Beauty in the Age of AI:
Will Physical Stores Survive?
The phrase “the death of the high street” became widespread during the early 2010s when the rise of e-commerce first threatened brick and mortar retailers. What was the role of physical retail when customers began making purchases online from the convenience of their homes?
For some industries, the emergence of e-commerce completely flipped the paradigm. Take the book and music industry, for example. With the rise of digital formats, such as e-books and digital music downloads, online retailers like Amazon have become dominant players, leading to the decimation of many traditional physical bookstores and record shops.
In the beauty sector, which I was a part of and understood intricately, physical stores have been more resilient. Physical retail allows customers to interact with knowledgeable consultants who can offer personalised recommendations based on their individual needs and preferences. These consultants can offer advice on everything from skincare routines to makeup looks, helping customers make more informed purchase decisions. This personalised approach to retail creates a more engaging shopping experience, which can be a key driver of customer loyalty and repeat business.
Today, in 2023, I am skeptical that physical retailers can still endure. Does the emergence of artificial intelligence (AI), especially the emergence of LLMs, disrupt the unique value proposition traditionally offered by brick and mortar stores? In the future, AIs could interact with customers, providing personalised product recommendations in the same way that sales consultants in department stores do.
Sephora, one of the world’s largest beauty retailers, uses AI-powered virtual try-on technology to enable customers to try on makeup products virtually. The Sephora Virtual Artist tool uses facial recognition technology to scan customers’ faces and suggest products that match their skin tone and facial features. Customers can also upload a photo and try on different makeup looks virtually. The tool provides personalized product recommendations based on the customer’s preferences and helps to reduce the likelihood of returns.
L’Oreal, the world’s largest cosmetics company, uses AI to provide personalised hair color recommendations to customers. The L’Oreal Style My Hair tool uses AI-powered image recognition technology to scan customers’ faces and suggest hair colours that match their skin tone and facial features. Customers can also try on different hairstyles and colours virtually. The tool provides personalised product recommendations based on the customer’s preferences and helps to reduce the likelihood of mistakes when choosing hair color.
Shiseido, a Japanese beauty brand, uses AI to provide personalised skincare recommendations to customers. The Shiseido Optune tool uses AI-powered analysis of customer data to suggest a personalised skincare regimen. Customers can answer a series of questions about their skin concerns and receive a customised skincare routine that includes products from Shiseido’s portfolio. The tool provides personalised product recommendations based on the customer’s skin type and concerns, helping to improve the effectiveness of the products.
Shisedo Optune — Personalised Skincare tool
As AI continues to evolve, could we see a future in which the requirement of a dual strategy of online and physical retail diminishes? It is certainly possible. As AI-powered tools become more sophisticated, they could provide increasingly personalised product recommendations that could rival or even surpass the advice provided by human sales consultants. This could allow online-only beauty brands to offer a highly tailored and interactive shopping experience to customers, without the need for physical retail locations.
However, it is important to note that physical retail still offers several advantages over online-only stores, even in the face of advancing AI technology. Right now, physical stores offer customers the opportunity to touch, feel, and try products before making a purchase. Until some innovative synergy of haptic feedback suits and VR headsets reaches beauty, physical stores will have a monopoly over this experience. Perhaps more importantly, physical stores can provide a social and community aspect to the shopping experience. When I think of the idea of “Retail Therapy’ I think of a group of friends strolling a department store and window shopping, not browsing alone at a computer screen.
AI may eventually reduce the need for physical retail in the beauty industry, it is unlikely to completely replace it. Rather, physical retail and online-only stores will likely coexist, with each offering unique advantages to customers.
