Who Is Buying a $500 Moisturiser?

When it comes to purchasing a beauty product with a triple — or quadruple — digit price tag, luxury consumers tend to have a critical eye.

“I want to see the research and know that the ingredients are unique, special and really active,” said Lacey Buteyn, a 46-year-old private wealth manager and yoga teacher based in Dallas, Texas. Other requirements include beautiful packaging and white-glove service, and of course, the products must also feel and smell good, she added.

Buteyn spends about $1,000 a month on beauty products, and her top brands include Sisley, Natura Bisse and Westman Atelier. Glimmering on her bathroom countertop are La Prairie Pure Gold Radiance Cream, $935, and Clé de Peau’s Beauté La Crème, $810.

She’s part of a small but high-spending cohort who are more likely to do their beauty shopping in boutique retailers and rarefied department stores than in Sephora or Ulta Beauty. Buteyn’s favourite retailer is Cos Bar, which has a store conveniently located above her vacation apartment in Aspen, Colorado.

Customers like her rarely get sticker shock — a contrast from the aspirational shoppers who have pulled back from luxury spending in recent seasons. For instance, L’Oréal and Shiseido both saw a slowdown in the US for their prestige offerings in second-quarter earnings, while LVMH’s perfume and cosmetics division grew but missed expectations. Unilever also noted softness for its prestige unit in its recent earnings results.

To make up for weak prestige sales, a category with products typically priced under $100, some beauty companies are now investing in more premium products in a bid to go after wealthy customers whose purchase behaviour has not been hampered by inflation or other macroeconomic uncertainties.

In July, Puig-owned Paco Rabanne announced the launch of a fine fragrance line separate from its widely distributed masstige offering. Similar moves are underway at L’Oréal and Interparfums. Nivea-owner Beiersdorf is seeking to revive its pricier lines like Chantecaille, and Estée Lauder-owned Tom Ford now offers private beauty shopping events for American Express Platinum card holders that pay upwards of $800 a year for membership.

But in order to justify an eyebrow-raising price tag, these beauty brands must demonstrate a strong value proposition and provide exceptional customer service. In other words, shoppers need to feel that their products are worth it.

“Even if you have unlimited money, people still want value,” said Oliver Garfield, chief executive of Cos Bar.

Building a Value Proposition

It’s not always about the contents inside a bottle; the most successful luxury beauty brands are able to create an image and overall sense of refinement.

For Louise de Turckheim, who runs the London-based PR consultancy LDT Luxury Communications, one of the most important attributes of the expensive products she opts for is how they look.

Some expensive products seem as if they’ll shatter if rolled off a shelf, while others have packaging that “feels a bit cheap,” said de Turckheim, pointing to Dr. Barbara Sturm as an example.

De Turckheim uses four Augustinus Bader products “religiously” — a cleansing balm, eye cream, foam cleanser and its signature moisturiser, The Cream, which cost over $670 altogether. She’s also a fan of Guerlain’s premier Orchidée Imperiale range, including the cream and essence, $525 and $155 respectively.

Other luxury consumers want to feel a strong personal connection to the creator of the brand or see rigour in a brand’s scientific research.

For Sam Yashari, a content creator based in Adelaide, Australia, it’s about originality. He doesn’t shop for luxury fashion or cars, but he has spent $820 AUD ($552) on a Chanel skincare product.

“It’s about the sourcing and storyline of their unique ingredients,” he said, “It’s about the fragrance and the unique packaging and also just heritage.”

A Luxury Environment

Even brands that craft a strong story and identity can stumble when they enter new retail environments through wholesale partners.

Annalise Fard, who oversees the high-end London retailer Harrods’ beauty, jewellery and watches departments, said the most successful brands are those that invest in education and staffing.

Sales associates must be able to convey the value of pricey labels in a way that resonates with shoppers. “The brands that are winning are those with great field teams,” said Garfield of Cos Bar. Once a shopper makes a purchase, the retailer encourages its employees to stay in touch, reaching out post-purchase to suggest top-ups through a clienteling software called Salesfloor.

In Harrods, shoppers can learn about products on the sales floor with associates, but also attend workshops, masterclasses and receive branded facials or spa treatments in a dedicated space.

Small touches can make a big difference in purchase satisfaction, including something as simple as small free samples.

Carving out space in the right retailers, investing in training, education and sampling and building out customer relationships are long term strategic shifts that require capital and time to pay off, but the upside potential is high: in 2023, Sisley broke the $1 billion sales threshold.

For upscale beauty retailer Violet Grey, which is often credited with kick-starting the Augustinus Bader brand, it’s ultimately about surprise and delight, and giving customers more than they expect, according to founder Cassandra Grey.

How the products are merchandised matters and even the lighting and scent inside a store can make a difference. And when it all clicks for the shoppers, “it’s like magic,” she said.

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