The past two years have seen consumers make unprecedented shifts to new channels. Whether these changes in behavior will persist is a fiercely debated issue that will not be resolved until the longer-term reality of the situation is clear. Even pre-COVID, while people were not shifting channels completely, the lines between them already starting to blur with consumers traversing channels as part of the same purchase.

Three tendencies have led to further channel blurring:

• Where we buy health and beauty products from has become less defined – Expansion beyond traditional mass market and specialist retailers to increasingly include other store types such as clothing and homeware. This is compounded by players in other categories entering the health and beauty space (e.g. Lululemon).
• Online retailers are meeting more of our needs – These now go to great lengths to replicate the physical health & beauty consumer experience, offering returns, virtual try-outs etc.
• Ever-broader definition of a sales channel – Anywhere a target consumer is spending their time is effectively a sales channel. We should therefore consider Instagram, TikTok, Amazon Alexa and even games as channels where companies should be engaging target consumers with meaningful and well-received content.

With this blurring of channels, the very concept of a “channel” as a way to organize your sales efforts and go-to-market strategies is losing significance. What matters now is where consumers choose to spend their time and what journey they take to engage with your brands.

For companies, the key questions include: Are you present in these spaces? Or are you losing share?

To navigate this emerging landscape, the present report aims to offer practical guidance to support your business in refocusing on the consumer. We use the health & beauty industry here to provide examples of dynamics which apply to fast-moving consumer goods (FMCG) more widely.

This report:

Regardless of channel, there are four constants that your consumers need from you, representing the basis upon which all channel discussions and actions should evolve:

While these constants apply equally to all channels, they are applied neither universally nor consistently. Interestingly, online players in the area of e-commerce have identified this as a gap in the market and responded by raising the bar with the Four Constants. Many websites now include:

For your consumers, finding these four elements in place is a matter of course, and they only really notice them when one or more is missing from their experience. Looking specifically at beauty, the shopping experience for this category ranked a low 110 out of 125 categories surveyed in a 2019 IPSOS poll. If you break this down further into the Four Constants:

With the Four Constants consistently driving your decisions, it is important to recognize that there are 3 keys to unlocking your success:

Established health & beauty companies have a natural advantage in the traditional channel of physical retail, one that emerging players try very hard to replicate.

Emerging players have turned this weakness of underserving consumers into a strength by focusing on digital solutions.

Physical retail will still be the favored place for consumers to explore and experience your brand and your products post-COVID. This will particularly be the case for products that consumers are less familiar with or feel that are important to try first.

Many companies have built tremendous brand heritage and obsessed over how to improve in traditional channels for many years. The challenge now is responding to consumer expectations that have evolved faster than the traditional channels have been able to adapt.

You could choose to put less focus on this traditional space, but this could mean wasting a key opportunity. Though physical space may need re-purposing post-COVID, it is important to build this channel up to showcase your brand while engaging with consumers in other channels in parallel.

Emphasize your strength in the physical channel as a differentiator

While focusing on the Four Constants – including in collaboration with your retail partners – continue to ask how you can:

As emerging players are starting to get these ingredients right in the online world, it is more important than ever to make it your mission to effectively apply the offline differentials mentioned above to the online world, as well.

We have collected and analyzed emerging practices from over 300 of the most innovative players in the health & beauty market that have gained strength in recent years.

The examples below illustrate some of the ways they have embraced the Four Constants to gain traction.

Many companies built their business models and internal governance based on a reality that is different from the one they face today, causing them, for example, to work more slowly and demanding a higher level of certainty in decision-making than is optimal.

Focusing the lens on changing consumer demands in each channel while also remaining authentic to your brand and delivering financial results to your shareholders requires fluidity.

Adapting your ways of working to the new reality will require an active effort in terms of initiating and sustaining change in your business.

In our experience, this fluidity can be delivered through some basic principles:

• Start lean – Like it or not, nobody has a crystal ball. When considering investments in new trends, you are essentially making a bet. Whichever strategy you choose, be sure to incorporate opportunities early on and often to learn from reality and make adjustments.
• Do not over-plan – Over-planning can be counter-productive. You are likely to spend a lot of time perfecting something that will never happen quite the way you expect. This time could be better spent learning in practice, with the right governance in place to recognize and manage risks.
• Be selective – Start-ups have taught businesses many things. One key lesson is to be specific about which battles to take on. Having a deep and clear understanding of the problem you are trying to solve is already half the battle, and it can guide and help you to:
  • Clarify which segments to target
  • Identify where you want to engage consumers
  • Select the right combination of the Four Constants
  • Define what real success looks like

The increasingly complex and demanding world of channels and consumers can feel overwhelming at times. The space in which you operate feels like it has opened up while the time businesses have to respond has gotten shorter and the importance of decision making appears more critical than ever.

There are, however, some essential tools that can support you during these times and in your drive towards success.

Channel blur is real and there is no escaping this development. If you are prepared to tackle the reality of these shifts, then invest time and energy into making the necessary adjustments across channels and learn fast to not be left behind.

Remember, this development is an evolution, not a revolution. Simply believing that we need to change everything and move away from whatever is “old” is a risky approach: it can blind us to our assets as well as to our true weaknesses. Test, learn and adjust – while also cherishing and boosting your assets, whatever those may be.

Channel blur is not only a commercial challenge. Tackling it holistically across the entire organization offers up an opportunity: Companies that win are the ones that succeed in combining their strengths across sales, marketing, supply chain, innovation and technology.

In this article, we aimed to be specific and offer practical tips that will help your business each day. We are also available to offer more tailored advice in the form of:

• Roundtable discussions with small groups of 6-8 executives on the topics raised above for going into more depth and offering more specificity
• Conversations with you directly about the article, your specific needs, or any project requirements you may have

If you are interested in learning more about the consumer lens in the context of current challenges that companies in the health & beauty industry face following disruptions caused by the global pandemic, please read our report authored in cooperation with the UK’s Health & Beauty Association, which can be found here.

The authors would welcome your feedback on this article: