The Trends and Challenges Facing DTC Luxury & Beauty Brands

Satisfi Labs
Satisfi Labs
June 03, 2019

Last week, the biggest names in fashion and beauty, from legacy brands to the new frontier of innovators, met at the Glossy 2019 Summit to address the rapidly changing industry landscape.  Beauty and fashion brands are still competing fiercely to retain and engage their customers as the landscape continues to become more difficult and cluttered, with the global specialty retail market expected to reach $863B by 2024.

After spending 2 days talking and listening to CMO’s and brand leaders, I wanted to reflect upon how these brands are leaning into technology to help them navigate the new consumer landscape.   Here are my key takeaways to look out for:

  • Direct to Consumer – it is all about control.  Almost 80 percent of brands that attended are cultivating and evolving their DTC strategy.  As creating a superior consumer experience continues to be paramount, DTC is allowing brands to create direct 1:1 relationship with their clientele and create new data streams. However, the biggest challenge brands are facing is sorting through that data and figuring out what’s relevant and what isn’t. Rhone co-founder Nate Checketts commented, “you have to gather the data; you have to organize the data and you have to take actionable insight from it. Most companies are stuck on part one, and for DTC brands, there are so many injection points of data, it can be hard to sort them all.” This is where AI can serve brands in navigating the data and helping them understand customers on a deeper and contextual level to create meaningful connections.

  • The growing demand to be omnipresent. Customers do not define themselves by the online channels they use, and brands shouldn’t either. When a brand makes all of their knowledge equally accessible on all channels, they are giving the customer a seamless way to interact with the brand, wherever they choose. Brands are embracing emerging technologies like shoppable Instagram posts, and building on voice-activated platforms like Amazon Alexa and Google Assistant to meet customers where they are.

  • Each customer can have an experience with a product expert. Many of the founders speaking at Glossy discussed their dilemma in translating their personal vision, understanding, and passion for their brands and products to their employees as they look to scale their companies, especially when they are considering expansion.  Leveraging new technology to transfer founder knowledge down to employees and ultimately to the customer is vital. The ability to scale and amplify internal expertise is core to creating meaningful, unique, and seamless interactions between employees and customers, and building brand interactions as if the founders themselves were serving the customer.

  • Convenience and frictionless experiences.  Brands are focused on delivering personalized and convenient experiences at scale. When a customer can’t get in touch with a brand when they need support, it creates friction and can weaken (or even ruin) the customer-brand relationship. Many brands who presented at the summit discussed being laser-focused on convenience, whether it’s Rhone offering a personal concierge service for the top 3% of its clients, StitchFix delivering convenience in personal styling, or Klarna allowing customers to pay for items over a series of multiple payments. It reaffirms that having technology that is agnostic and always-on to the customer’s channel is absolute.

So what does this mean for AI and knowledge management platforms like Satisfi Labs?  As brands further integrate technology into their efforts to connect directly with customers, it becomes more vital for them to source effective solutions that support their goals.  It is clear that brands need technology solutions to manage their ever-growing knowledge (data sources), extend their knowledge across all channels, and amplify that knowledge across employees and customers.  This all points to the importance of AI and conversational search as a key part of that solution. AI is inevitable for these brands to gain competitive advantage, and we are excited to see how they harness it and put the technology in action.

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