How Glossier lost its grip
When Glossier launched in 2014, it was entirely new, both in its messaging — just be you, more dewier — and its direct-to-consumer strategy, which at the time was an unconventional way to sell beauty.
Founder and CEO Emily Weiss’ approach worked, and suddenly Glossier became the gold standard for startups, which gave up once-coveted shelf space at department stores and Sephora in favor direct sales to their customers.
Countless beauty brands have emulated Glossier’s extensive use of social media to connect with their “communities,” as well as its millennial-friendly pink brand.
The buzz led to the investment: To date, Glossier has raised $266m in funding, including an $80m Series E in July 2021 to expand its retail network, valuing the company at 1 $.8 billion.
But even as it reaffirmed its unicorn valuation last year, the company’s problems were piling up. Glossier Play, a more pigmented and glittery makeup sub-brand launched in early 2019 to much fanfare, but failed to catch on and was quietly discontinued in early 2021. In August 2020, Outta the Gloss, a collective of former collaborating anonymous retailers, have emerged to challenge the welcoming image of the brand. The group posted an open letter on Medium and set up an Instagram account to air grievances ranging from racism to toxic workplace culture.
In 2021, Glossier sales in the United States were down 26%, year-over-year, according to Bloomberg Second Measure. Kym Davis, head of product development, and Ashley Mayer, vice president of communications, both left last year. In November, the brand announced a slew of senior hires: a new chief financial officer and senior vice president of retail, and its first chief commercial officer.
And on Jan. 26, Glossier laid off about a third of its workforce, or more than 80 employees, in what the company called a “difficult but necessary decision,” adding that “these changes leave us well positioned as we continue to develop the brand long into the future.
“We prioritized some strategic projects that distracted us from the laser focus we needed to have on our core business: scaling our beauty brand,” Weiss wrote in an internal email. obtained by BoF. “We also took the lead on hiring. These missteps are on me.
Today, Glossier is challenged to rewrite the beauty manual it helped define, breathe new life into a stagnating brand image, and attract new, younger members to its customer community.
So how did Glossier get here?
Stagnant messaging, branding and innovation
Weiss founded Glossier as an extension of her website, Into the Gloss, a popular beauty-focused publication. She introduced the brand in October 2014 with a set of four products – a “Balm Dotcom” pomade, moisturizer, face mist and skin tint, which at the time came in just three shades ( today there are 12). Each purchase came with cute stickers emblazoned with the brand’s logo and products, which customers stuck on their phones and computers.
Glossier was one of the first founder-led beauty lines that showed you didn’t have to be a global giant like L’Oréal or Estée Lauder to build a brand. Weiss’ Gloss’s fan base served as the foundation for the brand’s “community” – namely, the people who would not only buy Glossier products, but talk about the brand on social media and line up around the block. , rain or shine, outside a number of shops and pop-ups.
But for all the Glossier madness, the company’s messaging, the way it sells products, and its branding have remained a constant. While consistency can be a virtue in the world of consumer products, some aspects of Glossier’s branding, including its millennial pink color scheme, looked increasingly dated.
The central message of embracing who you are and promoting dewy skin has become as commonplace as “clean beauty”. Glossier’s main demographic, millennials, left the brand, opting for more mature and elevated skincare and makeup brands, such as Nars and Charlotte Tilbury.
“When everyone says you’re a ‘unique brand’, you might be fooled into thinking yours would be a brand that would stand the test of time,” said one beauty investor who requested anonymity. “So why change? Why evolve?
Winning over the next generation of young consumers has proven difficult. The teen and 20-something market is more crowded than it was eight years ago. Other players like The Ordinary, Youth to the People and Kinship have grown in popularity, while drugstore skincare stalwarts like Cerave have enjoyed a resurgence. The new products didn’t resonate with Gen Z; teens don’t need retinol — the ingredient at the center of Universal Pro-Retinol, one of Glossier’s biggest launches last year.
“Glossier stayed on that middle ground,” said Manola Soler, director of Alvarez & Marsal Consumer and Retail Group, a global consulting firm. “It’s the same aesthetic but it doesn’t resonate the same way with new generations.”
Glossier has tried something bolder, product-wise, with Glossier Play, a line designed for fans with bold brows and a love of contouring makeup brands like Huda Kattan and Anastasia Beverly Hills. But the time had not come. Play’s debut took place at a time when the use of makeup was on the decline. Two years later, the pandemic skincare obsession has given way to a make-up renaissance, including the expressive looks and colors that Play was intended for. But the line was discontinued in January 2021.
“When everyone says you’re a ‘one-in-a-generation brand’, you can be fooled into thinking yours would be a brand that would stand the test of time. So why change? Why evolve?
Evolution of beauty retail
Glossier’s issues point to bigger challenges for the DTC model itself.
It used to be that the ultimate sign of a “cool” beauty brand was that it was available exclusively on its own website, or perhaps in the occasional pop-up store. But most consumers still prefer to buy beauty products in person, whether it’s a specialty retailer like Sephora or the nearest Target.
Direct-to-consumer sales — which account for 80% of Glossier’s sales — are also costly. The brand once had an advantage over potential rivals in that its customers were more likely to return, reducing the need to bombard them with social media ads or rely on promotions. But this advantage has eroded.
Michael Maloof, chief analytics officer at Earnest Research, said Glossier’s once “first-in-class” retention rate – shoppers who returned to make a second purchase the following month – for new online customers has plummeted. from 15% in November 2019 to 5% in November 2021.
Overall, online vacation sales fell 22% from 2020, according to an Earnest Research analysis of credit card data between Nov. 1 and Dec. 29.
Glossier, which holds an annual sale at the start of the holiday season, added a second sale last June to bolster its revenue. Among new customers acquired in June, only 4% bought again in July, and in September, 1% of this group made their purchases on the brand’s site.
“In the three months following [the sale]those new customers are pretty much all gone,” Maloof said.
More traditional players have also stepped up their beauty game. Ulta Beauty introduced favorite Gen Z brands like Morphe and Kylie Cosmetics. Target, Kohl’s and Walmart have invested heavily in their beauty departments, including in-store boutiques with Ulta (Target) and Sephora (Kohl’s). Walmart introduced about 100 new beauty brands last year.
Glossier is not sold in any of these locations. The brand opened three stores in Seattle, Los Angeles and London late last year, after closing flagships in New York and Los Angeles and a London pop-up in March 2020.
“They need to be where they’re going to be discovered,” said Marie Driscoll, managing director of luxury and fashion at Coresight Research.
But even if Glossier continues to open more locations, which is expected, a Glossier store, no matter how Instagrammable, can’t compete with the selection available at Ulta, or even increasingly at Walmart.
“Scaling is the name of the game, but it looks like Glossier has maxed out on DTC,” Soler added.
An evolving startup and venture capital space
Glossier investors have limited options unless the brand can recover.
With a valuation of nearly $2 billion, Glossier is too expensive to be an attractive acquisition target, and the brand has raised too much money to sell for much less than that. Going public would also be difficult. Of the direct-to-consumer brands that have held initial public offerings in the past two years, including Warby Parker and Allbirds, most are trading well below their starting price.
Meanwhile, conglomerates seek smaller brands that have faster paths to profitability and wider distribution networks. Youth to the People, a Gen-Z skincare favorite that raised far less capital than Glossier, was acquired by L’Oreal in December for more than $300 million. It is said to be a profitable business.
Glossier could raise more money and hope the market rebounds, or buy smaller companies to fill gaps in its lineup. The easiest path to growth may be to adopt a strategy that Glossier was designed to avoid: getting into a big distributor. Some experts predict this will happen by the end of 2022.
“The last two years should have been a time where Glossier did wonders. Everyone was moving online, and online is the majority of their business,” Soler said. “They were there, they started there and they should have had that.”