Selling prestige beauty used to be a straight-forward business.  The formula was to recruit a celebrity to be the ‘face’ of the brand, put a magic formula in a pretty bottle, and sell it through department stores, with a little sampling and gift-with-purchase thrown in.  But that formula doesn’t work anymore.

Today’s affluent consumers, the 31 million households at the top 20% of U.S. income with the means to pay premium prices for beauty, are just as likely to turn to the mass-brands as to the prestige brands in the department store.

Or she shops online through Amazon or selects from the growing range of beauty offerings from the television shopping channels, which are able to capture her attention and dollars through deeply engaging on-air presentations from product creators.

When she wants to try it before she buys it, the specialty retailers devoted to beauty products are just as likely to get her business, as the department store counters.

And the best potential beauty customers might not be she at all, but he, who will shop for a fragrance gift for his wife or girlfriend at the department store beauty counter, but doesn’t feel comfortable shopping for his own skin care regime at the same one.

It all adds up to disruption, pure and simple.  Disruption in the brands affluents are choosing.  Disruption in the places affluents are shopping.  Disruption in the target market for prestige beauty. Let’s look closer at the data:

Internet/Direct-to-Consumer and Dermotologists/Spas winning the battle, Department Stores losing the war

In tracking the trajectory of affluents’ beauty shopping destinations, over the last two years Unity Marketing measures a significant shift in where affluents shop for beauty with department stores losing out as affluents increasingly turn to the internet and other direct-to-consumer channels and their skin specialists (dermatologist and spas) for luxe beauty.

Get the data here

Today beauty specialty stores (Sephora, Ulta, Bluemercury, as well as the brand-specific outlets like Bare Escentuals, L’Occitane, M*A*C and others) are in virtual tie as affluent shoppers’ favorite retail destinations, based on the latest UM Affluent Consumer Tracking Study (ACTS).

Even more significant is the differences that emerge when viewed through the lens of income.  The highest potential luxury customers, the Ultra-affluents, are far more likely to choose online and direct-to-consumer outlets than the lower-income HENRYs, who still favor department stores.  What this means for beauty marketers is that they need to think omni-channel to reach their best potential high-spending customers.

Disruption’s root cause:  Shopping & buying are now disintermediated

Everybody blames the disruption on the internet.  But it isn’t just that the internet offers things cheaper, easier or faster.  It’s that the internet has disrupted, or disintermediated, shopping from buying.

In the past going to the store was how one gained access to products.  Shopping and buying were bound together.  The internet broke that link.  Today people don’t need to go to the store to buy a product.  Rather shopping is an experience people choose to do.  The lesson for retailers is that they need to make the in-store shopping experience engaging, attractive and fun for the shopper.

The sad reality is that few retailers bring the in-store shopping experience to life and make it something that affluents actually want to do, since they don’t have to do it any longer.  Thus the internet and other DTC businesses are drawing the most high-potential affluent customers in droves who don’t have the time to waste driving to the store, dealing with indifferent or poorly trained sales clerks or scouring shelves to find what they want.  Today, success in retail is less about WHAT you sell and more about HOW you sell it.

Here are some ideas about how to make the retail shopping experience compelling to affluent consumers:

• Authenticity sells in luxury beauty

Now is a great time for beauty brands to take the center stage and tell an authentic story that draws the curious, the early adopters, and the beauty influentials.   Nothing moves more product than the authentic stories from emerging beauty entrepreneurs like Jamie Kern of IT Cosmetics or practical advice from beauty insiders like Dimitri James, Skinn Cosmetics or cosmeceutical prescriptions from doctors like Dr. Perricone, Perricone MD.

Of note:  All these brands make the most of the power of television to deliver the brands’ authentic stories.  In store retailers could learn a trick from TV shopping’s play book by putting a screen on the counter and showing videos that provide information, guidance and inspiration.

• Hire enough of the right people to sell luxury beauty

Two problems are all too common when shopping for beauty:  Not enough bodies on the floor to answer questions and not enough sales people truly excited to be there.  Beauty retail is a most personal kind of shopping experience, demanding sales personnel with product knowledge, technical expertise, sensitivity and the ability to establish confidence and trust with the customer.  People can be trained with product knowledge and skillful beauty techniques, but sensitivity and trustworthiness are part of an individual’s core makeup.

That’s one of the secrets of success at Bluemercury stores where founder Marla Beck made it company policy to personally interview every new staff member.  Now that Bluemercury is owned by Macy’s and operates 100 free-standing stores, the question is whether the company can keep its laser focus on the people-side of retail.

For other retailers, the solution is straight forward:  Invest more in hiring and training the right kind of professional sales people, while cutting back on the investment in product.  In business the 80/20 rule typically applies:  The solution: Shift 20% of the budget by eliminating weak or slow moving product and invest it in personnel. Retailing is primarily a people business now, not so much a product business , so that is where retailers need to focus.

• Where’s Sephor-him? Luxury cosmetics for men

The last frontier in beauty retailing is men, especially younger men on the road to affluence who are already investing in their wardrobes and appearance.  The recent acquisition of the Dollar Shave Club for $1 billion by Unilever attests to the huge potential in the male market.  But to date, few beauty retailers have seriously taken notice, remaining a feminine preserve where the shopping experience is designed for her, not him.

This is where department stores could find a foothold; after all they are experts at creating separate departments to serve specific customer segments.  But they need to put the men’s grooming and care departments adjacent to men’s apparel, not in the center of the main floor with women’s beauty.

Get inspired to market luxury beauty in a brand new style

Recently I presented a talk Marketing Luxury Beauty in a Brand New Style at the LuxePack New York conference.  It looks at how the oft-quoted “Lipstick Effect”  is only half true in today’s new luxury consumer market, as the status and prestige motivation for buying luxury brands is giving way to new drives and desires to buy luxury goods, most especially beauty.

Today’s affluent consumers are driven by new needs and desires to trade up to luxury brands, desires like:

• Luxury for Me (Anti-status):  Luxury isn’t about you, and what you think, but about me and who I am.
• Luxury of Discovery (Spread the word): Thrill of discovery anchors brand’s most powerful marketing tool – Word-of-mouth.
• Luxury of Simplicity (Simple elegance):  It’s the KISS principle – Keep It Simple Stupid! – is valued.  Embrace the concept of simple elegance.

My talk explores each of these new luxury drivers and profiles brands that are using each to connect with today’s most profitable customers – the affluent.

The message:  Luxury is a mindset, not a brand or a price point.