As consumers increasingly expect brands to meet them where they are, be it online or in person, Estée Lauder is seeing rising demand for digital availability.
Tracey Travis, the cosmetics company’s executive vice president and chief financial officer, noted on a call with analysts Monday (Feb. 5) discussing the brand’s second quarter fiscal 2024 financial results that, in North America, it saw a “softer performance” via digital channels, as it did in China. However, the beauty brand’s President and CEO Fabrizio Freda noted that, long-term, omnichannel remains a key growth area.
“We are going to continue to increase the focus on high-growth channels,” Freda said. “… We are continuing to accelerate online with various opportunities that we have in this world, and the consumer is shopping more and more omnichannel, and so we are going to continue to put focus on the opportunity of omnichannel growth that we have in the United States.”
Freda added that, in the company’s ongoing push to gain market share in China, the “first step” is to build out its “distribution in winning online channels.”
In fact, it seems that Estee Lauder is not the only brand or retailer seeing digital cosmetics sales’ growth hit a hitch. Retailer Sally Beauty reported in its first quarter fiscal 2024 financial results Thursday (Feb. 1) that global eCommerce sales amounted to $91 million — same as it was a year earlier — even as digital mix rose slightly from 9.5% to 9.8%.
Yet consumers want digital options for purchasing beauty products. According to the 2023 PYMNTS Intelligence study “Changes in Grocery Shopping Habits and Perception,” which drew from a census-balanced survey of more than 2,400 U.S. consumers, roughly half of all shoppers are buying personal and healthcare products in stores less often. Plus, 48% of those who purchase these items do not buy them in stores at all.
Moreover, many consumers expect to increase their digital engagement in the category. The PYMNTS Intelligence report “Tracking the Digital Payments Takeover: Catching the Coming eCommerce Wave,” created in collaboration with Amazon Web Services, found that 39% of the 2,700 consumers surveyed said they were very or extremely likely to increase their online purchases of health and beauty products.
“The [beauty] industry as a whole is on track for a full recovery, and if you look long term, a lot of this shift is being driven by a permanent shift in consumer behaviors towards digital channels,” American Express Vice President of U.S. Merchant Marketing Tessa R. Dooley said in an interview with PYMNTS last year.
“… [Businesses] need to harness this wealth of data and analytics and feedback that’s newly available to them in order to find ways they can make better business decisions that help reach new segments and drive loyalty,” Dooley added.
Overall, Estée Lauder and other brands are recognizing the growing demand for digital availability in the beauty industry. Despite some challenges in digital sales growth, consumers are, in the long run, increasingly opting for digital options when purchasing beauty products. This shift in presents an opportunity for businesses in the industry to seize on online data and drive deeper customer loyalty.