4 min read

4 Reasons Why Beauty Brands Should Invest in Tech in 2023

Featured Image

This year's hottest beauty trend is not TikTok's famous “sunburn blush” or “laminated brows.” Instead, brands are betting big on beauty tech. 

While investing in beauty tech is not new, the pandemic accelerated the trend. With heightened health and customer safety concerns, brands turned to digital channels and touch-free technology to engage with shoppers.

Today, beauty tech is changing the face of the industry. Makeup, hair and skincare brands are embracing technology to create personalized experiences and drive customer engagement. For brands, investing in beauty tech will be vital to meet the future needs of the omnichannel consumer. 

A New Beauty Landscape 

In the past, beauty companies directed their investments toward purchasing smaller brands. These acquisitions allowed brands to expand their offerings and grow their customer bases. 

Today, brands are no longer looking to new brands for growth. Instead, companies are investing in new technologies that help brands meet the needs of the omnichannel consumer

“Advanced technology—such as AI and AR virtual try-on experiences—are helping brands to create a seamless omnichannel strategy,” Alice Change, CEO and Founder at Perfect Corp, told Vogue Business earlier this year. “[These] entertaining and personalized experiences speak to the modern-day customer.” 

A few recent investments in the beauty tech industry include:

  • Verily, owned by Alphabet, announced a partnership with L'Oreal in January 2022. The partnership will study skin health and develop products to prevent, detect and manage skin diseases. 
  • Superordinary announced a $25 million minority-stake investment in Crea, an omnichannel solution for beauty brands in Asia. 
  • Ulta launched Prisma Ventures in 2021. The new fund will invest $20 million in beauty tech startups. Among the fund's recent investments are Haut.ai, Adeptmind and ReStyle.

4 Reasons Beauty Brands Should Invest in Technology 

Despite the recent investments in beauty tech, the industry is still new. And as new channels continue to grow—such as the metaverse—technology will be key to meeting consumers' needs in the future. 

Here are a few reasons why brands should invest in beauty tech.

1. Beauty tech delivers hyper-personalized experiences

With new technology—like virtual try-on tools, diagnostic software and custom formulas—brands deliver hyper-personalized products and experiences to customers. 

For Barbara Lavernos, Deputy CEO at L'Oreal, beauty tech does more than deliver personalized customer service. It also increases inclusivity in the industry. With beauty tech, brands empower “every single person with access to the most inclusive and personalized information about their skin management.”

And for brands across the industry, personalization is driving results.

  • After implementing a virtual try-on tool, haircare company Madison Reed saw a 38% increase in conversion. 
  • Estee Lauder saw 2.5 times higher conversion rates with customers who used the company's Lip Virtual Try-On feature. 
  • Customers increased their purchases by 200% using Tarte's virtual try-on feature. The brand also saw a 3x increase in the time customers spent on the site using the tool.

2. Beauty tech provides access to more data

Recent changes in consumer privacy have made it challenging for brands to collect customer data. Apple's iOS14 update made in-platform ad data less reliable. The technology giant's iOS15 update also made email marketing metrics less reliable. 

At the same time, government action is on the rise. In 2021, state legislatures introduced or passed over 27 online consumer privacy bills in the United States. 

Today, it is critical that brands develop owned channels to access first-party customer data. With digital tools and experiences, brands learn more about their customers’ purchasing habits and psychographic attributes.

3. Beauty tech helps brands meet their sustainability goals

At the same time, beauty tech enables brands to supercharge their sustainability efforts. Zero Waste Week estimates that the beauty industry produces approximately 120 billion units of plastic packaging each year. 

Packaging technology aimed at reducing waste is on the rise across the industry. 

  • Everist creates waterless concentrates for your hair and body. Water from your shower activates the product.
  • Human Essentials created a 100% biodegradable and vegan deodorant. Its packaging is compostable and can be used in your garden.
  • With its toothpaste tablets, zero-waste toothpaste company Bite removes the need for packaging. 

But beauty tech goes beyond reducing packaging waste. “Sustainability is so much more than just the packaging and what's in the product,” explained Joy Chen, Pure Culture's CEO and co-founder, to Vogue Business last year. “It's all the behaviors that we have created for the consumers that [have resulted] in a lot more waste.” 

With technology focused on personalized and custom beauty care, companies can reduce the production of samples. At the same time, brands also reduce return rates. Today, consumers return approximately 22% of cosmetics and health products. Arnaud Plas, Co-Founder and CEO of Prose, estimates that between 20% and 40% of beauty products are thrown away or end up in landfills. With beauty tech, brands can create a much more environmentally-conscious industry. 

4. Beauty tech drives customer engagement and builds community

Digital experiences and tools are also helping brands increase customer engagement. This is especially true among younger generations, who will likely turn to digital channels for inspiration and product research. 

With beauty tech, brands meet younger consumers wherever they may be shopping—online, on social media, during livestreaming events or even in the metaverse. And when consumers do shop in stores, they want an experience that is unique and encourages social interaction.

Brands are adopting digital experiences in a variety of ways, including:

  • MAC Cosmetics launched twelve new makeup looks with the launch of The Sims 4.
  • Last year, Clinique launched the brand's first NFT. Titled Metaoptimist, the digital collectible was only available to members of the brand's loyalty program.
  • Clinique also partnered with Daz 3D as part of its mission to make the "metaverse more inclusive." Customers have access to 8,888 female and non-binary profile picture avatars. 
  • Beautycounter did a four-episode live-stream series from the brand's content studio in Venice, CA. 

Meeting the Future of Beauty with Salesfloor

Salesfloor is a comprehensive customer engagement platform designed with beauty brands in mind. 

With the Salesfloor platform, beauty brands create immersive shopping experiences for their customers. And our Clienteling and AI-Assisted Selling tools ensure that brands deliver a high-touch and personalized customer experience.

Get started today to see how brands like Credo, COS Bar, Tatcha and Tarte are using Salesfloor to shape the future of beauty.

 

5 Tips to Elevate Your In-Store Experience in 2023

Despite the acceleration of ecommerce, physical stores continue to be an essential channel for retailers in 2023. Today, 85% of all retail sales occur

Read More

Three Reasons Retailers Should Invest in Technology During a Recession

Over the last three years, retailers have battled economic uncertainty. Record-high inflation, global conflicts and the impact of the pandemic have...

Read More

3 Ways To Encourage Customer Loyalty During an Economic Downturn

For retailers, 2022 has been a tumultuous year. Record high inflation, continued supply chain issues and the war in Ukraine have contributed to an...

Read More