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The Post-Glossier Playbook – How Gen Z Is Changing the Rules

February 7, 2022
February 7, 2022
Glossier

What happens when a millennial start-up beauty brand grows up to become a venture capital darling? Glossier is about to find out. Launched in 2014, Glossier was the first beauty brand born out of social media to reach unicorn status as a start-up. The buzzy direct-to-consumer (DTC) brand has raised $266 million in funding to date, most recently an $80 million Series E in July 2021, valuing the company at $1.8 billion.

Last week, Glossier announced to its staff that it was laying off over 80 employees, about one-third of the DTC brand’s corporate workforce. In an internal email, founder and CEO Emily Weiss described the staffing changes as a “difficult but necessary decision,” noting “these changes leave us well-positioned as we continue to grow the brand long into the future.”

“We prioritized certain strategic projects that distracted us from the laser-focus we needed to have on our core business: scaling our beauty brand,” Weiss wrote. “We also got ahead of ourselves on hiring. These missteps are on me.”

The layoffs come on the heels of a year of bumpy few years for the brand. Glossier laid off its entire retail staff in the first year of the pandemic and closed all its physical locations by August 2020. In the same month, ex-retail workers organized the “Outta the Gloss” movement (a play on the Into the Gloss blog that launched the beauty brand) to share their dissatisfaction with retail management, including alleged racist behavior. Glossier Play, the colorful sister brand launched in opposition to Glossier’s makeup minimalist philosophy, quietly shuttered in early 2021 after its launch just one year prior.

According to consumer intelligence firm Spate, searches for the brand fell by almost 40 percent in the past year. While most global beauty markets are experiencing growth, Glossier struggles to recover and stay relevant in an ever-changing beauty landscape.

Glossier made makeup and skincare for millennials, but now there’s a new generation of beauty consumers entering young adulthood: Gen Z. As millennials enter into a new life stage (the oldest millennials turned 40 last year), it's Gen Z's turn to take over the economy, as their collective income reaches $33 trillion. This generation is starting to recognize the power they hold, and want to support brands with strong social and environmental initiatives. Gen Z is shifting the trends towards unabashed self-expression and views the brands they support as an extension of themselves. Gen Z beauty brands may have learned the ropes of building a successful DTC brand with a strong community from Glossier, but they’re also outpacing the beloved brand when it comes to accessibility, transparency, and representation. We spoke to the founders of Gen Z beauty brands to find out what lessons they’re taking from Glossier’s scaling stumbles.

“There's just too much choice for consumers to not seek out partners that have already earned their trust, and, most importantly, we know that Gen Z enjoys shopping in stores."
By Michael Engert, co-founder + President, good light

The DTC vs. Retail Debate

Glossier has remained staunchly DTC since its launch, which helped them cultivate brand loyalty with its customers through email, social, and temporary pop-up stores in London, Miami, Austin, and Boston, in addition to their flagship location in New York. The brand also made a brief appearance in several Nordstrom stores to celebrate the launch of its Glossier You fragrance. However, selling direct-to-consumer has its limits in terms of accessibility and convenience. Gen Z beauty brands have largely embraced retail as a way to meet consumers where they are shopping most often.

“There's just too much choice for consumers to not seek out partners that have already earned their trust, and, most importantly, we know that Gen Z enjoys shopping in stores,” says Michael Engert, co-founder and President of good light, a skincare brand for Gen Z and young millennials. good light went into retail a few months after launching in early 2021, and is sold at Soko Glam, Nordstrom, and Cult Beauty.

“I think it used to be more of a one-way street where brands were lucky to be on retailer shelves,” Engert suggests.

Stephanie Lee, CEO and founder of Selfmade, a beauty and wellness brand, also notes the shift in attitudes towards DTC and retail.

“What contributed to [Glossier’s] success was being first-to-market in that specific time frame in terms of DTC,” says Lee. “Retail has completely changed. For us, it’s about finding retail partners that speak to our consumers, rather than asking them to come to us as a destination.”

Many of the top retailers have doubled down their efforts to expand their product offerings and grow their market share in the beauty category. Walmart has added 40 new brands to its roster, including an emphasis on indie brands and brands owned by people of color. In September, Target announced a partnership with beauty retailer Ulta with plans to launch 100 Ulta mini-stores within select Target locations as well as the retailer’s website.

Selling DTC also prevents a brand from having its products sit next to direct competitors, like it would on retail shelves. DTC naturally separates you from the competition, which helped drive Glossier’s meteoric rise in the beginning, but also weighed them down as copycat brands began to take flight and jump on the opportunity to land in retail stores. It also made Glossier seem more unattainable, which the millennial generation coveted, but which never appealed to Gen Z.

For some Gen Z brands, they welcome competition if it’s in pursuit of a greater good, whether that’s increased awareness of a social issue, or creating a more sustainable supply chain.

“I don’t really believe in competition,” says TooD Beauty founder Shari Siadat. “It’s a collective effort. I want to invite other brands to help one another. If I figure out a way to create packaging that has zero carbon footprint, it should be my job to tell other brands to do that, too.”

TooD Beauty makes the world’s first and only certified biodegradable glitter in the world and is committed to promoting sustainability in the beauty industry.

“I really believe in community-driven action, because that’s really the only way to help heal the world. We need to learn from each other and help each other out.”

This sense of collectivism can be felt across Gen Z brands, with brands joining together to help fight climate change or promote social causes they care about.

“​​It does seem like the collective good, rather than individual brand success, is promoted more strongly among Gen Z brands,” notes Engert. “And that probably has a lot to do with the challenges that Gen Z has already faced in a relatively short amount of time, which is then translated into how Gen Z brands connect with consumers, or view their peers.”

Brand Evolution and Message

Glossier’s millennial-pink aesthetic that once defined a generation feels somewhat stagnant and stale not even a decade later. While many Gen Z brands are embracing not just color, but also a point of view, Glossier has remained steadfastly committed to its brand stance, even as consumers asked for more.

Lisa Guerrera, co-founder of Experiment, a beauty and wellness brand, explains the lessons she learned from watching Glossier’s aesthetic expire over time.

“For Experiment, we’ve set up the brand to avoid brand stagnation,” says Guerrera. “People want visual intrigue. They want to see something new, and it doesn’t always have to be product! It can be a new way of talking about and presenting your brand, but in order to do that, you need a really strong brand mission and brand foundation.”

“Having that fluidity around how you present your brand allows you to morph as time goes on, and allows you the space to do it. Glossier never had the brand space, in my opinion, to do that. They set up really strong brand walls, which obviously made the aesthetic super iconic, but it also can create the inevitable feeling that those brand aesthetics are outdated.”

The generational divide between millennials and Gen Z has widened in the past few years, with Gen Z breaking from the conventional norms set forth by millennials and even older generations.

“I think millennials are more prescriptive in terms of who they get their information from, what aesthetic they aspire to follow,” says Fiona Co Chan, founder of Youthforia. “There’s such a willingness to try new things with Gen Z.”

“To me, the biggest difference is that when millennials were 22, it was this energy of 22-year-olds wanting to be 30-year-olds. Whereas Gen Z at 22 aspire to keep [their] inner 12-year-olds happy.”

As consumers evolved in their knowledge of skincare products and ingredients, so did their expectations. Not only did they demand high-quality products, they also wanted to support purpose-driven businesses that align with who they are and the social good they want to achieve.

“Gen Z expects the brands they purchase to share in their values and to not be silent,” says Engert. “Attempting to appeal to everyone, or remaining silent on cultural or political issues, isn't realistic, and I think pretty short-sighted. Not only because Gen Z is an important part of every brands' customer base, but they're also going to be 30% of the workforce soon, and they won't work for a company they don't respect."

Working with VC

When a brand raises $266 million from primarily tech investors, they expect to see that brand scale—and fast. Glossier was under enormous pressure to grow at the rate of the other tech start-up unicorns of the time, like Airbnb, which led Glossier to acquire a digital agency called Dynamo in 2018.

Following the deal, Dynamo co-founder Bryan Mahoney was named CTO at Glossier, and presumably led this push for the beauty brand to reimagine itself as a tech company aiming to revolutionize e-commerce for the modern age—that also just so happens to sell beauty products.

Glossier’s Emily Weiss takes full accountability for what the CEO herself called “these missteps,” and intends to right this ship in the coming months, largely through a return to physical retail. Glossier opened three stores in Seattle, Los Angeles, and London in 2021, and plans to expand its brick-and-mortar stores in 2022.

“[W]e are shifting our technology strategy to leverage external partners for parts of our platform that we’re currently maintaining internally,” Weiss wrote in an email to her staff.

Glossier’s experience navigating the murky waters of VC is unique in terms of scale, but many smaller beauty brands face the same issues to a much smaller degree when they agree to take on VC funding at any stage of growth. How do brands stay true to their vision while acquiring the funding necessary to do so?

“It can be a really scary and overwhelming situation for a lot of founders,” Engert says of working with investors. good light has received an early investment from groups including SuperOrdinary and Fab Ventures, the latter of which is led by ​​Odile Roujol, former CEO of Lancôme.

“You have to be very careful with who you’re choosing to partner with. Imagine you’re driving across the country, and every single round, a new investor gets in the car. By the end of that drive, you need to be able to arrive in one piece.”

Glossier has both the benefit and scrutiny of major VC funding, but the message from Weiss regarding the recent layoffs makes it clear: Glossier is not a tech company. It’s getting back to its roots of focusing on product, people, and purpose. If Gen Z brands want to avoid suffering the same fate, authenticity and consistency are crucial for earning and keeping consumers’ trust.

Even with its unicorn status and millions raised, Glossier wants to be known again as just another beauty brand. Maybe Glossier isn’t much of a unicorn after all, but just another horse that wants to run with its herd.

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