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The Next Evolution-Diversity is Specialization

July 12, 2021 Carla Seipp
July 12, 2021
Orcé Cosmetics

The beauty industry has undoubtedly had its confrontation with diversity and inclusivity over the past year. But where do we take it in the post-Fenty era, in a time when launching 40-50 foundation shade ranges is demanded as the norm? With 40% of Gen Z and 31% of millennials saying diversity and inclusion is the most important brand value, it has clearly become an important mandate; but in its next evolution, the conversation requires increased nuance.

Most consumers overlook the financial implications of launching with an entire spectrum of foundation shades, especially for those outside of multimillion-dollar venture backing. "As a small, indie, privately funded brand, my approach to diversity is very different from that which is expected by retailers and the beauty industry at large. Their idea of inclusivity is having mega brands come up with 40-50 different SKUs of shades, which leaves very little room for those who cannot afford that type of launch," explains Yu-Chen Shih, founder of Orcé Cosmetics, a color range tailored towards Asian skin tones. Whereas most brands will choose shades out of a Pantone selector kit, Shih decided to create her shade range based on independent testing and feedback from over 100 participants, a process which took over a year to complete. It was inspired by her own struggles to find a matching foundation shade, even when purchasing consumer products in Asia. Many base products in said market are developed with pink undertones to counteract the skin's naturally yellow undertones in a bid to conform to local beauty standards. "In Asian countries it's difficult because everyone is striving towards the ideal of looking very fair and whitening their skin. You would think that, living in an Asian country, all the brands would cater to you. Unfortunately, that isn't true," she explains.

It's problematic that the beauty industry’s approach to diversity is making it exclusive for these very large brands with so much backing.
By Yu-Chen Shih, founder, Orcé Cosmetics

Thankfully, the industry is looking for a long-overdue update. Google announced it would be developing an alternative to the Fitzpatrick Skin Type (FST), a six-color scale that the industry had been using since the 1970s to determine tone suitability. Researchers have highlighted that FST results in a bias towards people of color in the assessment process, and in resulting cosmetic products. Color cosmetic shade ranges are only one aspect of the equation, since skin needs also differ, such as more pigmentation issues in Black skin or higher rates of comedogenic risk in Asian skin. Certain ingredients that may work on one skin type could therefore cause an adverse reaction in, or be unsuitable for, another customer.

The ethical implications of the matter run deeper than mere financial projections. It's undoubtedly a development which permeates all aspects of product creation, from funding indie brands to more extensive PD processes and less-performative advertising campaigns. "Caucasian skin is the only one that gets the full benefits of the innovation, research, and development of our industry today because everything is based on them," proclaims Noelly Michoux, co-founder and CEO of 4.5.6., a skincare range tailored towards melanin-rich skin. "The industry is just not factoring these very important points in the genesis of product creation, and people have been confusing that problem with a lack of representation, which is a completely different issue. If you're creating products having one type of person in mind, and financially targeting other kinds of people, you're seizing a financial opportunity, not being inclusive."

For Michoux, who managed to raise $700K in seed funding and was incubated in the Cosmet'up Program at LVMH Research Center, the solution has been to invest in vertically integrated operations, with a tight-knit team of dermatologists, skin research scientists, skincare formulation experts and business experts to ensure everything from product concept to shipping is overseen in-house, without any third-party interference.

The challenge is getting investors and venture capitalists to believe in a more specialized approach, thereby offering indie brands the necessary funding. "In the startup world, the fact that we are minority groups means we're already not winning the numbers game, because we're never going to be the big piece of the pie. It's problematic that the beauty industry's approach to diversity is making it exclusive for these very large brands with so much backing to be able to be everything to everybody, rather than uplifting smaller indie brands," Shih comments. It's also an erroneous approach. A Nielsen study shows that Hispanic, Asian, and African American consumers in the US all outspent their white counterparts. Over the course of 52 weeks, their average expenditure was $540, $508, and $465 respectively versus $400 for white customers. Hispanic consumers also spent 13% above average on beauty and personal care overall. Certain companies are already amplifying their funding efforts, such as Glossier's Grant Initiative for Black-Owned Beauty Businesses, or Sephora's Accelerate program, which is completely comprised of BIPOC-owned brands.

What if, instead of trying to be everything to everyone, determining and fully catering to overlooked consumer categories becomes the defining marker? There is undoubtedly an appetite, with the customized beauty sector expected to reach a worth of $72.55 billion by 2028, and new brand launches like Veracity and Know Beauty incorporating the likes of hormonal, pH, and DNA tests into product development. Revea Precision Skincare, which measures over 100MM data points to create 3,000 possible different formulations, is one of the most ambitious takes on the point of specialization to date. In Revea's research across 15,000 individuals, the company identified 3,858 distinct profiles and found that no skin profile was the same for more than 1% of all individuals.

Specialization is what we need in our industry. I don't believe in a model where one brand does it all, it's not possible.
By Noelly Michoux, co-founder and CEO, 4.5.6.

For Revea founder and CEO Chaz Giles, it goes beyond ethnicity, to individual skin physiology, citing that 70% of skincare consumers say products are not meeting their needs. "Despite all the talk of diversity, the industry is still missing the point—our skin color does not define us, neither as individuals, nor our skin needs. Diversity and inclusivity is not just a marketing exercise, it is building products that work for me and giving me a seat at the table," he states. For Giles, investing in N of 1 trials, or individually performed trials, are the solution for optimal formulation, aided by data models that improve product personalization over time, as well as an agile supply chain that can more easily shift to consumer demands and produce on a smaller scale.

Many companies use a white-label formula, which hasn't been developed for, or tested on, a wide range of skin types. "When I started talking to the lab, the response I got was, 'We don't do products for darker skin tones, but you can use the formulas that we have and tweak them, add key ingredients that speak to your community, and some fragrance,' which is just how the industry works now. 99% of the stock you see out there is those formulations," Michoux explains, adding that the more brands can draw awareness to this, and the more consumers research into the scientific underpinnings of why certain products may work for some skin types but not their own, the better they can inform their purchasing decisions.

Unfortunately, in the era of cancel culture, sticking to a smaller segment may feel daunting, or risk the wrath of consumer audiences who believe companies should be able to cater to all, but it needn't be so. "Brands can be allies, and that's okay, because not all brands can tend to all people. Specialization is what we need in our industry. I don't believe in a model where one brand does it all, it's not possible," Michoux adds. Championing specialized brands, as opposed to critiquing those who are unable to keep up with mega brand launches, is the way forward. "My hope is that many indie brands can emerge, each specialized in their own group of people, that actually care about the unique needs that this community has instead of just playing a numbers game in the office," Shih remarks. "A huge brand that is trying to be everybody to everybody wouldn't understand my target market as well as I do because I've invested the research and product development."

Thanks to the tireless efforts of individuals like Giles, Michoux, and Shih, the industry can awaken to the fact that a one-size-fits-all solution, while perhaps noble in initial thought, actually undermines the nuance and individuality of its consumers. The prospective journey shouldn't merely concern itself with retail figures or a one-off campaign, but rather how the entire supply chain can be improved to include those who have previously been overlooked, how to create products which truly serve them, and empowering the indie brands which are seeking to do the same.

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