Winning with Omnichannel
March, 2016
Agenda Industry and Competitive Landscape
• • • •
Attractiveness MAC's Positioning Industry Trends Competition
Recommendation 1
Recommendation 2
Recommendation 3
Industry and Competitive Landscape
Cosmetics retailing industry: an attractive industry Low - Growing demand - No major substitute
Low-Medium - Low switching cost - Low mass purchasing - Moderate demand for product quality
Threat of Substitutes
Low-Medium - Many suppliers provide basics - High standards for quality, not differentiated - Forward integration
Supplier Power
Buyer Power
Low-Medium - High inventory demand - Need large supply chain - Relationship based industry - Growing interest in niche brands and products (i.e. organic)
Threat of Entry
Medium-High - Increased retailers - Not concentrated - Promotional competition - Growing online retailing
Competitive Rivalry
MAC’s positioning
Canadian DNA
All ages, All races, All sexes Professional Celebrity partnerships Optimized user packaging Socially conscious
Industry trends
“I want to maintain, not hide.” “Korean brands are the best in business.” “I look for brands that advertise to all ethnicities.”
The competing retailers in cosmetics retailing
Sephora
MAC
Retailer of multiple cosmetic brands along with its own private label
Estee Lauder brand
Products range from cosmetics, skincare and haircare – one stop shop
Cosmetic products sold for consumers and makeup professionals
Loyalty program – “Beauty Insider”
Loyalty program – to be released in Canada soon
Only free standing stores
Stores - free standing and in Hudson's Bay and Nordstrom
MAC’s growth opportunities…… In Store Customer Service 80
80
Loyalty Program
62
70 53
63
Professional makeup application
60 50
Sephora 33
40
80
Mobile App (Canada only)
72 Self Service
30
47
20
0
MAC
0 10 0
Ease of navigation from social media to online store
28
50
68 Accessibility 73
of Stores
23
20 50 37
Online Experience
48
63
Offer sample-sized cosmetic products
55
Offer product meets my needs 78
Experiment new looks
Omnichannel Performance - Sephora vs MAC
MAC: Playing field
Omnichannel integration
Higher accessibility in tier 2 & tier 3 cities
Make-up classes awareness
Recommendations
Omnichannel optimization and accessibility expansion, seamless integration of artist experience
Horizontal expansion – new skincare products
App learning loyalty program – MAC Guru
Recommendation 1 Seamlessly integrate all components via an omnichannel experience
What constitutes omnichannel? Seamless, regardless of place of purchase
• Mobile Application (loyalty program) • Mobile-based social media
Online Sales
Offline Sales
• Service • Product Availability • Store Accessibility
Online Marketing • Online sales website • Web-based social media
How to integrate the channels?
• Interactive mobile strategy • Streamlining physical and digital interactions • Engagement across all channels
• Expansion to increase instore accessibility • Increase household penetration through vending machines and kiosks
Action 1: Localize Social Media Contents
Action 2: Social Media Channels: Click Away from Shopping
2011 report - Benefit Cosmetics sees a 10 times higher click-through rate for the “buy now� button on Facebook than the average online ad
Action 3: Create Self-serve Friendly Shopping Experience
" I don't feel free in the MAC shops. It feels like someone is always looking at me, or I have to rely on assistants to get the cosmetics I want. Whereas in Sephora, I feel that I can find the makeup I want and try them on just like being at home."
Action 4: Expand through vending machine and kiosks High agility – fast market entry and exit 30% of participants showed interest in using these channels Travel sized products to minimize customer adoption Partnership with technology savvy and vending/kiosks companies
The better-off test Tier 1 • Expand market • Synergistic locations • Inventory rotations based on product consumption • Increased user convenience
Tiers 2 and 3 • Pilot test new markets • Market research • Increased accessibility • Understand market prior to opening free standing stores • Increased user convenience
Recommendation 2 Enhance the MAC brand by including more ageless focused products
Horizontal Expansion: Include more cream products under MAC Expand MAC’s BB cream category to introduce anti-aging creams Better-off test • In line with consumer trends – capturing the “ageless segment” • One step closer to being a one stop beauty and cosmetic shop • Leverage expertise and skills from Estee Lauder to introduce this product
Recommendation 3 A beauty guru’s journey
Purchase products
Achieve different levels and benefits
Receive “Expertise� time
Guru
Winning with Judo Strategy Redeem in-store makeup tutorials
The long term strategy: how to win Use vending machine data to reach 50/50 free standing store goal Identify and develop partnerships with technology firms to remain competitive in digital retailing Re-introduce YouTube channel and partner with Snapchat Videos on self application of make-up Reflect diversity – all sexes, ages and genders
Partner with make-up professionals and stars to develop a live training during product launch
Thank You!