Retail

Why Health And Beauty Retailers Are Driving Digital Innovation

Heath And Beauty Retailers

Amid great technological change, health and beauty retailers are developing strategies to drive innovation. In some cases, retailers are using social media tools such as Instagram to post promotions and product tutorials — or interact openly with consumers about their offerings.

The aim is to stay on top of the latest digital commerce trends to remain relevant. And many retailers are heeding the call: According to the PYMNTS Retail Innovation Readiness Index, 60 percent of health and beauty merchants are focusing on innovation. That mindset “is becoming increasingly necessary if retailers want to remain competitive in the market,” the index found.

Yet not all retailers have the same resources, as companies with less than $250,000 in earnings might not have an easy time paying for new innovations or finding talent. In fact, the average index score of firms that took in yearly revenues of between $25 million and $100 million was just about double the average of firms that earned less than $250,000 over the same period.

However, both large players and upstarts are driving digital innovations in the health and beauty space. These are some of the reasons that retailers in the space are approaching the future of retail with an eye toward digital innovations: 

More than six in 10 health and beauty firms — or 61.7 percent — cited improving customer loyalty as the motivation for innovation. Pharmacy operator CVS, for example, experimented with a program in Boston in which shoppers received free delivery on prescriptions and eCommerce purchases as well as other perks. The program, which is dubbed CarePass, also includes access to a pharmacy helpline, a discount on CVS branded products and a monthly coupon. The membership reportedly comes at a cost that is lower than Amazon Prime and is said to be aimed at Amazon as it can combine prescription drugs with everyday purchases.

About the same share — or 60.9 percent — of health and beauty firms said store innovation is important for survival as a motivation for innovation. Early this year, it was announced that Walgreens was tapping into mobile technology as it seeks to connect the gap between digital and brick-and-mortar store experiences. To further that aim, the pharmacy chain is bringing enterprise-class mobile computers and handheld tablets from Zebra Technologies Corporation into its U.S. stores. Zebra said that the technology can help workers with their daily tasks and helping customers, as workers can set up orders for delivery or check planograms, among other use cases. Walgreens Chief Information Officer and Senior Vice President Steve Turner said in an announcement in January, “Every customer has a unique need when shopping, so each experience needs to be personalized for it to be successful.”

More than half — or 53.5 percent — of health and beauty firms said the ordering of products and services was a motivation for innovation. Scentbird, in one case, provides subscribers with access to roughly 500 designer fragrances in exchange for a monthly fee. The customer completes a short form at sign-on and is then sent a 30-day supply of scent. Sergey Gusev and Mariya Nurislamova founded the firm with veteran beauty marketer Rachel ten Brink and rocket scientist Andrei Rebrov. Nurislamova said in 2018 that the company’s goal is to help and “guide customers toward finding their new favorite scent online” without having to visit the perfume section in a department store.

Just under half — or 45.9 percent — of health and beauty firms said consumer demand to use new payment methods was a motivation for inspiration. CVS, in one case, introduced support for Apple Pay to stores across the country last year months after Apple CEO Tim Cook said the retailer would start accepting the wallet. At the time, it was reported that the retailer had brought support for the payment feature in the U.S. The move, however, was publicized in the fall. Apple said in a marketing email at the time per reports, “Get your essentials in a flash … Buying snacks, vitamins, personal care and prescriptions from CVS Pharmacy just got faster and more secure.”

Roughly three in 10 health and beauty firms — or 29.2 percent — said ordering products and services through social media was a motivation for innovation. The finding comes as Instagram has rolled out features that include a new shopping channel within its “Explore” tab last year. Through that offering, consumers can see posts from brands they currently follow in addition to recommended brands. University of Pennsylvania’s Wharton School Marketing and Social Influence Expert Jonah Berger told CNN Money in September that the move makes sense for the company. “The challenge at the moment is that discovery is happening, but Instagram isn’t necessarily getting credit.”

From CVS to Scentbird, health and beauty firms both large and small are innovating in the digital age. And going forward, they will need to innovate as consumers demand more features and payment methods as the health and beauty space — and the retail industry as a whole — heads into the future.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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