The concept of “if you can’t beat them, join them” has become one of the strategies for growth within the beauty industry recently, with many major players acquiring promising brands. While the most commonly acquired brands were in the beauty space, the situation is changing as companies race to keep up with Gen Z and remain competitive technologically. Staying ahead of competitors with the most innovative app or latest in-store technology is just as crucial as keeping up with product trends.
In order to quickly respond to changing consumer needs and compete in the digital space, firms realize that the incorporation of savvy technology is a must, and many expand into tech with acquisition strategies. For instance, at the beginning of 2017, Shiseido acquired U.S.-based start-up Matchco to incorporate personalized foundation into its BareMinerals portfolio. The company proved that Matchco wouldn’t be the only of its technological acquisitions by also acquiring Giaran, a leading artificial intelligence company, and indicating that the two companies would operate in sync to further expand Shiseido’s capabilities. Shiseido maintains its momentum in 2018 by acquiring Olivo Laboratories, a firm that created a “second skin” technology, which Shiseido hopes to use across different applications.
Last month, L’Oréal announced its purchase of ModiFace, a company that has worked with many beauty brands to create custom augmented reality beauty apps and, as late as December 2017, even provided L’Oréal’s competition with augmented reality try-on mirrors in stores. While this acquisition will undoubtedly strengthen L’Oréal’s brands’ foothold in augmented reality, it is to be determined what will happen to L’Oréal’s competition using ModiFace technology. One thing that is clear is that the L’Oréal/ModiFace strategic partnership will serve as a reminder that companies will need to continue to invest in their own technology, to differentiate themselves from competition. Investing in such technology sooner rather than later is crucial to keep up in this rapidly changing beauty environment.
For more information on how technology can be a strategic competitive advantage, ask us about our Cosmetics & Toiletries USA report.
To see what beauty products win in the digital space, view Kline’s new digital tool Amalgam which ranks beauty items and brands among best-selling product listings and customer ratings and reviews across nearly 20 leading retailer websites to identify which brands and products are winning in the digital space.