3 Trends Shaping Health and Beauty Retail in APAC
Health and beauty retail has weathered much over the course of the pandemic
In fact, the global beauty market shrunk by an approximate 30% at the outset of the pandemic. Asian consumers' spending on health and beauty products, however, didn't decrease as much as counterparts in other markets and regions, which caused the APAC wellness market to surge past North America and Europe to take first place globally. Now, two years after that initial global contraction, consumers worldwide have become even more focused on health and wellness.
To put a point on it, McKinsey & Co. estimates the wellness market — of which health and beauty is an integral part — to be worth $1.5 trillion worldwide, with annual growth of up to 10%. The e-commerce market alone may grow between 20% and 30%.
The trajectory of health and beauty retail is becoming clearer, and the outlook is good — so long as retailers adapt accordingly. Let's look at three trends shaping the future of health and beauty retail, and what you can do to help make the most of the moment.
1. Non-essential traffic: in-store, digital, and the new normal
Like most non-essential retailers across the board, foot traffic for specialised health and beauty retailers plummeted — and digital traffic soared — when the pandemic arrived. And even as foot traffic across the region has since stabilised (though not to 2019 levels), digital traffic has not waned. Far from it, health and beauty retailers are focusing on innovations that create a synergy through the integration in-store and digital traffic. Why not just drive shoppers back to stores? Because it’s clear by now that omnichannel is here to stay — and retailers should consider how to adapt to (and leverage) this new norm.
As traffic finds its (new) normal, retailers should consider evaluating their patterns anew in order to staff and stock accordingly. It will be important to integrate digital and in-store traffic patterns into staffing and inventory strategy, especially for retailers that have seen a significant uptick in omnichannel use — because it's not just a matter of the number of customers who walk through the door, but how many orders need to be fulfilled for customers using Click and Collect.
Using a sophisticated traffic analytics solution that goes beyond people counting to provide insights on the shopper journey and paths-to-purchase can help ensure retailers staff both to general demand and specific department. Likewise, utilising item-level inventory intelligence delivers real-time transparency and accuracy that enables retailers to stock and sell confidently, without the concern that a product purchased in-store will leave a curbside order unfulfilled (and customer disappointed).
2. Shopper experience undergoes an evolution
Not only are spending habits in this market changing, but also shopping habits — which means what constitutes a superior shopping experience has also changed. One thing, however, remains the same: The desire for experiential retail. Products in this market remain highly tactile, and there is still a demand for shoppers to see, smell, and touch in order to make choices.
So, what has changed? Sensormatic Solutions’ retail professionals highlight three shifts impacting the desired shopper experience:
- drivers of loyalty
- patterns in omnichannel use
- focus on health and safety
Shifting drivers of loyalty
Whereas it used to be that shoppers, by and large, were loyal to a specific brand or counter at their favorite store, today’s health and beauty shoppers are increasingly trend- and product-driven. Their collection of cosmetics, skincare, and other health and beauty products likely contain a variety of brands, purchased at various locations.
No longer can retailers simply rely on the lines they stock to drive loyalty — they should be keyed into beauty trends that may span beyond their staple brands, and merchandise them in such a way that makes clear to shoppers that they’ve got what shoppers want. Because if they don’t, shoppers will happily go elsewhere to find it.
Omnichannel use for health and beauty
Few consumers strictly shop online or in-store anymore, and in the case of health and beauty products a pattern is emerging: Shoppers tend to rely on e-commerce channels for their routine products and venture in-store to experience new items.
Retailers are beginning to regard sales as one channel, explained Andy Sumpter, retail consultant (EMEA and APAC) at Sensormatic Solutions.
“They know there are relatively few shoppers today who are purely in-store or purely e-commerce,” he said. “Instead, they’re learning that customers will come into stores to try out a new item, but they’ll rely on e-commerce for the items they use daily.”
Health and safety you can see
While drugstores and supermarkets that carry health and beauty products were largely considered essential retail, and thus evaded the worst impact of any lockdowns and other pandemic measures, some specialised retailers were not so fortunate. The pandemic disrupted more than just foot traffic for these retailers, though — it altered the conventional one-on-one connection of in-store experiential health and beauty retail.
Shoppers still desire it, though — with health and safety in mind. In order to gain shoppers trust, it’ll be important not just that health and safety measures are in place, but that they are clearly visible to the consumer. In other words, it’s good to post signs disclosing your product sanitation practices, it’s far better for shoppers to see them happening.
It will require more than sheer will for retailers to harness trend loyalty, match stock and staff to omnichannel use, and create visibly safe in-store experiences.
One critical tool is accurate item-level inventory intelligence. It enables shoppers to see transparent item availability no matter where they choose to shop — because if they show up at your store and you don’t have what they want, they’ll happily go elsewhere.
Accurate traffic insights are also vital for creating a superior shopper experience, as they help retailers know which departments get the most traffic during which times — incredibly useful knowledge, since, if a customer is in your store, they’re likely looking for a new product and an experience. Of course, traffic insights aren’t only beneficial for staffing purposes, but to know how and where to best promote the on-trend products that are driving loyalty (and, thus, profits).
3. Shrink — and what to do about it — takes center stage
Shrink plagues all markets, but the often high price point and small size of cosmetic products make them a prime target for theft, which is why shrink is an especially significant problem for health and beauty retailers. And the pain of shrink is felt beyond the bottom line — it strains inventory management. If a customer visits your store to purchase a product the website said was available, only to find it’s not because someone walked out with it earlier, you risk losing a customer (and you’ve already lost the revenue).
To complicate matters, the obvious solution — keeping items in a display case behind lock and key — is detrimental to the shopper experience, and the small size of the products render many common tagging solutions impractical. So, what’s a retailer to do?
Loss prevention is always a priority, but sometimes having deep insight into exactly where and how shrink is happening can be more valuable than stopping single occurrences of theft. After all, if you don’t know which products are walking out the door — or how, or with whom — you won’t know how to best mitigate that risk in the future.
Leveraging loss prevention solutions like RFID-enabled electronic article surveillance (EAS) can help you do just that. EAS systems can integrate with your existing channels, giving you insight into what is being stolen and when, and ensuring any items lost to shrink are correctly reflected in online sales platforms. Even better, integrate video surveillance into your loss prevention strategy for real-time suspicious behaviour alerts and more insight into the how, who, and when of theft.
4. Install public view monitors to put ORC groups on notice
ORC groups are sophisticated, organised – and they cost retailers an average of $720,000 (£640,000) for every $1 billion (£0.87 billion) in sales. These groups may be undeterred by some traditional loss prevention technologies, but an easy way to remind them that they're being watched is by installing public view monitors in high-traffic – and high-theft – areas, such as outside dressing rooms or at self-checkouts.
They won't prevent every ORC event, but they will serve as a powerful reminder that they are under surveillance and that the store will have footage to share with law enforcement after the fact. And beyond ORC, public view monitors can be especially effective at deterring opportunistic shoplifters, as the monitor makes clear that – since they can see themselves – it's likely that someone else could be watching.