How Can Luxury Beauty Be Relevant To Today’s Consumers?

In this edition of Beauty Independent’s series posing questions relevant to indie beauty, we ask 19 retail, branding, design, product development and marketing experts the following: Despite prestige beauty rebounding this year, there’s been a strong focus on masstige beauty with Target’s Ulta Beauty partnership and the continued challenges facing department stores. In that context, what do you think is the role of luxury beauty now, and how can luxury beauty brands resonate with today’s consumers?

Bradley Skaggs Partner and Creative Director, Skaggs Creative

I think it is important to define (or redefine) luxury. That word has been abused so much over the last several years that I don't think most people fully understand what luxury really is. There is a difference between being luxurious, which most brands aim or want to be, and being luxury, in my opinion.

There are very few truly luxury brands left in the world and, for those brands that want to be luxury, they need to be extremely exclusive either through price or access. Deciding you are a luxury brand is stating that you are not for everyone, that you don't want to cater to everyone and, therefore, your audience and access to that audience gets narrower and more difficult to reach.

There is an audience of people out there who can afford it, who want to be in that exclusive group and who don't want to be known. Luxury brands don't need to resonate with today's consumers as it's contrary to what they stand for.

For a brand that is more luxurious in look and feel, product offering, pricing and distribution, they need to adhere to the same things as any brand. They have to answer what they do better than the competition and how they solve the pain point of their target audience in a unique and ownable manner.

Margarita Arriagada Founder, Valde

Luxury beauty brands have a great opportunity to tip the scales back towards premium/luxury, but it will take transformational evolution for the scales to rebalance. The luxury segment has been slow to adapt to the new paradigm. Luxury is no longer about status, logos and exclusivity. The current environment and influence from millennials and gen Z'ers call for greater transparency, authenticity and social responsibility.

What remains the same is luxury brands must continue to drive desire. However, more than ever, it needs to come with massive value creation, value beyond price. They can lead, raise the bar, educate and continue to inspire in a way that is humane and very much engaged with the social issues we are facing today.

Jodi Katz Founder and Creative Director, Base Beauty Creative Agency

I think what consumers are looking for, especially coming out of this pandemic, is accessibility. Are the products available both online as well as brick-and-mortar? Easy return policies, exciting loyalty programs, sampling opportunities, these are some of the retail experiences consumers are craving.

Additionally, consumers are looking for complete transparency from brands. Long gone are the days where people would buy a product because of the expensive pretty packaging. Consumers are savvier than ever and really take the time to research and understand ingredient formulations.

Masstige brands have done a really great job in communicating product benefits in engaging ways that ultimately have a greater impact in shaping consumer purchasing behavior than ornate gold bottles covered in crystals.

Ehrin Ziccardi Co-founder, Undrgrnd Beauty and Beauty Anthologie

The idea of luxury beauty is changing and redefined as beauty's distribution landscape becomes more accessible. Gone are the days of clear delineations between mass and prestige due to the likes of Amazon Beauty, Sephora in Kohl's and Ulta in Target.

Luxury brands owe it to their customers, their position in the marketplace and their pricing structure to more than acknowledge what is happening in the Indie brand world, but learn from it.

Luxury is no longer what store you are in; it is the entire ritualistic experience—innovation, authenticity, purpose, curation, and cause are the DNA of today's luxury beauty brands.

In today's world, relevance is a moving target, seems especially so in beauty, and legacy is not on the list of prerequisites. And, therefore, if brands wish to survive, they must evolve and adapt to the new luxury standards.

Keyanna Sawyer-Jones CEO, Bleum Creative

Luxury brands have always been the leader in offering unparalleled consumer experiences. Just a decade ago, luxury wasn't attainable.

Now, luxury brands have begun evolving their experiences to meet today's consumers and current retail climate. Consumers expect convenience, affordability and quality.

We see more and more luxury brands combine products, services and retail footprints with other brands to offer authentic, affordable and accessible ways to experience the brand. This is happening with Ulta x Target, Target's capsule collections with high-end luxury designers, and Kanye West's partnership with Gap.

I definitely see the future of luxury brands continuing to partner with unconventional brands to bridge the gap between mid-market and super premium.

Ruba Tadros Meier Co-Founder and Creative Director, Monolith Design Collective

There will always be a place for luxury in beauty, but I think it’s more about what luxury has evolved to and how it’s defined compared to what we knew it to be. Is it the most exclusive ingredients sourced from the most remote area packaged in a glass bottle with crystals? Probably not.

Looking at how Tiffany Co. just did a collaboration with Supreme or Gucci and Xbox, I think there is a real opportunity in the beauty space for these unexpected types of brand collaborations to redefine luxury and a real understanding of how brand perception can make something "new luxury."

Danielle Chocron Managing Director, Blonde + Co

Luxury is still very much about the story and the experience. Beauty products today are such a commodity and the choice is overwhelming to the consumer. For luxury, the retail experience needs to bring the consumer into the brand, its story and values. It is not just about the luxury product, but the consumer’s connection with it.

I had the wonderful fortune of entering the Byredo boutique in SoHo a few weeks ago and was absolutely transported by every touchpoint, the ingredients packaging, the space, the scent. It was a small special escape from the day-to-day and one that a luxury brand is most poised to provide.

Rachel Roberts Mattox Founder and CEO, Oyl + Water

While luxury beauty has indeed been impacted by the fallout of the pandemic, including shifts in consumer spending and the challenges facing department stores, I would suggest that there's a bigger influence impacting the luxury market: the rise of gen Z as the leading audience to reach. Gen Z and even younger millennials are driving the conversation around ethics, sustainability and inclusivity.

They care less about brand names and more about values. They align their purchases not with social status, but with environmental and social responsibility. For them, sustainability, transparency, quality ingredients/materials and craftsmanship is the new luxury. Luxury brands today must be aware of this shift and develop products, business plans and marketing strategies to center around these values in a genuine way.

For example, focus on clean ingredient innovation in a clear, concise way, feature real, raw and relatable before and afters, and prioritize philanthropic brand collaborations. Offer payment options like Klarna or Afterpay to enhance affordability without lowering prices. Above all, make it optimistic and empowering.

Patricia Valera Founder, Beautybrandr

Masstige beauty is all about making high-quality, beautiful products accessible to a larger customer base. As a category, it has grown tremendously and definitely threatens the luxury/prestige market, which means that they have to step it up.

In my opinion, too many luxury brands in beauty and fashion have gotten lazy by resting on the idea that customers will continue to choose them because they've been around forever and are well-recognized.

The overall quality of many prestige products has either diminished or is now on par with many masstige brands, which makes the pricing then seem ridiculous in comparison, especially when they're sitting in the same retail space.

I believe that, in order for luxury brands to remain relevant and competitive, they must return to the roots of what true luxury means—premium craftsmanship, artistry, limited quantities, highly personalized experiential marketing, and building a high-touch relationship with their customers. While all of that obviously justifies higher prices, the key for their future survival is not to be exclusive in such a way that is elitist or snobbish.

It's not about excluding those who can't afford it. It's about creating brands and products that are so effective, so meaningful, so deeply impactful and so special that someone will want to save up to be a part of them, be associated with them, and experience them over and over again. The customer needs to believe that an investment in the luxury brand is an investment in themselves.

Rebecca Bartlett Principal and Creative Director, Bartlett Brands

Pre-pandemic, we saw the walls between prestige and mass starting to come down as brands mix between the retail tiers (lower price point brands in prestige and luxury in mass). In the customer's mind, it's already not unusual to see a higher price point brand in mass and vice versa. The stigma is gone, at least in consumer's mind.

In the post-pandemic world, I see luxury cozying up to mass and big-box retail as a means of survival. After a year and a half of consumers becoming masters of efficient online shopping that now integrates seamlessly with physical retail via curbside pickup, easy returns, etc., and mass big-box retailers leading the charge in making it impossibly easy to buy everything for everyone in one place (Target, Walmart, Kohl’s), we find ourselves feeling that creating separate transactions or making separate trips to buy just beauty at Sephora, Credo and Ulta is inconvenient.

As a culture, women are busier than ever—juggling work, kids and COVID chaos. It's reported that the average working mom has 32 minutes of time to herself every day. When I heard that stat, frankly, I thought it sounded too high. This large beauty consumer base still wants the nice things and is willing to pay up for the prestige brands, but luxury needs to meet this consumer where they are if they want the brand awareness, attention and wallet share.

Rohit Banota Founder, Story Saves

Luxury brands might not be able to turn the tide for the department stores, but they can choose a strategy based on their penetration of the category. The ultimate survival + long-term strategy is one that yields higher profitability/assets managed. For luxury brands that are still emerging, they should focus on their tribe and super fans, as the returns will be 6X(approx.) more. Understand why your super fans buy and how you can better their experience of the brand so convenience doesn't play spoilsport.

For example, luxury brands' typical consumer profile is predominantly that of a relationship-oriented buyer who wants a highly-differentiated brand and isn't very price sensitive. Luxury brands need to up the differentiation for the authentic brand experience at every touchpoint to wow the super fans and command a higher share of wallet first before going for acquiring light buyers. This is especially true for emerging beauty brands.

For all luxury beauty brands, there are two pitfalls of going to mass stores, including some department stores:

  • Discounting of the brand by the retailer, higher price contributes to the luxury affect.
  • Penetration into the masses before penetrating the super fans in the early mainstream or emerging market.
  • The whole notion that "desire for a luxury brand only goes up with penetration" is highly misplaced because it discounts the order in which penetration should happen.
Robyn Watkins Founder, Holistic Beauty Group

The opportunity for luxury brands will be in the realm of radical execution of sustainability while providing a seamless consumer experience. Building a truly sustainable beauty product beyond buzz words requires investment. Luxury brands have the advantage. Sustainable formulations are more expensive to create and produce.

Sustainable formulations will become more concentrated with less water and created with upcycled ingredients that can have a higher price tag. Production excellence is also required, with brands needing to partner with more sophisticated contract manufacturers that have climate certifications and solar-powered manufacturing facilities.

Lastly, there will need to be an investment in packaging, with packaging initiatives heading in a more circular direction. This highly calculated approach to sustainability can be a cost challenge at the masstige level, so luxury brands should play the role of innovating in this category, with the hopes that these initiatives will trickle down and become more accessible masstige brands in the years to come. Luxury should raise the bar for sustainable luxury to the next level to set their brands apart while doing good by the planet.

Ana Armstrong Director of Sales, Orden Beauty

The retail opportunities for prestige beauty are shrinking. The ones that will survive must have a strong connection to their audience via digital marketing, have a healthy DTC channel and be open to new streams of business like Amazon.

Erin Orden Founder and Director, Orden Beauty

The landscape is changing. We’ve learned that we are more separatist than unified as a culture, which is why I believe in inclusive luxury. In the new market, quality and brand integrity isn’t a privilege of wealth, but something everyone must have access to. It's the responsibility of brands to bring something of actual value to the world, not just produce garbage. Luxury isn’t about money anymore, it’s a commitment to create harmony and not destruction.

Karen Young CEO, The Young Group

There's always a market for luxury. I'm a firm believer in the Thorstein Veblen theory: Luxury goods are in demand because of their high pricing, their limited accessibility and their ability to bestow status on the buyer.
Luxury is being pulled in many directions now because of well-deserved sustainability pressure to be greener. It's a fine line [creating] beautiful, luxurious packaging that doesn't end in a landfill (30% of landfill is consumer packaging!). It takes time to reimagine and rebuild a supply chain. I'm confident brands will sort out how to be luxurious and also responsible, but not tomorrow.
The experience piece of luxury is, of course, also critical.  Luxury fashion brands are exploring gaming, creative collaborations, digital avatars and various forms of AI to keep experience in the mix as well as recruit badly needed younger consumers. Luxury beauty brands are beginning to look at "experiential" alternatives as well.

Ccertainly, gen Z, who is now the consumer demographic on everyone's radar, will guide this sea change. What will luxury mean to them in the coming years? What I do know is that the category won't disappear!

Rachel Martin Founder, RemCal Insights

Consumers used to have this perception that the more they spent on the product, the better the product, but those days are gone. Consumers realized that they were mostly paying for packaging and that there were other products that do the same thing that won't break the bank. There are some consumers that do admit that packaging will still sell them, but there is a shift happening here. Even these consumers admit they're moving away from this.

The luxury brands that are doing it well are highly specific and creating products that masstige brands haven't perfected, e.g., facial oils, vitamin C, hyaluronic acids, etc. The more specific a luxury brand can be about its formulations, the more likely it will appeal to a consumer.

Skinceuticals and Vintner's Daughter are both considered luxury brands, but consumers consider them worth the splurge. Skinceuticals for its Vitamin C serum and Vintner's Daughter for its Active Botanical Serum. Both these brands have a relatively small portfolio, especially Vintner's daughter, and there's a perception that they put a lot of time and effort, considered a luxury, into these products, not just fancy packaging. A luxury brand that comes out with another moisturizer will have a harder time cutting through.

Tracy Aschenbrenner Founder, IN Beauty Consulting LLC

First, what I love about the beauty industry and retail is that it is always evolving and must say I think the Target and Ulta partnership is so smart!  In my opinion, there is selling space for all types of brands, and I’m seeing a shift for brands to step into different types of distribution not pre-defined by price point.

As for luxury, I am already seeing brands and accounts pivoting by optimizing their reward programs and livestream selling.  Selling via social media is a brands’ BFF! Instagram continues to drive business, but luxury brands shouldn’t overlook TikTok—it’s not just for the under 25s anymore—and luxury brands can connect there as much as any other social platform.

Another amazing avenue for luxury brands that I am seeing now and throughout COVID the founder engagement through masterclasses. This brings consumers and founders together to connect in a fun, engaging, educational way. Founders have really put themselves out there, and I see it working.

Melissa D'Aquila Chiofolo Co-Founder, Beauty Breakthrough

The role of luxury beauty is all about an elevated experience through personalization and service. My mind immediately goes to retailers like Saks and Neiman Marcus who provide this through initiatives like omnichannel clienteling, loyalty programs and exclusive events. There is certainly a consumer that truly values the high touch experience that luxury retailers and brands excel at.

Andrew Glass Founder and Co-Founder, Non Gender Specific, Joos, Wakse and PraDrem

I think that the job of premium brands more than ever is to appeal to the younger consumer. During COVID and in general, the younger consumers are the ones spending money, and I don’t know if these brands are relating to a younger audience. A lot of the heritage brands have a long way to go with their sustainable efforts, and those will appeal to the younger audience that’s out shopping.

If you use me or the people around me as an example, I don’t think of going to a Saks Fifth Avenue or another traditional beauty counter for my skincare needs anymore. My mentality is elsewhere. It’s at places like Credo, and I’m doing my research in the indie space to look for brands. It’s not really about supporting these billion-dollar companies anymore.

If you walk through some of the department stores, just in fragrance even, the packaging is so elaborate. I can’t imagine how much brands are spending on it, not to mention how wasteful it is. In other countries like Japan, the culture is there to appreciate brands’ heritage, but the U.S. doesn’t have that mindset. We have become so trend-driven a lot of these prestige brands don’t feel like they are innovating to catch the eye of the consumer.

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