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Employer Insights


HOW AI IS REVOLUTIONIZING THE BEAUTY INDUSTRY

Updated 08.16.2023
7-minute read
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It feels like over the last year, the use of artificial intelligence and machine
learning has exploded. AI and its impact has become the topic of so many
discussions, from the role of AI in processing data and even diagnosing diseases
in healthcare to playing a role in the historic writers strike still taking
place. Our approaches to AI are often filled with apprehension—particularly when
it comes to data, privacy, and creative ownership—but the fact of the matter is
AI is here to stay and already plays a huge role in our day-to-day lives. AI is
behind all those suggestions of videos you might like on social media. “Smart”
products are constantly learning our behaviors to make our lives more
comfortable. If you use face recognition to unlock your phone, that’s AI too.

AI will only continue to play a big role across industries, and the beauty
industry is perfectly primed for an AI takeover. Before we nerd out over our new
robot overlords, let’s note just how massive the beauty industry is. Beauty
(which is broken down into makeup, skincare, hair care, and fragrance) is set to
generate $580 billion by 2027 and AI within the beauty industry is already worth
billions. Beauty’s hold on consumers is so bankable that, according to an
anecdotal theory called the Lipstick Effect, in times of economic downturn,
women and folks who typically purchase makeup will still spend money on small
luxury cosmetics rather than other more expensive purchases.

E-commerce is now the fastest-growing channel in the beauty industry, making up
over a fifth of the market and steadily rising. The market is more competitive
than ever with the huge increase of smaller, direct-to-consumer business owners
alike, but a lot of customers are satisfied with the makeup they have access to.
According to a 2019 Ipsos survey, via Forbes, 80% of respondents agreed with the
statement “My personal beauty and grooming needs are met by products I can buy
today,” and 55% of respondents would rather stick to a brand they know over a
new one they haven’t tried. But in light of the impact of social media and
e-commerce’s rise, behaviors have shifted. A StyleSeat poll of 1000 respondents
found that 89% of TikTok users surveyed, purchased a beauty product after seeing
it on the app—despite the fact that 76% of all social media users surveyed don’t
believe product recommendations from influencers are genuine.

So you have your giant legacy brands holding their ground. And you have a lot of
up-and-coming small direct-to-consumer brands breaking in and finding their
audiences to varying degrees of success. And AI is about to be a huge game
changer for everyone across the board if they understand how to leverage it
correctly.


EASE THE PROCESS FROM HEART TO CART

AI at its best is all about overcoming consumer pain points in a thoughtful and
engaging way. Shopping for beauty products can be complicated and overwhelming
for customers; with a myriad of skin trends and endless information about
ingredients used in the product, it can be a real art to engage a customer,
understand their needs, inform them of a solution without overwhelming them, and
make the sale. Other common pain points for beauty consumers include not having
enough associates to help with in-person consulting and stock running low.

AI has the potential to convert these moments that might make a consumer give up
into positive experiences. Behind the scenes, AI can help forecast demand and
understand supply chain issues to ensure your product stock is stable and
consistent. When it comes to direct interactions with customers online or even
in person, having virtual assistants that can answer questions, make
recommendations, and successfully troubleshoot with customers will make all the
difference in maintaining customer engagement and loyalty.


PERSONALIZE PERSONALIZE PERSONALIZE

It’s hard to believe that it’s only been 6 years since Rihanna launched Fenty
Beauty, successfully providing a wide and actually inclusive range of foundation
shades to match every skin tone and proving once and for all that not only does
everyone deserve to have makeup that works for them, but that you can make a
couple of billion dollars off that reality.

At the heart of that spirit of inclusivity is personalization, ensuring that
consumers can have a product that makes them feel like “This is for me.” In the
same way that customers’ #1 goal with retail is finding the “right fit,” a top
goal for beauty is helping consumers find exactly what works for them. Consumers
know what they need and know what they like, and want to make those
well-informed choices for themselves, and AI is an excellent tool in
facilitating this. AI can be used to provide personalized and informative beauty
suggestions, taking the customer’s skin type and tone, sustainability
preferences, skincare and makeup regimen, and style into account. This can be
done through diagnostic quizzes, or analyzing selfies to identify skin type and
face shape.

For example, Shiseido’s groundbreaking products like the Skin Visualizer which
measures “radiance, resilience and suppleness, and fine skin texture and
smoothness of the skin” and Makeup Advisor allows customers to get an in-depth
analysis of their skin and face, share what kind of beauty outcomes they’d like
to have, and receive an extremely personalized menu of suggested beauty
products.

Having personal and unique suggestions can result in a huge return on interest,
upwards of 1500% according to ERM, a personalization software for retailers.


TRY BEFORE YOU BUY

Despite e-commerce being a huge part of the beauty industry, nothing can really
replace going into a store to try on a product, whether it’s seeing how a
certain moisturizer sits on the skin or trying to see which shade of plum
actually works with your complexion. While AI may not (currently) be able to let
you feel firsthand just how well a cream absorbs into your skin, it can
definitely help you see what certain makeup products look like on your face.
Companies like Sephora, Maybelline, L’Oreal and more are banking on virtual
makeup try-on services. Having tech that allows customers to virtually “try on”
products whether it’s makeup or different hair colors and styles engages
customers in a fun and genuinely informative way, and can even help us overcome
our own biases regarding beauty.


AI AND EQUITY

AI is fast becoming an essential tool in all aspects of our lives and is already
playing a major role in the beauty industry. But it is far from perfect. AI does
reflect biases embedded in the data it’s working with and this has unfortunate
results, particularly when it comes to race. Facial recognition technology has
been criticized for not accurately picking up on darker skin tones, and certain
technologies have been found to perform better on men than women (a reflection
of the lack of diversity in who is designing and creating these AI products).
While these issues are being addressed, it’s important to be mindful of these
realities and experiences and ensure that the AI being used is accessible to all
consumers. Part of AI’s strengths is in providing nonjudgmental interactions and
suggestions to customers based solely on data, so as to not perpetuate the
limited beauty standards and judgmental exchanges that have kept customers from
going into stores.

It’s of utmost importance that the technology being used can actually ensure
that kind of equitable inclusivity, but once properly deployed and leveraged, AI
will be essential to creating an experience that earns customer loyalty, and the
possibilities will only expand from there.

About the author. 
Sam Mani writes about work, creativity, wellness, and equity — when she’s not
cooking, binging television, or annoying her cat. 


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