The Asia Pacific (APAC) beauty and personal care market is one of the fastest-growing and diverse markets in the world. Driven by consumer demand for products that cater to Asian-specific needs, such as halal-certified beauty products, or for environmentally friendly options, the APAC market is expected to grow to $250 billion US by 2026. As COVID-19 recovery continues, emerging markets such as India are poised for growth, propelled by the cosmetics and skincare segments.
Karan Kewalramani, a senior associate at GLG, sat down with GLG Network Members from the beauty ecosystem — Sabeen Fazli, former Marketing Director at Unilever Arabia; Shreya Agrawal, former Omnichannel Global Brand Strategy & Management at Nykaa; and Olivier Schaeffer, former Global Chief Operations Officer at Sephora — to explore the latest trends across the Asian market, including:
- Why e-commerce will be a permanent, long-term trend in India and APAC
- How Halal-certified brands differentiate products from global counterparts
- How Gen Z and millennials influence the landscape
Karan Kewalramani: What is the Muslim opportunity within the beauty market?
Sabeen Fazli: It is a fast-growing segment valued at about $45 billion. Muslims are a fifth of the world population, and it is expected that the spending that comes from this segment is about 10% of the total spend on beauty globally.
Major demand and concentration of halal beauty brands exist in Indonesia, Malaysia, India, and the Middle East. These brands tend to have a local distribution footprint, as there are very few halal brands that have expanded to multiple markets. In more developed markets such as North America and the U.K., there is a greater availability of halal brands on digital commerce vs. traditional trade channels. Companies that adhere to halal principles don’t use animal-derived enzymes, blood, or lard. These ingredients are not permitted in Islam. The manufacturing process is prescribed by halal certification boards, and package design is in with the Islamic values.
I am often asked why the multinational beauty companies have failed to tap into this opportunity with scale even in majority Muslim markets. The answer is not easy and there are many reasons why MNCs have failed to gain a large piece of this pie.
One of the key reasons is that MNCs have tried to pivot existing brands toward this segment by either launching a variant under the master brand or by incorporating some relevant cues in the brand messaging instead of designing and deploying a new brand with the audience in mind. There is no halfway solution here as the local players are incorporating the halal ethos across the entire marketing mix, not just adapting a preexisting mix superficially.
Interestingly, Halal and clean beauty segments overlap. Many global players are actively entering into the clean beauty space, which qualifies as halal since there are no animal-derived ingredients or alcohol; however, there is no halal label on the product. Many Muslim consumers are opting for clean beauty brands as a substitute for halal.
KK: How should beauty brands approach content?
Shreya Agrawal: Content is the one most important pillar in e-commerce, especially for beauty brands. Beauty is very personal for most users, and companies need to connect on that emotional, personal level, while simultaneously sharing the objective information a customer needs to make a decision.
Customer attention has shifted to digital platforms, and it’s important for brands to understand the need to differentiate themselves and tell stories that appeal to customers and shape the narrative online.
Content strategy for a brand needs to consider the long-term impact on user retention and perception rather than immediate sales conversions. Beauty is not a commoditized purchase so the strategy needs to focus on the subtle nuances of user psychology, preferences, and needs.
Digitalization has skyrocketed in the last few years in APAC, Asia, and India. Millennials and Gen Z believe in the mobile-first approach and are interested in relevant and interesting content: makeup tutorials or how-to videos that explain specific makeup looks, Videos like this foster more curiosity, retention, and loyalty.
Separately, use of advanced technologies such as augmented reality, personalized content, guided shopping, online brand experience stores, etc. has created a shopping experience that mimics offline real shopping and, in most cases, offers a higher engagement and convenience. Brands are shifting their content strategies to take advantage of most of these new-age tools.
Also, the success metrics for content need to be more focused toward the engagement, utility, and loyalty generated. Conversions need to be seen as a down-the-funnel metric, which will happen over time. This is important to ensure that companies do not evaluate content using short-term tactical goals and instead see them as long-term strategic differentiation for the brand.
Some of these countries have younger demographics, large populations, and an appetite to adopt new trends. Some of them may have lower paying capacity (e.g., India, Indonesia), but that is compensated by the volumes that are at play. And a larger chunk of their user base is predominantly digital due to various reasons, such as high digital growth and logistical convenience.
You don’t need a crystal ball to say that e-commerce and digitalization are here to stay or that omnichannel is the new normal. The key for brands is to assess their digitalization road maps and invest in the long-term charters, which maximizes their reach and awareness in the target user set.
Initially brands focused on offline first and digital strategy later and they saw digital as an incremental channel rather than the main channel. But now the brands have shifted to a digital-first approach. In some cases, they have fully bypassed the offline. The reasons are accessibility to a wide variety of brands under one roof, availability of global brands online, efficient supply chain, and spike in digital adoption.
Olivier Schaeffer: When I was at Sephora, they decided to buy a Russian chain with no e-commerce. However, they had an engaging channel where consumers shared content, advice, and opinions. We added a checkout, and it immediately kicked off sales.
E-commerce was a preexisting trend to COVID-19, but customers discovered its convenience during the pandemic.
KK: How do you manage price expectations versus quality? What is the need for organic beauty, especially in India?
SF: Even in the toughest times, luxury and prestige brands have not done price promotions, because price equates to quality. You see a lot of innovative solutions wherein brands bundle offerings, form collaborations, and other promotional ideas. Premium brands stick to that mantra. Otherwise, it eats into the quality perception.
OS: There is a clear need for brands and retailers to think through the pricing, the products, benchmarking pricing versus similar products in the same category, and benchmarking with luxury and mass products to make sure you are hitting the sweet spot with price point.
SA: Many international premium brands appeal to aspirational consumers in developing countries by creating innovative ways for them to experience the brand in “mini sizes,” which helps spur full-size conversions. Also, the premium brands offer various beauty sets, with sample sizes having a high perception value for customers in terms of value and experience. Organic, sustainable, and clean beauty is a trend here to stay. There has been an increased awareness among the consumers who are conscious about what they consume, leading to an uprise of brands catering to this need claiming to be clean for the planet and consumers. High quality, authenticity, affordability, and innovation will be the differentiating factors among the various upcoming organic brands.
About Sabeen Fazli
Sabeen Fazli is a marketing specialist and nonexecutive board member with 20 years of experience in mature and developing markets, defining and delivering winning marketing strategies and innovative, best-in class brand experiences to grow market share and build brand loyalty in challenging business conditions. A revenue driver with a passion for demand creation, product innovation, and crafting compelling brand stories, Sabeen has spent the bulk of her career within the FMCG sector with Unilever working on multiple product categories across various markets. Her last corporate role was Marketing Director for Beauty & Personal business in the Gulf region. She left her corporate career to embark on an entrepreneurial journey in 2020 and set up a marketing strategy consultancy based out of Dubai catering to local and multinational clients in the MENA and South Asia regions.
About Shreya Agrawal
An e-commerce specialist and beauty strategist who worked in Omnichannel Global Brand Strategy & Management at Nykaa, Shreya brings in best-in-class beauty brand experiences. Previously, she was a co-founder of a wellness product startup. Her experience is in international beauty across India and SEA. Before this, Shreya was leading brand partnerships in Lazada, Unilever, and Flipkart.
About Olivier Schaeffer
Olivier Schaeffer is the International COO of Groupe Printemps, featuring the world-famous Paris-based department store and other omnichannel brands, namely Citadium, Place des Tendances, and Madeindesign.com. Previously, he worked for Carrefour, Europe’s leading retailer, as Controlling Director for the Non-Food business. At Sephora, he held several financial positions, including Chief Financial Officer for Europe, Middle East, and Asia; International and Development Managing Director; and Global COO. Olivier has also been Global COO of Yoox-Net-a-Porter (ynap.com). He also holds nonexecutive board member positions at several luxury/prestige innovative retailers and brands based in France, Australia, India, U.S., and Spain.
This beauty industry article is adapted from the GLG Convene “Beauty in Asia—Undergoing a Makeover?” If you would like access to the transcript for this event or would like to speak with beauty industry experts like these or any of our approximately 1 million industry experts, contact us.
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