Can L’Oréal's new luxury skincare line Shihyo shake up the beauty industry?

Over the last few years, independent brands such as Innisfree, Drunk Elephant and The Ordinary shook up the skincare industry with greater transparency, accessible pricing, community-first marketing tactics and claims of being built on ‘clean’ ingredients. ‘Clean beauty’ is a burgeoning favourite among the hyper aware millennial and Gen Z consumers, and one of the fastest growing categories in the luxury personal care sector. With consumers willing to vote with their wallets, the concept incentivises more brands to formulate products that are kind to the skin and the planet alike.

Despite the growing demand, there is no industry standard to define what “clean beauty” actually means. Ideally, for a product to be labelled as clean, it must be sustainable and ethical in its ingredients, packaging as well as supply chain. But with a lack of legal or regulatory labelling laws, the term is unregulated and the definition constantly changes depending upon who you are talking to. Largely, as long as the product is devoid of the harmful phthalates, classified as endocrine disruptors, or potential allergens and microbeads, it is considered natural or clean and free to eat a slice of the soaring US$22 billion industry.

The shift towards sustainability also means clean has become de rigeur or table stakes in consumer choices, murky labelling laws notwithstanding. The proliferation of the word also leaves the impression that skincare and cosmetics labelled as such is safer, non-toxic and generally better than the rest, which might not necessarily true. Little wonder then that French beauty giant L’Oréal, the maker of Maybelline and Lancôme is riding the green wave with the announcement of a new luxury beauty brand, in partnership with the upmarket Korean hotel, Hotel Shilla. Together with Anchor Equity Partners, the companies are looking at unveiling the brand through a third-party joint venture, Loshian; this is the first time L’Oréal has launched a new brand in this way. 

To be a disruptor in the overcrowded beauty industry one has to funnel through multiple channels and streamline the customer experience, give the client what they think they want, what they need and what would enhance their lifestyle, or make the product an experience in itself and obviously worth the cash. 

The brand must capture the market in various channels: online, offline and physical stores, and partner with retailers or multi-brand stores. During Covid, we've seen the importance of innovation in the luxury beauty space—an online presence with apps and website-only exclusive offers has become a must. This provides a "VIP experience" for the clients. Offering online presence, a tailored and unique service such as a "online consultants" for example, who will be able to answer queries, making the experience tailored for each customer's needs and requirements is integral. Offering online discounts, sign-up promotions, first time purchases and mini-gifts upon purchase and free returns for those expectations are not met are all important. This will improve the trust between the customers and the brand.

The brick-and-mortar stores must and should focus on creating a highly- personalised client experience with the presence of a brand, skin, make-up expert, providing one-on-one consultation, educating consumers about the brand story, hero ingredients, product benefits and engage costumers to purchase online with the option of picking up in a physical store. When one is physically present in the store, it is easier for the customer to browse and shop with the availability of a salesperson or consultant to give advice and knowledge to the customer. Virtual Mirrors, a chatbox integration where a client may be able to seek for advice for questions, giving sample products and demonstrations to enhance product visibility are always good additions to the experience. Consumers love seeing the results of 'before and after' especially when it comes to beauty and skincare products. Loyalty rewards create a community within the customer database. Rewarding the customer for their support makes them feel special and their purchase is important. Repeat business lies in the hands of loyal customers and brand followers. 

Ambassadors play an important role in making the customer believe that the product works. However, the brand needs to carefully select such representatives who look believable, relatable and communicate authenticity.

Q: Will the negative macro environment forecasted for 2023 hinder or help the launch of a beauty product. Do you envision the ‘lipstick index’—the phenomenon where consumers turn to low-cost luxuries in a recession,—come to the rescue here?

Martin Roll
Global brand expert and leadership advisor
Author, 'Asian Brand Strategy'

The 2023 environment will be challenging for everyone, and brands need to be at their best to compete. However, in this category, consumers are always looking for new trends, latest offerings and something that can add to their daily lives and beauty routines. The new brand has the chance to provide exactly that by being the 'new brand' in class, being slightly more edgy and willing to stand out – compared to the established K-beauty legacy brands. There is always a reasonable window for new brands. Furthermore, L’Oréal knows consumer marketing better than most so can play with their insights and expertise. The lipstick index can play to the brand’s strength if it offers good and valuable treats in difficult times. The tricky part is the value quotation which needs to be calibrated carefully in the current environment.

Jennifer Carlsson
Independent brand and beauty expert

For consumers looking for a small luxury during difficult times I believe that getting one iconic product to treasure gives more joy than languishing through the decision fatigue of picking out one out of 24 identical products. If the key selling point is having an immersive experience in person, then delivering on that during an ongoing pandemic seems doomed to fail. Unless I’m missing some key factors from what I’ve seen I’m not impressed and don’t think it’s enough to break through.

 

Anna Flores
Wellness and beauty branding expert,
Founder, Chaless Hong Kong

Recession is a good time to launch a low-cost luxury item. There is ample evidence from past that during difficult times people tend to boost their mood with small treats. Even during Covid, the beauty industry has always proved resilient; skincare and cosmetics, in particular, were one of the first categories to rebound as we come back to a new normal. But brands must realise that over the last few years, consumer behaviour and habits have changed. The iconic challenger brands like Fenty, Glossier are now household names, and with Sephora and other online platforms, sales cut across demographics. Brands can’t only rely on timing or their market pull, niche potent products, alternative ingredients, sustainable and clean values will win the trust of the consumer. How you market and sell thereafter will win loyalists. 

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