How Can Emerging Beauty Brands Avoid Glossier’s Stumbles?
Last week, Modern Retail broke the news that Glossier laid off over 80 employees, about a third of its workforce. The one-time millennial “it girl” brand, which raised $80 million series E funding in 2021 at a valuation of $1.8 billion, seems to have lost its unicorn magic. While it may yet turn things around, Glossier’s fall from favor holds many lessons for emerging beauty brands looking to avoid its current fate. So, in this edition of our ongoing series posing questions relevant to indie beauty, we asked 15 investors, executives and consultants: What should emerging beauty brands learn from Glossier’s struggles?
- Rich Gersten Co-Founder and Managing Partner, True Beauty Ventures
Pick your investment partners wisely and make sure you are aligned on the strategy. This feels to me like a “growth at all costs” strategy where significant capital was raised at stepped-up valuations along the way. Pure-play DTC businesses are hard to scale profitably. At some point, the cost to acquire an incremental customer gets prohibitively expensive.
In addition, a real estate brick-and-mortar strategy can be very capital-intensive, and brick-and-mortar retail is a risky business. Glossier also made significant investments in IT and organization, and created a very expensive overhead structure. At the end of the day, Glossier is a beauty brand and not a tech company, so that strategy was always risky.
As we say often to founders, we do not believe in growth at all costs. We are different in this way from many other VCs, and Glossier is a good example of why. Profitability or a path to profitability is extremely important to us and something we look for in brands as a way to scale properly Investors and founders need to align on what success looks like prior to investment.
Raising a lot of capital at high valuations often requires unnatural growth to justify the spend and the valuation. Consumer brands also do not scale capital efficiently like tech or software does, and pure-play DTC brands with a brick-and-mortar growth strategy scale even more inefficiently.
To scale a beauty business profitably without a key retail partner to help build brand awareness can be difficult and expensive. We have always believed that the consumer doesn’t shop beauty that way (DTC only). Beauty has and will continue to be omnichannel.
- Rachel ten Brink Co-Founder and General Partner, Red Bike Capital
I greatly admire Glossier and never like to see any brand go through these difficult decisions. There are three learnings that come to mind:
One is around the evolving nature of the tech stack for DTC and e-commerce. When Glossier started in 2014, most DTC brands had to have a full team to build everything from scratch. Then, there was a time where Shopify was the solution, and now it's moving towards headless and a more customized approach leveraging tools rather than building from scratch.
Second, Glossier has always been at the forefront of omnichannel. Even with the huge COVID bump in e-commerce adoption, over 80% of transactions still happen at retail. The most successful companies need to have a comprehensive omnichannel strategy and continue to invest in this.
Third is around branding. Even Glossier, the "it" brand for millennials, needs to continue to evolve. Beauty consumers are always looking for newness. It's a blessing and a curse. It means there is always opportunity for a new entrant, but also that you need to keep innovating to stay relevant.
- Andrea Baldecchi Feldman Co-Founder, It Will Bloom
One of Glossier’s success factors early on was their ability to successfully feed consumer insights into their product launches and innovation, which enabled the brand to really resonate with young consumers. Their efforts around retail and technology caused them to lose focus on their core business, which was making great products that address consumers’ skincare needs (“skin first, makeup second”).
Additionally, during a particularly tumultuous time in the lives of consumers (the pandemic), they didn’t respond quickly enough to shifting trends. Beauty consumers’ focus shifted to self-care and skincare, and Glossier was well positioned to capitalize on this moment in time, but they didn’t evolve their messaging to speak to the realities consumers were facing, and they didn’t leverage their ability to feed real time consumer insights into nimble innovation and product development.
This caused consumers to start to lose their connection to the brand. Consumers want to feel like a brand understands them and their needs. Glossier got their start that way, but they lost their focus on these important elements that the brand was built on.
- John Burry Founder, Re:store Ventures
I think that the most valuable lesson here is the importance of focus. Be clear about where the center of gravity is for your brand, and spend as much as possible of your precious resources working there. Don’t get too distracted by what others are doing, and don’t lose focus just because investor cash seems to throw up a bunch of new possibilities.
Consider outsourcing the activities that don’t add much value, but be fiercely protective about owning the ideas and resources that define the brand. Focus on learning, explaining and improving at the core of what the brand is.
Glossier seems to have squandered some of its early advantages. Of course, they didn’t invent minimalist beauty, but their expression of it was definitely ownable and scalable. Somewhere along the way they seem to have got confused about where the value is added.
They seem to have been more distracted by technology than enabled by it, losing focus on product in the process. They have not had a convincing plan for physical retail and perhaps that speaks to some broader questions of strategy.
This is a brand that might have fared much better through the pandemic than it has. Minimalist beauty in a lockdown and Zoom world seems like an interesting challenge, all things considered. More emphasis on the brand and less on the platform might have served them better.
- Elizabeth Edwards Founder and Managing Partner, H Venture Partners
As one of the biggest digitally native beauty brands, Glossier is likely seeing what a lot of new brands are seeing: the rising cost of Facebook and Instagram ads is making the "Instagram Brand" business model cost prohibitive.
The DTC ROI just isn't there anymore as it was back in 2014. The cost of Facebook and Google ads increased 300% per year since 2014.
Even at launch, brands need to seriously consider a more balanced mix of media spend—and whether retail partners like Sephora, Ulta and Target should be part of the mix.
- Susie Ippolito Founder and Brand Strategist, SI Brands
It seems to me that they chose to pursue a younger market with Glossier Play. This was, quite possibly, motivated by the desire to grow them into Glossier consumers as they aged. Perhaps the better choice would have been to nurture the brand to mature along with the audience that was already so devoted to it.This strategy leaves plenty of room to recruit new members of the 18-to-29 demographic as they age into the brand.
Instead, it seems like they doubled down on the current consumer for the brand by expanding into merchandise and wanting to be a lifestyle brand without paying proper attention to how it will impact the growth of the business.
- Sonia Elyss Founder and Digital Marketing Strategist, Sonia Elyss Consulting
From my observations, Glossier lost sight of their why and their how. Becoming a viral brand had them expanding into many categories at once while simultaneously investing in creating an aspirational lifestyle with over-the-top flagship retail locations, swag merchandise and other non-necessities.
Emerging brands should take note that, even with vitality and an influx of investment capital comes the task of constantly asking yourself, “Does this decision align with our why and our how?”
- Shelly Socol Founder and CEO, One Rockwell
When brands are seeing success, they can begin to get forceful in pushing for more growth. However, doing so can cause a brand to lose their core consumer’s attention. Sometimes brands can get ahead of themselves and lose sight of what has made them so successful, and it’s important to take a step back and look at how to grow smartly, not just aggressively.
Ensuring that every launch is distinctly aligned with the brand and marketed well to the customer will lead to continued strong numbers. Brands should also consistently deep dive into their consumer data to ensure they don’t lose market value with their consumers. Brands can also learn how to be graceful in the face of mistakes.
Glossier is an exceptional brand and the transparent and clear communication surrounding mistakes, as opposed to deflecting responsibility, leads to more consumer and employee loyalty.
- Elizabeth Lim Strategic Advisor And Consultant, Elizabeth Lim Strategy & Consulting
Always think product first and create a consistent pipeline of new product innovation that works. Building an authentic brand story is key to setting yourself apart from a very crowded marketplace. However, it is the product that will be the reason why customers come back to buy it again and recommend it to their friends.
For brands to be successful, they must solve consumer problems and do it better, quicker and more creatively than the competition. They should be innovative and continually and consistently offer consumers more effective products and formats that surprise and delight.
The products must also deliver on results. Great packaging design or a cool product name may persuade consumers to try your product once and even share on social media. However, if the product is second rate, they won't buy again or worse could write a bad review and criticize your brand on social media. Quality, efficacy and earning and maintaining consumer trust must always be a priority.
Adopt a multi-channel approach. While a DTC-only approach may have its benefits, a brand needs a healthy blend and the right balance of retail partners, physical and digital channels to drive the biggest returns. Brands that successfully adopt a more customer-centric perspective and focus on the customer journeys, including where they shop, and shopping experiences can create significant value.
Perhaps an eye towards the future, cost focus on the present. Not suggesting the community was taken for granted, but perhaps the feeling was the relationship with the customer was stronger than it actually was. The brand voice seemed to go quiet on the original consumer, and she no longer felt part of something new, fresh, and cutting edge.
The introduction of Play likely seemed like just that, a "play" to grab a larger share of the cosmetics market pie, and the community recognized the effort and felt disconnected. However, we are optimistic the creativity and energy that brought Glossier to the forefront is likely to be seen and heard from again.
- Chris Hobson President and CEO, Rare Beauty Brands
Some of what impacted Glossier was just bad luck and timing. They got NPD timing wrong, launching their Play makeup line right before the pandemic accelerated the trend away from color cosmetics, and then discontinuing the line last year right before color started coming back as people returned to the office, bars and restaurants.
A big part of it, according to the popular press, was a failure to evolve with the times. Millennial pink, stickers on your phone, selling DTC-only (though they’ve recently started opening brick-and-mortar), building community mainly on Instagram—all these worked amazingly well…until they didn’t. It’s a reminder that in our industry, we constantly need to be evolving our brands and how we connect with consumers.
- Fabian Urquijo President, Swiftarc Ventures
There are several takeaways from Glossier’s recent struggles, but one that immediately comes to mind is the need for brands to make strategic decisions from a channel and product perspective. As brands become omnichannel, the market has to be able to support new expansions. Furthermore, channel and category expansions must support the brand’s core business and not be superfluous.
- Charlene Valledor Co-Founder and President, SOS Beauty
Glossier’s recent challenges with layoffs and company culture and diversity, these are problems that any business would have as it scales, so I do think it’s a little unfair to shine the light on them as a cautionary tale. In my eyes, they’re still very much a success story. They’re only 10 years old and just look at the massive impact they’ve made on the modern beauty landscape.
They needed to take big risks in order to get to where they are. Not every gamble pays off, and so sometimes you need to pull back and reallocate resources in order to get back on the right path. Nevertheless, layoffs are horrible, and I have great empathy for all those people that unfortunately had to be on the receiving end.
From the employee’s perspective, I think it’s really important to understand what role you’ll be playing in the company’s growth trajectory while in the interview process. If you’re not clear on how your role plays into the long-term growth objectives of the business, it might not be clear to the potential employer either, and that should be a signal that you need to be prepared for potential volatility ahead.
- Tami McGown Business Consultant, Tami McGown Beauty Industry Expert
While I believe that building a strategy and rollout brand plan was important to Glossier, it should have been more dominant in their business model and continually tweaked and refined, especially during the pandemic. Their internet presence was large, but they needed to grow it more before adding retail stores or they should have, at the very least, test-marketed their products in more pop-up shops before going straight to their own storefronts. They were too ambitious in the ever-changing, evolving beauty industry.
Glossier moved away from its core consumer by lack of focus on scaling the brand. During the pandemic, there was a decline of color across the industry and a turn towards skincare and fragrance. Glossier did no pivot with their competition and lost focus.
Glossier hired employees quickly and without recruiting quality candidates. They should have invested more in the time needed to on board and train better brand ambassadors. Additionally, diversity and inclusion should have been a top priority when hiring. A balance is always necessary in this unforgiving industry. Brands cannot be viewed as only hiring one race or one ethnic background.
Glossier has quickly slipped off the beauty industry radar and become irrelevant. They are not presenting the consumer with anything new and innovative. They are not launching new products and their makeup lacks shades. They were one of the pioneers of the no makeup look, but the natural, dewy skin profile is no longer innovative. They are not laser focused with the current industry trends.
- Aggie Burnett Founder, Aggie Burnett Creative
While Glossier did a great job in terms of branding, creating a cult following and building influence, a process that I think a lot of other up-and-coming brands have used as a blueprint, the product innovation, efficacy and sustainability hasn't kept the same pace.
Glossier is a perfect example of the phenomenon of the trend-driven or even celebrity-driven brand. It rises and falls fast and furious, same as trends. It's something I'm always teaching my clients and students—lean into the long game. The trend game is fickle and, when trends shift, trend-driven companies who don't keep pace fall out of favor. Organic growth, in my opinion, is the best type of growth.
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