Insight

AR is more than skin-deep in retail beauty, unlocking engagement, innovation, and sustainability

By Alice Vallesteros

Aug 26, 2022

Navigating beauty and personal care product selection is a challenging process for consumers. In fact, eight in 10 U.S. consumers say they use trial and error to determine which products work best for them. Now, advanced technology is enabling beauty companies to deliver new consumer experiences that lead to better-informed product selection, higher satisfaction rates, and less waste.

Thanks to augmented reality (AR) and artificial intelligence (AI), consumers can now virtually try on products and receive personalised recommendations. For brands and retailers, this offers an enormous opportunity to help consumers navigate product selection, sample new items, convert browsing into buying and receive personalised recommendations – all while supporting sustainability goals.

Capturing the senses with advanced beauty technology

Recent data shows that with AR, beauty companies and retailers can increase consumer engagement by about 20 per cent and conversion rates by up to 90 per cent compared to consumers who don’t use AR. Brands, such as e.l.f. Cosmetics and L’Oreal, and retailers such as Ulta Beauty are using AR to create frictionless shopping experiences that let consumers take the guesswork out of finding the right beauty products by allowing them to virtually ‘try on’ different items.

The latest digital technologies also enable brands and retailers to translate more intangible experiences like choosing fragrances or scents into digital reality. Puig, a Spanish fashion and beauty company, created a new technology called AILICE that allows consumers to explore the scent of a perfume without physically testing or smelling it. Another example of turning scent into an immersive expression is Bulgari’s VR launch of the Man Glacial Essence fragrance.

Technology leaders and social media companies are also entering the fray. Amazon Salon uses AR to enable consumers to experiment with different dye colours and products available on their website before getting their hair done or making a purchase. Google Search helps consumers try on makeup using product SKUs and cameras on their mobile phones. And YouTube, Instagram and Snapchat have teamed with beauty manufacturers to create immersive shoppable experiences.

Influencing the next big trend with consumer intelligence

So, using AR is good for business. However, these new services also provide a wealth of data related to consumer demographics, behaviours, and preferences that beauty companies can use to fuel product innovation and achieve other strategic goals.

With insights into customer needs and likes, beauty brands can place the right bets on new products, rapidly scale manufacturing to capture demand and proactively discontinue products that aren’t converting. They can also create their own tutorials, offer personalised advice, or develop other value-added services. Ulta Beauty Advisor, for example, integrates virtual try-on experiences with video chat and a one-on-one consultation with a beauty advisor that leads to higher sales.

By building thriving online consumer communities, beauty brands can test and validate new products, as well as build market demand for them. In addition, brands can create omnichannel loyalty programs that enable consumers to buy their products wherever they want and still receive perks. Such loyalty programs enable brands to better understand the customer journey and gain valuable first-party data collected directly from consumers. This data will soon be a new gold mine as third-party cookies – which store data from online browsing sessions – get phased out. They have already disappeared from Safari and Firefox and are being blocked by Chrome in 2023. Demonstrating consent goes a long way in abiding by data privacy requirements.

Achieving sustainability goals through virtual experiences

Consumers are increasingly demanding brands to be more sustainable and produce less waste. Thanks to advanced technologies beauty companies can make significant strides towards making the industry more sustainable. Between 20 and 40 per cent of beauty products end up in the trash. Further, beauty products are typically packaged in single-use plastics, which contribute to the world’s landfill crisis, as well as groundwater and ocean pollution.

With beauty technology, manufacturers can eliminate the need to produce physical product samples and ship them to stores, which reduces product, packaging, and logistics waste. Brands can simply direct consumers to AR- and AI-powered experiences or have advisors in stores guide experiences face-to-face. As a result, consumers are more likely to find and buy products that meet their needs, decreasing product returns. For example, the Japanese company KAO reduced plastic waste by 56 tonnes per year by implementing virtual hair colour try-on.

Bringing beauty technology into your business

So, what’s next? The reality is that all beauty companies will need to adopt advanced technology to transform the consumer experience.

Thanks to the rapid development of beauty technology capabilities, brands and retailers can deploy off-the-shelf platforms such as Perfect365 or Modiface and other try-on tools to enable new experiences. However, technology is just an enabler, and it should not be the first step in getting started.

It’s essential that leaders start by envisioning the art of the possible when it comes to incorporating technology into the beauty products business. By having a clear understanding of where you are headed and what value you want to create for consumers and your business in the future, you can start designing the larger beauty ecosystem and desired user experiences. To do this effectively, it’s important to select the right technology partners that support product discovery and virtual try-ons, create a solid data strategy to stay ahead of trends and outline ways to monetise the newly created experiences that technology has enabled. These steps will pave the way to a more sustainable, profitable business.

The future of beauty is creating immersive experiences that engage consumers, drive revenue, and reduce product waste. How will you seize this opportunity?

About the authors

Alice Vallesteros PA consumer products and retail expert Alice leads global consumer goods brands through ideation, validation and launch of new growth platforms.

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