The effect of technology, on the beauty and lifestyle industry, has exponentially increased its market share – and then some! As of 2020, the beauty and lifestyle market segmentation has been valued at over $532 billion dollars. Adding over two billion digital buyers to the list, the beauty and lifestyle industry has seemingly reached its golden years. In the coming years, without a shadow of a doubt, the market value is bound to reach new heights.
Modifications in technology has opened-up the beauty and lifestyle market to a world of vast and quite often unfamiliar opportunities. In fact, over the last 5 years, beyond digital payment gateways, customer relationship management, and global marketing, technology has been the catalyst by helping quadruple the market value— currently reaching an annual growth rate of 27%.
The digital revolution in the luxury retail market is taking flight:
In June 2017, luxury brand leader LVMH launched its online retail store named 24 Sevres. In addition, the global powerhouse named their e-commerce portal after their brick and mortar store – which is situated in the heart of Paris. Luxury fashion noteworthy players such as Far-fetch, Yoox, and Net-A-Porter have all seemingly taken significant roles in implementing the digital revolution to new heights. In fact, they many times invest tremendously in premium content and technology— to cover wider audiences and market share.
More to the point, the beauty and luxury market is perfectly aligned to E-commerce. The reason for the alignment, when promoted online, is that there is a wider scope of potential customers and brand awareness.
MORE FOR YOU
Recently, I had a short yet exclusive interview with Jun Li, Founder of ONTology, a company that addresses itself as the blockchain for self-sovereign ID and data, (Their OScore product launched the very first credit scoring system in blockchain history. Another great feat is their partnership with Daimler Mobility, parent of Mercedes Benz) on how technologies like Blockchain influences today’s ever changing fashion beauty and luxury market.
Joseph DeAcetis: In your words, how is blockchain technology aiding the fashion and beauty luxury market today?
Jun Li: There are a multitude of ways blockchain affects the luxury market. With all premium markets, such as beauty or luxury, the verification of authenticity is of vital importance. You would be able to track the manufacturer and verify the item you are transacting with through the power of blockchain technology.
But more importantly, you would be able to trace and verify the supply chain process. In a field like luxury, changes are being made constantly, especially towards a greener, eco-friendly solution. You can track this change from a raw material standpoint, moving along the supply chain until the bag is sitting on a shelf in your Louis Vuitton store.
This gives luxury brands a new processing method of signaling to their users where they stand on key issues revolving around raw materials and the supply chain. In addition, we have included a decentralized identity layer protection for luxury NFT’s as we envision this space to grow exponentially soon. It allows companies to quickly migrate and store data on our blockchain through our data attestation service which reduces their data storage fees.
JD: Talk to Forbes about whether or not advancements in technology will signal change in the beauty, lifestyle, and luxury markets? If so, what role does Ontology play in this light?
Jun Li: The beauty of decentralized identity being a core principle at Ontology is that it can be extrapolated and applied in a variety of fields, including the luxury market. For starters, luxury is about taste and personal preferences. It is a form of signaling, or more accurately, a form of signaling your identity.
Through decentralization, we can attribute your taste in luxury and beauty markets to who you truly are — your identity. In terms of application, being able to track accurately your history of purchases reveals a certain part of you, while protecting your actual identities such as your name, weight, eye colour, or other elements that get biased in the beauty space.
Imagine Sephora or Louis Vuitton knowing who you are at an identity level, without being able to access your sensitive data points. They would be able to better accustom what your luxury and beauty needs are, such as which toner is more suited for you based on previous transactions made, rather than just how you are feeling at the moment.
This removes stigma and biases affected on a retail level and instead allows them to better accommodate you on an identity level while having it protected through decentralization. Also, our data attestation service can be utilized for fast and cheap alternatives.
High-tech is giving the beauty and luxury industries a complete makeover
Technology is constantly evolving, and so is consumer demand for speed and efficient service. In the near future, businesses will need to find more efficient ways to satisfy consumer demand.
In an industry with an estimated worth over $532 billion, the beauty industry has been cautious in keeping up with technological advancements. And keeping up is what it’s all about in the 2020’s. Given all technology that’s available today, there hasn’t been too much penetration in the beauty market by advanced technology such as AI.
But all that is about to change. As tech-forward companies are implementing AI and other novel technology solutions to promote E-commerce businesses. Novomind is a tech company leveraging intelligent software to promote e-commerce brands in the luxury sector. “Our e-commerce software is designed to enable the display of such details that make the aesthetic difference, such as large product images, 3-D videos, detailed product information, and content links for storytelling. Visitors immediately notice if a website is of high quality, and thus get an entirely different feeling when browsing through it compared to an average e-commerce store,” Sylvia Tantzen, CMO of Novomind AG, explained.
AI can take insane amounts of data and turn it into bite-sized, digestible, easy to understand relevant information. It can successfully streamline strenuous processes and solve complex problems.
With the help of AI, E-commerce fashion retail processes can be automated. Things like chatbots, churn predictions, product recommendation, better understanding customer preference, offering personalized solutions, enabling virtual product trials and manufacturing customer-centric products and a host of others are all possible now because of AI.
FinTech: creating bigger opportunities for lifestyle brands
There is without a doubt an upward trend in the use of mobile smartphones to shop for luxury items. According to Mckinsey, at least 95% of consumers of luxury are equipped with mobile phones. Moreover, in some countries as much as 100%. Thus, marketers understand that if they will dominate the market there has to be a way to ride on technology’s influence.
Innovators like Globalytics Tech Research have seen this opportunity and have provided online shoppers with the opportunity to pay for items through financial technology and AI. GTR is a fintech company that connects its clients with global service providers using its STAR technology. The company sells its services on a subscription model (SaaS) and invests the pool of the profit into new opportunities, which is then distributed back to clients.
How tech will change beauty and lifestyle for good
I am amazed when I see luxury brands transitioning into modernity both in style and in business. Another tech company leveraging decentralized technology is Uberstate. This tech brand provides more than a wealth management system. Uberstate uses its mobile app to provide users services like wealth calculators and smart wallets for their funds which they can spend anywhere which enables users to monitor and control their digital assets and cryptocurrencies within the decentralized market.
So, it is only a matter of time before traditional luxury brands will have to embrace the tech world and stop seeing tech innovations, most especially E-commerce as a major threat to their brand story and the production of contraband products.
If they remain in the market and maintain their brand authority, the only choice they have right now is to integrate online selling, AI features, and digitized payments into their strategy to keep up with the increasing demands of the market.