Paris-based physical and digital retail design agency Malherbe Design Founder and President Hubert de Malherbe tells BW Confidential about his vision of online and brick-and-mortar retailing, how it will be influenced by gaming technology and the importance of the subscription model
Online sales have accelerated since COVID-19. How can brands improve their online presence and e-commerce stores?
What is fabulous about these times is that there are new opportunities because mentalities have changed. However, COVID-19 has shaken the consumer’s psychology much more than it has changed the psychology of those managing companies. It is more important than ever to innovate, as consumers are more willing today to do things that they would not have done in the past, as their lives have changed and the market has changed.
In terms of creating a luxury environment online, the question is not really about luxury or not luxury, but about experience. The real issue to be able to hold people’s attention for a relatively long period of time. When you shop in a high-end mall, there is an element of taking time for yourself and having fun, but if you go online, most luxury brands still have a presentation that looks like what you get on Amazon. Therefore, the question is what direction do I need to take, to keep consumers’ attention for longer than it takes them to find a product they saw in an ad and to make a transaction – which was the transactional type of e-commerce from before the crisis.
Look at gaming – there are around 3.1 billion people on the planet who are frequent gamers, and gaming is a way of escape, of immersing yourself in a different environment and participating in something. Artificial Intelligence will mean that people will have more immersive experiences and become more sedentary; they will be able to virtually do more things without having to move, such as visiting a country in an afternoon and have a real digital existence. There is an opportunity for companies to transport consumers into a brand’s world and allow them to discover the brand’s environment and culture through experiences that are inspired by gaming technology.
However, what it important, especially in cosmetics, is to have a digital version of yourself before entering these digital environments. Entering a virtual world as a physical person does not work. This means that the biggest issue to be able to create a virtual twin of each person so that they are able to see themselves in this digital world. And being able to create an avatar for your clients is also way to build loyalty.
Facebook is in the process of modeling the faces of everyone on the planet – which is not so hard to fathom given how close people are to the cameras on their phones all day long. So to being able to model the shape of the face, and all the subtleties of the face, such as fine lines and complexion is the reality of tomorrow.
But what about privacy concerns?
I don’t think the majority of people think like that, and especially not young people. People have changed and this facial modeling will be accepted, especially when you begin to explain that people’s phones or devices will soon be able to detect serious illness or disease. It is inescapable that phones and other devices will become more sophisticated and help us to live better. And it is not such a big leap to see these applications for health also be used for the world of beauty – for example, an app on your phone that tells you that since you stopped eating meat or diary your complexion is better, or that your skin is in better health after using a certain type of cream.
This brings me to the issue of subscription, which is a new way of consuming. The younger generations are less concerned about the possession of things and more focused on the enjoyment of things. Look at [Amazon] Prime – 80% of American households have Prime, a subscription they pay $100 a year for and it gives them access to entertainment, gaming, music, quick delivery, as well as special prices at Whole Foods. They get all of this for a price that is lower than if they were to pay for all these things individually – it is a consumer’s paradise. And above all it is a way of gaining consumers’ loyalty – and making them pay for it.
What is important is that there will be a race to model people’s faces, and this ties in to the idea of subscriptions. Imagine a brand says that for one month we will model your face and show you in a truly exceptional way what you will look like. So they may make your eyes bigger, smooth certain parts of the face and create your avatar so you can enter digital environments which will begin develop. And so will be able to have wonderful moments, relationships, experiences in these new virtual environments because they modeled your face.
There will be different levels of classifications depending on the quality of these services, in the way you have for all subscription models – such as for frequent flyer loyalty programs for example. But the question is who will recuperate these virtual twins. So there could be a radical evolution of the industry – as from the moment that you are in control of a person’s face, you are in control of their needs and you can push them product. We are going towards a world where you do not go to the product, but where the product comes to you. This inversion of the principle of retail is a key issue.
How can brands make this digital shift? Companies such as L’Oréal for example have made strong advances in digital have set the bar high for others. Will this make it more difficult for other brands to embrace digital?
Your example of L’Oréal is very interesting, as they been relatively avant-garde, especially considering their investment in Modiface, and they have understood digital before a lot of others.
I would say that unfortunately negotiating this very big digital shift takes a lot of resources, and there will certainly be a large concentration in the cosmetics industry. Those that have the advantage will be companies that have had a head start and that are big and powerful. However, there will also be brands who are daring, and if they innovate will be able to surprise rather than be a follower.
What does this digital shift mean for physical retail?
Companies will have to be careful in what they invest in when it comes to physical retail. Is it in services? Is it in digital and to use physical retail to create a virtual environment where we will be able to retain the consumer? Because one of the big challenges in retail today is that retailers do not know who their consumers are – which is crazy. Very little effort has been put into that, and that ultimately the physical place is often a place of recruitment.
We work with Alibaba on their Hema store in China. They have a physical space to show shoppers what they sell in the physical store is the same thing that they will buy online. For them, their ultimate goal is for the customer to come to their store one time out of 10, which is the opposite to most retailers. Hema sees the physical stores as places of discovery, with seasonal products, catering, cooking classes. When consumers come to the stores they will experience the product and staff will spend time with the consumer – and that is the future. It is question of mindset.
Will retailers continue to invest in brick-and-mortar stores given the volumes now done online? And how should they invest in physical stores?
I think this is a question of region. Europe is behind when it comes to digital compared with China, the Middle East and the US. There is a certain conservatism, and it is also difficult to invest as the scale is smaller.
Clearly, innovation and change are key in Asian projects. Take Alibaba’s Hema. Last November we opened a new cross-border concept store for Hema, which puts forward the idea of showrooming. Consumers can discover the products on display, and to make a purchase they scan a QR code. The product is then delivered in 10 minutes and the consumer benefits from a tax refund as the products are shipped from a free zone. The idea is great as you have no cash desk, no stock and the people who work in the store are devoted entirely to listening to and interacting with their consumers; plus shoppers receive their purchases in just 10 minutes. It is super exciting, but there are no takers for this kind of concept in Europe.
What I am worried about is whether European companies will be major players in this natural concentration of tomorrow and be able to see the industry completely turned around by those who master facial modeling
So could the Big Tech players replace today’s cosmetics players?
Take the example of the car, Today, anyone can make can car since there are motor modules in the wheels, people who make batteries and after that there is just a chassis. So the manufacturers of yesterday are not those of today – look at Telsa. And today’s retail pure players are not those from the brick-and-mortar business.
But what about the brand?
Luxury, however, is different. The luxury experience is to be reinvented online. There are not really any luxury experiences online, if only because the luxury so expensive, and the fact is that today on the Internet, everything is cheap.