits. Ingredients recorded on the blockchain help to emphasise the transparency and ethical values of natural and organic brands. It’s been two years since B Corp brand Aveda put its Madagascan vanilla on-chain — but this still feels progressive, as it’s still rare for beauty brands to engage with blockchain in terms of traceability of a particular ingredient that blockchain can help verify is ethically sourced. Of the brands in the index, it’s La Roche-Posay, alongside the Cult Beauty x Provenance initiative (which involves select brands it stocks: Hourglass, Paula’s Choice and Glow Recipe) that has engaged in blockchain technology. Outside of the index, Rtfkt and Shu Uemura have partnered this year to experiment with a future of beauty that is “offline, online and on-chain”, while Clarins allows customers to trace the manufacturing journeys of not only their products but their packaging on-chain by scanning a QR code. Going forward, collaborations in the metaverse between brands and customers, with ingredients verified on the blockchain, will see brands able to prove to consumers that their choices were actioned. Fenty and Byredo are already inviting customers to become product creators in the metaverse — asking them to collect virtual ingredients for the beauty gloss bomb in the Fenty Beauty Lab on Roblox and for the Byredo “aura” NFT perfume in Rtfkt, respectively. Rihanna’s favourite fan-created Roblox formula for Fenty will be released as a physical product in 2024. And once a Byredo perfume created in the metaverse becomes a physical product, it’s automatically verified via its original on-chain digital twin. Case study: Charlotte Tilbury and the virtual store Charlotte Tilbury, charting at number one for innovation in the index, refers to itself as a technology and beauty company. Already a forerunner in providing virtual consultations, AR try-on and AI diagnostics, it’s currently in world-building mode. The brand’s 2023 collaboration with Disney has birthed the fourth version of its virtual store: Charlotte x Disney 100 Beauty Wonderland. Upon arrival, visitors find themselves immersed in a 3D gameplay experience. Here they can customise their avatar’s skin colour, body shape and outfit, and an option to invite friends, replicating online multiplayer gaming environments. The store aims to feel like an open metaverse experience — meaning there are fully immersive, peer-to-peer interactions, but that it’s cleverly housed entirely inside the brand’s jurisdiction. (The virtual store design is largely based on solo shopping trips with P2P interactions as a feature.) Instead of placing the store within an existing gaming platform, Charlotte Tilbury’s standalone destination secures zero-party and first-party data. Every step a visitor takes, and every quiz completed is a bankable in-house insight, revealing consumer behaviour and preferences. Its worldwide availability means its independence can also future-proof access for Chinese customers — who, at 26 per cent, are the most enthusiastic group by geographic location in terms of metaverse and gaming (despite currently having Roblox closed to them). The Charlotte x Disney digital marketing campaign in July 2023, which launched an exclusive range of products to accompany the store, continued to blur the lines between the physical and fantastical — the campaign creative even presented Charlotte herself as a virtual-ready Disney character. According to software and data analytics company Launchmetrics, the Charlotte x Disney 100 Beauty Wonderland launch campaign generated $6.2 million in MIV from online channels (media impact value, which allows brands to assign a monetary value to every post, interaction or article to measure its impact) and $3.9 million from social channels alone. Expert interview: Vania Lacascade, chief innovation officer at L'Oréal What does success look like for beauty innovation in 2024? To be a beauty leader is not enough. Innovation in 2024 is about having a positive impact for each and for all. The convergence of health, science and technology leads us toward new frontiers of beauty. Big focuses are inclusivity, ultra-personalisation, new codes of beauty and sustainability. For success, the industry must meet the infinite diversity of beauty needs and desires all over the world and go beyond just products, with innovation approaches needing to encompass services, communication and educational initiatives. We must do this in a climate-challenged environment where our resources are becoming limited. This means leveraging biotechnology and committing to green sciences. Can there be true innovation without purpose? Purpose is what drives us. The world is becoming increasingly diverse, and inclusion is critical in our innovation approach. Age inclusivity and gender identity are key in terms of representation and our mission is to ensure everyone, no matter their age and physical ability, has access to beauty. Lancôme’s Hapta technology assists in makeup application for those living with limited fine motor skills. Diversity also includes ethnic diversity with an evolution of skin tones and hair types that will continue to accelerate. We are also living in a world where we see an increased prevalence of skin pathologies, especially with the growing impact of climate change. What do you see as the benefits for brands innovating within virtual worlds and gaming? The future of beauty is physical, digital and virtual, with gaming becoming more present in consumers’ lives. Gen Z seek to creatively express their individual personalities when in virtual worlds, with limitless possibilities offered through their virtual identities, via avatars and digital twins. We are continuously reinventing beauty experiences to enhance consumer interactions and explore new avenues for reaching people, bringing new codes of beauty to gaming, creator and community-based platforms. *Not included in the index ranking To receive the Vogue Business newsletter, sign up here. Comments, questions or feedback? Email us at feedback@voguebusiness.com. You can learn more about the Vogue Business Index and Advanced Membership here.