The Fung Global Retail & Technology team attended Cosmoprof North America 2017 in Las Vegas this week. Cosmoprof is the leading B2B beauty trade show in North America, drawing more than 33,000 attendees and 1,015 exhibitors from 39 countries. In addition to the trade show, the event included a three-day education program where beauty industry experts shared insights and discussed key trends.
Below are our top five takeaways from the expo floor at Cosmoprof:
1) K-Beauty’s Momentum Continues
There continues to be strong interest in beauty category innovation from South Korea. South Korean beauty brands have seen strong sales volume growth, with exports reaching $2.45 billion in 2015, and they have had a growing influence on the global beauty market in recent years, sparking the “K-beauty” trend. This has led to market-share gains in the global beauty and personal care market.
K-beauty brands are known for their innovation, which consumers have heartily endorsed. A study by Nielsen in 2015 showed that six out of 10 K-beauty brand shoppers from Greater China and Singapore considered South Korean products to be innovative. This perception was the strongest among Mainland Chinese shoppers, with 68% of those polled agreeing that K-beauty products are indeed innovative.
From product to process to technology to packaging, K-beauty brands have innovated on several fronts. Innovation in product development is driven by companies’ heavy investment in R&D as well as by the expectations of the sophisticated customers in the South Korean market. This creates an ideal platform for beauty brands to create and test their innovations, including formulas, ingredients and manufacturing processes.
K-beauty brands also have a shorter product development cycle compared with the international players, responding more quickly to evolving consumer demands and therefore remaining relevant. South Korean brands have been leveraging the growing influence of digital media to engage with customers, too, while capturing the opportunities brought forward from the K-beauty wave. Many of these brands were also quick to adopt in-store technologies, some of which are on par with, or more effective than, those developed by international beauty brands.
A number of K-beauty startups have emerged that have created innovative products using the latest technologies and have made their products available overseas through e-commerce.
2) Interactive Technology Area Showcased the Latest Innovations in Beauty
On the Cosmoprof trade show floor, there was an area dedicated to interactive technology. Some of the notable demonstrations we saw there were:
HiMirror: This smart mirror conducts in-depth, at-home analysis of users’ skin conditions. The device can track redness, hydration level, dark spots and wrinkles over time. Users can use the analysis to understand the effect of their skincare products and adjust their skincare regimen accordingly. In addition to skin condition analysis, the connected device also doubles as a smart makeup tutor and a music player.
Raise3D: This 3D-printer maker provides high-quality desktop-size 3D printers that small and medium-sized beauty brands can use to make prototypes of packaging faster than they can using factory samples. The size of the printers and their affordable prices enable smaller brands to invest in 3D technology in order to improve their speed to market.
3) On-Demand Startups Are Disrupting the Beauty Industry
On-demand beauty services apps have provided consumers a more convenient alternative to booking appointments at individual salons. The beauty services industry is fragmented, with many independent salons and stylists and a lack of transparency regarding pricing and consistency of quality. It is also difficult for consumers to fit beauty services into their busy schedules. Three on-demand beauty services platforms have attempted to solve these problems:
Style Bee: This platform enables clients to book professional beauty services at their home or office. The platform has a network of vetted beauty professionals who can provide services 24/7 at a client’s location of choice. Style Bee maintains consistent pricing for its services, which range from blowouts to haircuts to makeup applications. The company currently serves San Francisco, Los Angeles and Las Vegas.
ShearShare: This platform enables licensed barbers and cosmetologists to rent space by appointment at established salons. It provides flexibility for independent stylists to book temporary salon space and helps salons to monetize their excess space. The platform has connected salon owners to 1 million stylists to fill empty salon space on demand.
Bella on Demand: This luxury beauty app brings beauty services to clients wherever those clients are. Since its launch in 2014, Bella on Demand has expanded to 11 countries and its network now includes 1,200 stylists. The startup has also partnered with beauty brands and retailers to bring products for sale to clients during appointments. The conversion rates for such beauty products are significantly higher once clients have seen the stylists apply them.
4) Eco-Friendly and Organic Products Were Prevalent at Cosmoprof
The heavy presence of eco-friendly and organic products at Cosmoprof demonstrates that they are not a fad that is going away anytime soon. While there have been natural beauty brands for decades, demand for the category has increased significantly in the past two years, and 2014 represented a turning point in the category. Previously, many consumers had the perception that natural beauty products were not effective, and that they had to choose between natural products or seeing results. That is no longer the case.
There was a curated area called “Discovery Green” on the trade show floor that was dedicated to more than 50 eco-friendly, organic beauty and all-natural companies. Some notable companies that exhibited were:
Feather & Bone: A holistic wellness company that sells unique beauty care solutions through both product and education, Feather & Bone launched in 2015. Its first product, Face Gems, is a single-use, portable tablet facial cleanser made from only three ingredients—starch, clay and sandalwood.
Emani Vegan Cosmetics: This company makes color cosmetics using only vegan ingredients and sells them at mass-market prices. Its products appeal to vegans and vegetarians who want to extend their lifestyle beyond diet. Emani’s products are currently available through its direct-to-consumer website, on Amazon and at Target.
5) Beauty Services Can Change the Brick-and-Mortar Experience
When touring the show floor, we noticed that the area focused on beauty services generated much interest among other show attendees. The area featured a barbershop as well as vendors who provided eyelash extensions, makeup application, women’s hair styling and braiding, nail art and skincare. For retailers looking to enhance the in-store experience and combat weak traffic, beauty services could provide a reason for consumers to visit stores. Such beauty services support our view that stores can serve as a more general platform, providing one-stop shopping and added convenience. These kinds of services can also give retailers access to new customer groups that traditionally have not visited their stores. Ulta Beauty, for example, has seen success through this kind of initiative by adding hair salons in its retail locations.