On January 19 at Manhattan’s Union League Club, hundreds of beauty industry executives gathered for an informative and entertaining presentation and panel on “New Consumerism Rules” in 2016. Carlotta Jacobson, president of CEW, introduced the program as “the first of 20 in their Beauty Insider Series to be held this year.”

Speakers from M&A, trend watching and brand marketing provided attendees with insight and objectives for evaluating strategies for 2016 and beyond, based on current trends.

Shown in the photo above by JF Productions are the panelists (L-R): Maxwell Luthy, Kelly McPhilliamy, Drell Szyfer, and moderator Jenny B. Fine.

Traditional Demographic Markers No Longer Work

The key message was that traditional demographic markers such as age, income and gender are no longer effective for targeting consumers, and individual needs and values now drive customers’ purchases and loyalties.

Kelly McPhilliamy, managing director, Consumer & Retail Investment Banking, Wells Fargo Securities, spoke about “consumer megatrends” that are affecting how customers discover and shop for brands. Beyond changing U.S. demographics, she highlighted acceleration in lifestyle trends such as healthy living and urbanization, consumers’ desire for convenience, and how digital has upended the path to purchase. Independent brands have capitalized on these trends plus even lower barriers to entry in a more digital and social world to disrupt the industry and capture market share from established players.

McPhilliamy also shared that beauty M&A volumes neared a historical high in 2015. Key drivers of future M&A activity, she said, include strategics’ need for growth and brand acquisitions that round out their portfolios across categories, channels and geographies as well as significant buying power of private equity funds.

“We are in a dynamic environment from an industry and M&A perspective,” said McPhilliamy. “Notwithstanding the recent capital markets volatility, we expect M&A activity to continue on a solid pace in 2016 with a combination of larger, industry-defining transactions and the ongoing pursuit of attractive independent brands by major strategics.”

Maxwell Luthy, director of Trends & Insights, TrendWatching, gave a presentation on “Post-Demographic Consumerism,” suggesting: “Demographics are dead.”  Luthy advised how people of all ages and in all markets  are constructing their own identities more freely than ever. Today’s “expectation economy,”’ he said, “is driving change at an accelerated rate, as is the speed of access to services, global trends and opinions.

Some of the sub-trends Luthy discussed included:

• Heritage Heresy: When brand heritage becomes brand baggage, brands are breaking their own rules.
• New Normal: Consumers are embracing new beliefs on everything from family to marriage, sexuality, gender roles and more.
• Post-Demographic Empowerment: Empowering underserved, repressed or ignored demographics to pursue their own identities.
• Taste Led Targeting: Brands use customer data to tailor everything (their products, services and experiences) to a ‘segment of one.’

“In 2016, beauty brands must face the music and break away from the sweeping assumptions they’ve long made about their customers based on their age, gender, race or income level,” said Luthy. “Rules must be broken, and wherever possible, products, services, marketing campaigns and even customer service should be tailored to an individual level.”

Brands Need To Evolve Strategies

The event continued with a panel discussion with McPhilliamy, Luthy, and Elana Drell Szyfer, CEO of Laura Geller New York, moderated by WWD Editor Jenny Fine, to discuss the need for brands to evolve strategies to reflect the new realities of the market. Drell Szyfer shared how Laura Geller New York is taking a personalized approach to consumer engagement through evolved brand values that reflect the company founder, increased education for consumers and authentic social media interactions.

“Our purpose as a brand inherently transcends any preconceived notions of consumer segmentation,” said Drell Szyfer. “We seek to ‘touch’ the customer across channels in the same personal way that Laura Geller herself would connect with them during a personalized makeup application or in-store appearance. We aim to share our products and beauty advice with anyone who is seeking simple advice and high quality products that will make them feel and look beautiful.”


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