Legacy brands in tomorrow’s market

Puig has sought to tap into the women’s empowerment movement with the launch of the Queendom website

An analysis of how legacy brands can remain relevant in the market of the future

Indies, digital-native brands and influencers have stolen the limelight in the past few years. The success of some of them has also been a wake-up call to big brands that are perceived to be entrenched in outdated models. The dilemma for the legacy brands is that the advantages they had for the past 50 years can now be a liability, says Dave Knox, brand builder, strategic advisor and author of Predicting the Turn.

Large global brands have felt the pain and have had to change, comments WSL Strategic Retail chief shopper and ceo Wendy Liebmann. “Brands can’t assume longevity is a guarantee of success.” Relevance is particularly important in beauty, and brands can no longer look to grow just by launching new shades or a new fragrance, points out Liebmann. The level of trust in legacy brands—something that has been a differentiator from lesser-known indie brands—has also been eroding for some time, whereas the trust in smaller and even private-label brands has been improving, she adds.

Legacy beauty brands enjoy high brand awareness but are hampered by the perception that they are old, and no longer relevant today, says Pamela Danziger, market researcher and founder of Unity Marketing. “For legacy brands, the consumers’ perception is their reality.”

Staying on message
In a bid to stay on message, major players have made efforts to woo younger shoppers with influencer collaborations, the launch of lines targeting younger consumers and Instagrammable campaigns and products. Examples include MyClarins, pitched as a natural-based, new-generation skincare range, and YSL Beauty’s YSL Beauty Station pop-up. The challenge for beauty brands is to take their ‘old’ products and make them new again,” says Danziger. They have a powerful advantage in that they have been around for a long time and have invested in resources and research to stay abreast of the many innovations in beauty,” says Danziger. “The solution is for legacy beauty brands to make themselves over by communicating their strength from winning the test of time, but also moving with it. It means they need to use all the 21st century tools in their marketing arsenal to communicate with consumers.”

Many groups from Unilever to Walmart have also been looking to shake up their corporate cultures and look more to open-innovation and collaborative platforms in a bid to draw young talent. L’Oréal’s launch of BOLD Business Opportunities for L’Oréal Development, an investment fund targeting start-ups, is just one of the latest initiatives the company has forged for exploring and creating new models across its business. Spanish company Puig created Puig Futures, a collaborative platform focused on drawing in new talent, developing and supporting innovations and seeking out new opportunities and models. “The major players realize they are playing in a new space and they are stepping back and looking at how to deliver around a faster, more fragmented, shorter lifecycle business,” says Liebmann.

Acquisitions have long been put forward as the best way of buying into new business models or markets. And this has been a key trend, especially in the direct-to-consumer space. Both Edgewell Personal Care and Unilever paid vast sums to get into the direct-to-consumer subscription model shaving market—Edgewell shelled out $1.37bn for six-year-old brand Harry’s earlier this year, while Unilever paid an estimated $1bn for Dollar Shave Club in 2016.

A multi-pronged approach
However, increasingly, beauty groups are looking to develop their own new brands. L’Oréal, which has relied on acquiring brands over the years, recently launched the Seed Phyto Nutrients brand from scratch. LVMH’s launch of Fenty Beauty and the Maison Fenty fashion house have been significant entries in both beauty and fashion. In a bid to tap into the women’s empowerment movement, Spanish company Puig just launched an online platform called Queendom. The site says its aim is to celebrate women and promote gender equality. It also sells a range of Queendom fragrances and make-up directly on the website. “As the legacy companies begin to ramp up their innovation across their systems, from manufacturing and R&D to all aspects of the business, they have now recognized that it is in many ways easier for them to develop their own proposition, rather than trying to put band-aids on something that someone developed and that has had a very quick fast run to success,” says Liebmann. She adds: “We are moving into this next era of beauty innovation and
I think we will see legacy companies begin to follow that LVMH Fenty model and be much bolder. I also think we are going to see more of the impact of the non-global and the quiet caliber of a company like Amorepacific beginning to disrupt or create innovation in markets where they have traditionally struggled.”

Big brands continue to dominate the market and have much expertise, and as Danziger puts it: “The problems women face in beauty are the same today as they were years ago. Skin hasn’t changed, but the products have.” But this does not mean life is easy at the top, especially as the investments and risks involved are high. “For a lot of the big legacy companies, the brand has been very controlled for a long time, and very carefully curated. And in this new world it is going to be different in that regard; it is going to be much more about nimbleness and responding in a wide range of ways. That means is it’s necessary for them to try different models and to experiment because that is what is at the heart of the competitors they now face,” says Knox.

Knox adds: “I think where a legacy company fails is that it thinks it can do one of those things [an acquisition, collaboration or new launch] and that it will solve all of its ills. ‘I bought three brands pat me on the back, I’ve got it solved.’ They have to figure out a lot of different models and see which ones work uniquely for them.”

“I wonder if we are going to see billion-dollar brands [in the future]. Because we have consumers who want local, who want personalization and who want things that really fit them; that’s where the model has gone in so many different ways,” says Knox.

But that is not to say that new companies are not looking to generate large volumes. “I can’t even describe the number of companies that are pitching themselves as the next-generation L’Oréal or Estée Lauder. Everyone wants to create that model, but I don’t think anybody knows quite yet what that model is going to be about,” says Knox.