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What US Brands Need To Know Before Entering the £20 Billion UK Beauty Market

Pat McGrath and Rihanna are among the US beauty brands that have made big splashes in the UK. But successfully crossing the Atlantic isn't easy. Retailers, brands and industry experts told BoF how to navigate the complex British beauty market.
Milk Makeup's pop-up in London | Source: Courtesy
By
  • Cheryl Wischhover
BoF PROFESSIONAL

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NEW YORK, United States —  British shoppers love American beauty products. Consider:

In April, Pat McGrath's makeup line became Selfridges' most successful beauty launch ever. Harvey Nichols executives claimed the same after Rihanna's Fenty beauty range debuted there in 2017. Instagram favourites Drunk Elephant and Glossier had splashy UK launches in 2018 and 2017, respectively.

The UK and its enthusiastic beauty shoppers offer an intriguing opportunity for US beauty brands. Last year, the country’s consumers spent nearly £20 billion on eyeshadow, skincare and other beauty products, according to an Oxford Economics report for the British Beauty Council, an industry group started in late 2018.

But cracking the UK market isn’t easy. For starters, there is no dominant multi-brand retailer along the lines of Sephora or Ulta, so brands must decide between a confusing mix of online shops, small chains, department stores and drugstores. Regulations on cosmetics and wellness products are stricter, and Brexit could change everything. Plus, the marketing techniques that prove successful in America may not work across the Atlantic.

“No one spots a bullshitting American quicker than a British customer,” said Caroline Hirons, a consultant who has helped American brands like Sunday Riley and Herbivore Botanicals navigate the UK market. “We are at best sceptical and at our worst very cynical.”

No one spots a bullshitting American quicker than a British customer.

BoF talked to UK retailers, US brands and industry experts. Here is their advice for entering the British beauty market:

Learn what UK customers want

Though they may be sceptics and cynics, UK consumers are generally open to trying out US brands.

“An American brand still incites a feeling of efficacy and if it’s from the US [people think] it’s going to be really fantastic,” said Krishna Montgomery, founder of London-based Monty PR.

Milk Makeup launched in the UK in January via Cult Beauty, an e-commerce site known for carrying independent brands and which frequently launches American brands. Months earlier, executives did some on-the-ground reconnaissance.

"We took our time to listen, walk the streets, meet with retailers and talk not just to people in the beauty industry but DJs and people who own bars and clubs," said Milk Co-founder Mazdack Rassi, who founded the brand with wife Zanna Roberts Rassi, a former beauty editor in the UK, along with Georgie Greville and Dianna Ruth. "We'd walk up to people and ask, 'Have you heard of Milk Makeup?' That really gave us confidence."

They learned potential customers wanted to get their hands on the brand's stick products. The process also confirmed their original inclination to launch online first.

Glossier sells directly to consumers in the UK via its website and is opening a pop-up shop in London this fall. It has a warehouse in the UK and a team based there, which has been invaluable for learning about local preferences.

“We changed our shippers to slimmer padded mailers to ensure they can get through the post boxes,” said Gemma Bellman, Glossier’s director of Europe. “It can be small things like that really make a difference.”

Navigate the regulatory framework

To enter the UK, brands must abide by the European Union’s cosmetics regulations and obtain certification for every product. It can take up to a year to complete the process, and UK retailers recommend working with outside agencies. About 20 percent of beauty products fail to pass EU requirements, said Doram Elkayam, chief operating officer at Obelis, a firm that helps brands with regulations. Even labels and packaging are subject to different standards.

Brands like Milk and Wander that bill themselves as “clean” often formulate their products with an eye toward eventually launching in the EU, where over 1,000 ingredients that are allowed in the US are banned. Still, Wander Co-founder Divya Gugnani said the brand spent “thousands of dollars per SKU” to get registered.

My biggest advice is don't be rigid in your view, come with an open mind.

Sunday Riley had to change the formula for its best-selling Good Genes lactic acid serum, swapping in glycolic acid in order to qualify for sale with Cult Beauty. Alexia Inge, the site’s co-founder, said several brands she has worked with had to pull out of the market or delay launches for months to deal with ingredient issues.

Know where to sell

In the US, Sephora and Ulta, chains with hundreds of locations, are the obvious choice for beauty brands looking to make a splash. In the UK, the reality is more complicated.

Millie Kendall, CEO at the British Beauty Council, says that placement at department stores like Selfridges, Harrods and Liberty can “create excitement.” Retailers like Boots can help move volume, and e-commerce retailers like Cult Beauty and Beauty Bay are helpful for brand storytelling. She also thinks that brands should consider service businesses like beauty salons, a growing segment in the UK. According to the British Beauty Council report, 1,394 new service providers opened in 2018.

Normally retailers require a period of exclusivity lasting anywhere from six months to years. Fenty Beauty waited almost two years after its Harvey Nichols debut before entering Boots in May.

Cult Beauty will pay for publicity for brands it launches, and often requires six months of exclusivity. But Inge says that it’s not always the right move, either for the brand or the retailer.

“I think that tying their hands too much with exclusivity can also limit the growth of that brand,” she said. “You can end up strangling a brand by being too dominant in that way. There’s room to have a couple of competitors.”

Pre-launch brand awareness is key

Glossier and Milk knew it was time to launch outside the US when a big chunk of their social media followers were coming from outside the country. In Milk’s case, retailers told Rassi they were getting requests for the products. He says that when Milk launched in the UK, customers were interested in the original slate of products as opposed to newer items that were popular in the US.

“What we’re really looking for is how it’s trending in its local market and that a brand can demonstrate some customer traction in order to bring it into the UK,” said Margaret Mitchell, Space NK’s chief merchandising officer. Space NK, a multi-brand prestige retailer, has 69 stores in the UK and is planning for more this year.

Brands should also be ready to provide samples, said Joanna Rogers, Boots’ commercial director and VP of beauty.

“Sampling is critical. It’s ultimately about, ‘How are we going to drive awareness in the UK?’ Sampling has worked massively well for us,” she said. Depending on the brand’s size, Boots has sampled anywhere from 1,000 to 40,000 units at a time.

Boots, which has about 2,500 UK locations, is looking for brands of all sizes to launch in its newly designed beauty spaces, which feature open-concept shopping and a variety of indie, prestige and mass brands. Brands shouldn’t always enter the UK expecting their US retailer strategies to work, though.

“My biggest advice is don’t be rigid in your view, come with an open mind. Where we’ve found the most success is when we’ve been able to be flexible,” said Rogers.

Have a PR strategy

Instagram is a big driver of sales and awareness in the UK, just as it is in the US. But while the power of traditional print media mentions in the US has faded, in the UK, the Sunday papers still matter.

"If India Knight writes about you in the Sunday Times, you can be damn sure you will sell out," said Kendall, referring to the lifestyle writer who has a beauty-focused column in the newspaper's style insert.

Sali Hughes at the Guardian, mentions in British Vogue and positive reviews on Hirons' blog can also turbocharge awareness and sales. Hirons recommends to clients without much brand awareness in the UK to hire PR a few months before they try to find retailer placement.

We look at our offline retail experience as the pinnacle of that customer engagement with the brand.

As in the US, pop-ups are going strong in the UK. Milk staged one prior to launching at Cult Beauty, and queues stretched around the block. Glossier, which has permanent stores in New York and Los Angeles, sees them as a strategy to connect with consumers.

“We look at our offline retail experience as the pinnacle of that customer engagement with the brand. It allows us to get under the hood and to get to know our customers in our community,” said Bellman.

When Drunk Elephant launched at Space NK, it worked with both the retailer and with Monty PR to stage the launch via a pop-up called the House of Drunk. Space NK has also coordinated immersive experiences for smaller brands, like sending a group of UK influencers to the US to visit the salons run by haircare brand IGK’s founders.

“What’s really important is working to maintain whatever the strategy is and you don’t just enter the market with a bang and then nothing happens for a year,” said Montgomery, who has worked with clients like US-based Hourglass Cosmetics for seven years.

Space NK’s Mitchell says brands usually want to celebrate when they land in a retailer. “But don’t think that that’s the end of your journey. That’s when the hard work begins.”

Editor'sNote: This article was revised on 24 August, 2019. A previous version of this article misstated that Monty PR worked with haircare brand IGK. That is incorrect.
But it shouldn’t stop at the launch.

THIS WEEK IN BEAUTY

Speaking of UK beauty, brick and mortar beauty destinations fight back against online competitors. UK retailers are using a combination of splashy brand exclusives and compelling in-store experiences to lure customers to stores.

Estée Lauder celebrates strong earnings. Sales of the company's brands in Asia, the Middle East and Europe increased 20 percent and up, with skincare and travel retail driving growth.

How E.l.f. is growing its cosmetics sales in a softening makeup market. After closing all its freestanding stores, the mass brand has had sales wins with a new primer product and a renewed focus on influencers.

Morphe valued at $2.2 billion after majority investment from General Atlantic. The company also said it is looking to acquire up-and-coming digitally native brands.

Stranger Things' Millie Bobby Brown is the latest celebrity to launch a beauty line.  Florence by Mills, to be sold at Ulta in the US and Boots in the UK, includes skin care and makeup geared towards Gen Z customers.

Celine's first fragrance is actually several fragrances. Celine creative director Hedi Slimane created 11 unisex scents, to launch this year and into 2020.

Amazon's private-label skincare brand apparently not doing that well on Amazon.  Belei, Amazon's attempt to crack its own skincare search algorithm, has a middling standing in the behemoth's bestselling product lists, with mediocre reviews.

Ulta ad resonates with girl who uses a wheelchair, goes viral. A Virginia mom posted a picture of her daughter gazing at a model in a wheelchair at an Ulta store. Ulta arranged for the girl to meet model Steph Aiello.

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