From cosmetics to cars, seemingly almost anything is available through self-serve these days. The April Unattended Retail Tracker™ looks at how companies, from banks to restaurants and beyond, are incorporating automation to deliver products and raise brand awareness. Also, PYMNTS interviews Proactiv EVP Kimber Maderazzo about the skin care company’s investment in unattended kiosks and what the effort reveals about its customers. Plus, a growing directory of top providers in the space, including 10 new additions, inside the Tracker.
For many travelers concerned about their complexions, having cosmetic products confiscated by TSA agents at airport security can potentially feel like a breakout-inducing scenario.
However, the unattended retail market may offer a salvage for air travelers interested in keeping up with their skin care regimens, either by whim or by want. Several cosmetics companies, including Sephora and the Honest Company, are putting the products back in consumers’ hands through vending machines located at airports beyond security checkpoints.
Another cosmetic player in the unattended retail space is the Proactiv Company, a producer of acne treatment and prevention products. In addition to positioning its self-service kiosks at airports, Proactiv’s unattended retail locations can also be found at malls located around the world. With about 1,000 kiosks peppered across the U.S., Canada and Japan, the company has found a way to reach consumers looking to buy Proactiv products on the go.
To discuss the company’s decision to invest in unattended kiosks, PYMNTS recently caught up with Kimber Maderazzo, the Proactiv Company’s EVP of brand and product marketing. Maderazzo explained why the company considers itself a “pioneer” in the world of unattended retail and why it only recently decided to make its products available in brick-and-mortar stores.
Going directly to the customer
By some estimates, the beauty and cosmetics industry is valued at $62 billion. For years, Proactiv has relied on unattended retail systems to take home its share of this lucrative market.
For Proactiv, unattended retail locations, which the company refers to as “self-automated retail centers,” have been an important part of the company’s broader strategy to build its brand awareness by marketing directly to consumers. In practice, this means the company has placed its kiosks in high-foot-traffic areas such as malls and airports where consumers are more likely to see the product and make an impulse purchase.
Maderazzo described the company’s use of unattended kiosks as somewhat of a holdover from 15 years ago, before Proactiv was offering a way for consumers to easily buy its products online. Unattended retail kiosks were seen as a way to both raise brand awareness in a populated retail location and offer customers the immediate satisfaction of buying the product on site.
“At that time, the internet wasn’t so big,” said Maderazzo. “This was another way to get Proactiv into consumers’ hands and make it accessible to them in the locations where they [gathered].”
Today, Proactiv has a more robust online presence. But even with an online option for consumers to buy products, the self-service kiosks continue to generate strong revenue, Maderazzo said.
“It’s equal to a retail center or a brick-and-mortar store,” she said. “They are servicing customers at a high level and a high volume.”
She believes Proactiv’s initial efforts with unattended kiosks helped pave the way for other companies to make similar investments. These days, beyond the usual offerings of candy and soft drinks, she said that she sees plenty of other products and services being offered through unattended retail kiosks and machines at malls and airports that dispense items like nail polish, headphones and even high-end beverages like Nespresso.
“We were the pioneers,” she said. “It puts a smile on my face because other brands have realized that this is an opportunity, and they’ve jumped on the bandwagon.”
Know your consumer … and your buyer
While Proactiv’s products are aimed at helping customers with acne and skin care issues, Maderazzo said the fact that the company sees lots of activity at its vending machines indicates that their consumers aren’t self-conscious about buying their product in busy, public areas.
“If you look at the locations of the machines, they’re in very high-traffic mall locations,” she said. “They’re near movie theaters where people can walk by and go, ‘Oh, I need Proactiv.’”
Installing the self-service kiosks in locations where there are plenty of potential customers walking by has so far served the company well, she said. But sometimes even ideal locations with lots of potential Proactiv customers don’t pay off, she said, recalling a lesson the company learned the hard way about trying to reach customers on college campuses.
“Everyone said, ‘Wow! That would be great! Put them on college campuses, and they’ll do amazing,’” she recalled. But the results were anything but that, she said.
Despite being in a well-populated location surrounded by the company’s target consumers, the sales failed to materialize. The experience taught the company an important lesson — while college-aged adults might have wanted to use Proactiv’s products, they didn’t want to spend their limited college funds. Instead, they wanted their parents to pay for it, Maderazzo said.
“You have the user, and you have the buyer,” she said. “On college campuses, you have a user, but the student is not interested in using their allowance to buy acne medicine.… We found being at locations where there are parents works better.”
Tapping unattended retail and celebrities to raise brand awareness
While online sales and self-service machines have worked well for Proactiv, the company is now also looking at other ways to engage new customers and is doing something that other skin care companies have been doing for ages: selling their products at physical brick-and-mortar stores. Last year, the company partnered with Ulta Beauty, which became the first physical brick-and-mortar retailer to offer Proactiv on its shelves.
But even with a retail partner and as revenue from vending machines of all kinds has declined recently, the company continues to see opportunity in unattended retail systems to help address consumers’ beauty needs.
“We’ve always bought candy bars, sodas and all sorts of things out of machines,” said Maderazzo. “I can’t think why products that are very well-known, that have high brand equity and knowledge about them … people wouldn’t want to buy them that way.”
While unattended retail has been a key component of the Proactiv Company’s marketing strategy, other essentials are word of mouth and celebrity endorsements. The company’s own infomercials featuring celebrity endorsements from stars like Katy Perry, Kaley Cuoco, Julianne Hough and Olivia Munn appeal to its consumer base and further raise its profile.
The investment in celebrity advertising paid off during the Super Bowl earlier this year. Proactiv purchased a 30-second Super Bowl ad (valued at an estimated $5 million) featuring Munn that aired as the game went into overtime. After the Proactiv spot aired, the company saw a 100 percent spike in its online traffic.
Maderazzo said the company spends “a large amount of money” (although she declined to provide a figure) on raising its brand awareness. And while a celebrity endorsements go a long way toward achieving that goal, she said incorporating vending machines into the mix has paid off as a way to raise brand awareness and build product loyalty.
“[Consumers] like being able to do self-service because they don’t have to deal with a retail associate and they don’t have to call in to to talk with someone on the phone,” she said. “Instead, they can pick what they want and purchase it on their own.”
In other words, offering customers easy access to a product they are familiar with in a location they are likely to frequent has worked well for the company. And accessibility can be a stronger investment than brick-and-mortar, especially when trying to connect with customers in-the-moment — like when passengers are killing time in an airport terminal or looking to take back what the TSA taketh away.
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About the Tracker
The PYMNTS.com Unattended Retail Tracker™ serves as a bimonthly framework for the space, providing coverage of the most recent news and trends, as well as a provider directory to highlight the key players contributing across the segments that comprise the expansive unattended retail ecosystem.