Why FMCG brands will expand via AR and digital platforms next year

Image of woman using phone
Brands are tapping into Gen Z and Millennial consumers via AR and Snapchat.
Photo: Bigstock.

Consumers in both the FMCG and retail sectors have been switching from the brick-and-mortar way of shopping to sourcing online since the advent of the Covid-19 pandemic.

During the Pandemic & beyond: Digital transformation and the future consumer seminar organised by Snap Australia, major FMCG giant L’Oreal, HiSmile and Australian consultancy Retail Doctor Group joined a virtual roundtable on how the shopping has changed since Covid-19 hit the region.

Anastasia Lloyd-Wallis, GM consumer insights & projects at Retail Doctor Group; Kathryn Carter, GM of Snap Inc, ANZ, SEA and Hong Kong, Lyndall Campher, media director at L’Oreal, ANZ; and Justin Gaggino, 2IC of HiSmile talked about the impact of the pandemic on their businesses and the trends they expect to see in the year ahead.

Initially, digital platforms were primarily tapping Gen Z and Millennial consumers but this year has seen the rise of consumers aged over 35 also moving to online channels to shop FMCG and retail brands.

Campher said there is an acceleration in e-commerce and in using new platforms, particularly in Zoom and social media channels such as Snapchat. Even L’Oreal’s luxury brands pivoted to the digital space this year. Several brands, including Maybelline, have already embraced AR, using the ModiFace app.

L’Oreal’s ModiFace makeup app.

She said consumers have resorted to doing more self care at home from skincare to hair colouring, so there’s been an increase in such purchases this year.

“We shifted our focus from brand awareness advertising straight into everything driving to conversion. So everything was driven to conversion across the board,” said Campher. “We’re spending time and pampering ourselves, and we found that … anything related to skincare went up dramatically: masks, skin masks, and of course, sanitisers and hand creams. We actually sold out of hand creams. And so we ramped up our investment in those areas.”

Campher added that different businesses reacted in different ways during the pandemic, but L’Oreal has pivoted to e-commerce largely. Last year, it launched the virtual make-up testing technology ModiFace on retail giant Amazon where shoppers can try on lipsticks using live videos on mobile or with selfies. In 2018, the company rolled out ModiFace on Facebook for makeup using the social media platform’s Facebook Camera products.

Justin Gaggino of HiSmile.

Meanwhile, Gaggino of HiSmile said the company was lucky to have got a head start in social media with its teeth-whitening products. The company’s target market are Gen Z and Millennial consumers so it wasn’t too hard for them to infiltrate further into the online space.

“I think there’s a lot of highs and lows in terms of how everything’s gone during this time here and a lot of adaptability, which has brought a certain level of community and camaraderie between people in the industries. But we also have a lot of interesting social dynamics, which have been brought into business.

“Obviously, it’s really interesting to see a lot of classic brick-and-mortar businesses kind of diving into the e-commerce space. And yet, it’s been quite a rollercoaster ride for me to be honest,” said Gaggino.

Lloyd-Wallis added that the sector is seeing the “first generation of digital natives”. Millennials and Gen Z consumers are looking for brands where they can experience shopping the same way they shop in physical stores in the digital space. E-commerce can drive that physical experience using AR and other virtual technologies to create an emotional connection with a brand.

“So I think one thing for sure is this convenience, you know. Time is very valuable to consumers now. And they’ve realised they do not need to spend the time on what we call transactional retail. So we’re going to see this trend very much continue with customers expecting products when they want [them], expedited delivery, free deliveries. Retail is really having to go the extra mile through fulfilment,” said Lloyd-Wallis.

She sees brands speeding delivery times next year, a rise of click and collect and more POS and lockers at the train stations. She said companies will bolster their sustainability programs to raise awareness in the sector.

She added that younger consumers shop to make themselves feel better and happier so she’s seeing them wanting non-essential items that will make their day smoother and better.

“That’s why we’ve seen the likes of Kmart and TK Maxx do so well… And I think we’re going to see again, the rise in this kind of trend in particular around our younger consumers that maybe don’t have as much disposable income, but they also don’t have much money for their cars. So they’re going to use that to see how can they can have experiential retail,” she explained.

Kathryn Carter of Snap Inc.

Carter added that Gen Z and Millennials have an increased amount of influence, “both in terms of their own discretionary consumption, and then also influencing potentially all the generations” on the benefits of shopping using the new technologies.

“From a Snap perspective, we continue to be able to deliver strong levels of conversions to our brands, both for businesses that are looking to attract local audiences, and for brands which use our platform to reach global audiences, as well and enabling brands to be able to deliver a global consumer, wherever they may be based.”

In 2018, Snapchat launched a service where users can simply point a smartphone camera at a barcode or product within the app to find products they want to buy from Amazon.

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