Thursday, July 26, 2012

The Next Big Beauty KIO Program: Birchbox

I've been hearing a lot of buzz about Birchbox lately, the web-based product sampling service. With the launch of Birchbox Man in April it seems popularity for the service has reached critical mass that any successful web venture needs. It is currently exploding in female demographics and poised to take over the male lifestyle category as well. For beauty, fragrance and haircare brands I believe Birchbox and Birchbox Man will become one of the most useful tools for key influencer outreach there is in the digital space. 


My conclusions are based on the following:
Sampling focus
Innovation and Competition
Pinterest integration 
Social media activity

Sampling Focus
Male and female interest in trying lifestyle products before they purchase them pairs perfectly with the mission of Birchbox, providing high end beauty and hair care samples to subscribers. Sampling has been an integral part in the success of brands like AvedaBumble and bumble and Sephora. Some big beauty families have not yet overtaken Birchbox sampling, so it is also an opportunity for young, small or up-and-coming brands to get in the game. For example, currently only two Estee Lauder family brands, Origins and Smashbox, are partnered with Birchbox. So the opportunity to be on the cutting edge of this service is still available for both big and small.

Innovation and Competiton
Brand space is filling up in the Birchbox lineup. Particularly for natural and organic beauty, there are several brands already using Birchbox, most notably Kiehl’s which is not only partnered with Birchbox but was recently featured in a promotion on the Birchbox Facebook page. Partnership with Birchbox could not only give beauty brands klout within the digital space, but stay in step with key competitors.

Pinterest Integration
Pinterest offers a huge area of opportunity to connect with KIOs, new customers and express brand loyalty. Birchbox has a solid 23,433 (and counting) base of followers. They have boards specific to the hair and beauty category where they feature partner’s products. Birchbox may offer an alternative avenue for brands who are not yet on the Pinterest bandwagon to participate in the Pinterest beauty movement.

Social Media Activity
Birchbox has an incredible engagement rate on its social media properties. To take an example, over the past month highly successful beauty brand (and one of my personal favorites), Aveda, has had a 1.3% engagement rate vs. 6.2% for Birchbox on Facebook. To put this in context, if 5% more Aveda fans were talking about Aveda on Facebook that would equate to roughly 25,063 more people chatting about their brand, leading to countless impressions and word-of-mouth worth. Birchbox fans social activity also translates to Instagram where they have 1.8x more followers than Aveda and an astounding 383,106 more Twitter followers than Aveda. 

It is always a good time for samples, but Birchbox has the opportunity to be a key ally to lifestyle brands when launching new products or invigorating old ones. All in all Birchbox is pioneering in the beauty space for both male and female demographics, and brands should take notice if they want to stay on the cutting edge. 

Friday, July 20, 2012

How the International Political Economy Impacts Beauty and Luxury Brands

As the economies of China, Brazil, India and Russia have increasingly become more prominent players in international finance, so have their citizens enjoyed their rising affluence. The Brazilian middle class comprised 54% of the population as of 2011, which makes it the largest of all five official classes and has allowed for a 4.4% increase in purchasing power between February and March 2012. This is nowhere as prominent in China, where the average disposable income per capital of China's middle class rose $2,240. Since 1980 Chinese yearly earnings have multiplied 10 fold. The Brazilian middle class comprised 54% of the population as of 2011, which makes it the largest of all five official classes. 


This rise in disposable income enables people to spend more on leisure activities than ever before. One such activity that is on the rise is travel and tourism. When passenger volumes increase, like those we are seeing in emerging markets, travel retail grows. As of 2011 the largest airport retail market was located in Europe, but some estimate that the Asia-Pacific retail market could grow as much as 75% by 2015.


The global travel market as a whole is fastest growing retail channel for beauty, fashion and accessories. It is projected to grow 60% to $45 bilion by 2015, and beauty sales, in particular, will likely grow more than 80% over the next five years. As travel and spending from these regions increase, so do companies investment in airport stores. For example, Estee Lauder already has nearly 1,000 airport stores, featuring such respected brands as Aveda, Clinique and Bobbi Brown. Estee Lauder Companies are looking to add additional stores in domestic airports in China and Brazil. To stay ahead of the curve, they are currently scoping out locations that could one day become vacation hot spots in China. 


Sales are not only rising in airport retail locations, but also in destinations as well. For example, tourism in Italy rose by 22% and and their spending increased by 24%. It seems that the Euro's devaluation is the tourist's gain. The Chinese Yuan, for example, rose 17% against the Euro last year, often making it less expensive to purchase luxury goods abroad in Europe rather than in their home country. Overall luxury sales could also grow by 15% over the next five years, mostly in travel retail outlets, and luxury retailers are taking notice. High end fabric and suiting brand Ermenegildo Zegna is spending aggressively on marketing to tourists by working with tour operators to inform them of Zegna outlet locations, hiring multilingual staff and adjusting the sizes and products featured in store. Zegna believes they could see a 10% growth in store as a result. Cheif Executive Officer Patrizio Bertelli of Prada and Chief Financial Officer of PPR SA (PP) and French owner of Louis Vuitton both contributed first quarter growth to the contribution of tourist purchases. 


Luxury and beauty brands must understand the shifts in the world market to stay relevant to their clientele. There is no doubt that the international beauty and luxury market should value and cater to tourists from emerging countries to ensure their brand's stability and growth as former powerhouses continue to rebuild their economies. 

Friday, July 6, 2012

State of US Online Retail Economy 2012


Just wanted to pass along some interesting facts from a recent ComScore webinar on the state of the US online retail economy in Q1 2012. They are super handy and add great insight into the trends forming this year. 

ONLINE
  • Top 20% of households account for 74% of retail spending
  • 1 in every $10 spent by consumers in the US is spent online
  •  E-commerce is up 42% vs. 10% increase in traditional retail since Q1 2008
  • Online access to coupon sites has become important in spurring their growth (group on being a prime example)
  • Cookies are deleted by 30% of the internet population 3-7 times a month which can be problematic for digital plan delivery and accurate counting of impressions 
MOBILE/TABLETS
  • Mobile/Tablet is approaching 10% of e-commerce sales and continues to climb
  • Tablet ownership has reached 40 mil in a year, where it took 9 years for smartphones to reach 40 million
  • 1 in 5 tablet owners have purchased clothing and accessories from a retailer via their tablet (followed by books and deal sites at 11% each)
  • 41% of owners researched prices and product features from their tablets
SHOWROOMING
  • Showrooming--> visiting a brick and mortar store to see the product but instead purchasing the product ONLINE. 
    • 1 in 3 consumers have engaged in showrooming (50% of 25-34; 43% millennials; 48% of tablet owners; 43% smartphone owners)
    • 6 in 10 say they intended to purchase in store but changed their mind; 32% (1 in 10) always intended to buy online
    • Why? 72% say because the price is better online, 45% wanted to see them in person, 18% would rather have them shipped to their home (twice as likely to do this in urban areas)
PINTEREST
  • Pinterest --> still adding 1 to 2 million people a month; engagement is really high
    • RETAILERS NEEDS TO BE ON PINTEREST,  it should be priority #1 for social media strategy and is probably more important than some other social media channels