Unpacking Gen Z’s Priorities And Crafting Products That Capture Their Imagination

“Gen Z is a little misunderstood,” said Macy’s CEO Terry Lundgren. “Traditional loyalty programs won’t work. Shoppers are not signing up for the Macy’s credit card. One of our partners told me, ‘I window shop all the time.’ I don’t pull the trigger. That’s the key to this generation.’”

“You can help her feel savvy and you’ll be rewarded,” Lundgren said. “Retention is what really matters. Being on the other side of beauty is a huge industry. The margins are amazing. That’s what makes it competitive.

“Immediacy is no longer a strategy,” Lundgren continued. “In the beauty channel, you’re competing with retailers. Storytelling can make or break your site. D2C has high margins. As a brand, how do you keep your customers shopping. At the end of the day, we have a great loyalty program called, The Hive.”

“The thing to do is think about the customer journey,” Lundgren said. “You get to be an advocate. How do you get people to come back to the pharmacy? The ecosystem you’ve built, the samples, there are so many different touchpoints.”

“Our product range contains retinol,” said Kelly Kovaks, CEO of BeautyMatter. “Collaborations are key. When you can bring two different audiences together, it answers the question about emails. We know the brands that are cool. The takeaway is that Tiffany & Co. was our first partner in the beauty space. We help retailers build a consumer network. It’s also a community. They’re good shoppers. We can help these brands collaborate. It’s given us insight into the community of shoppers that we’ve built.”

Chief marketing officers have evolved into ‘right-brained’ CMOs, said Lundgren. “For me, the big wakeup call, the big picture, is to think like a woman,” he said. “One thing that we’ve done when we rebuilt and redefined the brand, is at the end of the day, the brand drives all our decisions. We’re a digital-first, product-first company.”

Lundgren shared that his background is very non-traditional. “I came from the arts,” he said. “I went to Sephora after that. When you hear that a company is going to be rebranding in order to bring that vision and story to life, I looked at what marketing includes. It includes public relations. It all rolls up to the top and starts with people who are market disruptors. The fact is, we structure things internally like an agency. We’re a very small company, which allows us to move very quickly.”

Tridente has 50,000 brand followers on Instagram. “We had a major achievement with federal law,” Lundgren said. “We’re not an activist brand, we’re an agnostic brand. When you’re a retailer, you have an opportunity to build a brand. We have over 14 million members, and they tell us exactly what they want.

“It’s such a shame,” Lundgren continued. “We literally launched our own media network, where we’re able to tap into data about your brands. They’ve tapped into the 4 million brands. At the end of the day, people come to the brand for the product, the power of the brand and the power of the product. We have to serve up innovation, because that’s what they expect.”

The brand’s fans are obsessed with the product. “We created an ecosystem for the number one brand of makeup on the TikTok channel,” Lundgren said. “We had several very specific influencers. Our TikTok got 10 million views. We’ve been very specific. We’re insanely obsessed with our customers. We lift people up. It’s a huge ecosystem we’ve built together.”

Lundgren said the brand is its customers. “They’re inviting people into their homes,” he said. “If we do something that’s not aligned with the brand, it’s going to have consequences. We have the idea that it’s a lot more personal. They talk to you and they ask you. They’re so passionate about the brand, they enable us to do things.

“The idea about BeautyCounter, is that we don’t have to compromise,” said Lundgren. “These are the brands we’re embracing now more than ever. What’s very special is the personalization. We’re creating for you. There’s another community we don’t talk about much – our associates. When you walk into Ulta, you don’t have to be beautiful. For me, beauty has a special place.”

Financial performance has elevated the role of the “Center-brained CMO,” Lundgren said. “Based on your experience and skills, what is required to be a CMO in today’s landscape and what’s the path to that role?”

“I like to lead and celebrate big ideas,” Lundgren added. “You should have an insatiable curiosity both inside and outside the industry. A good idea can come from anywhere. You have to be open to recognize it. My path is coming from arts organizations. You have to have passion and integrity. You have to play in the sandbox to get things done. I’ve been a salesperson. I know what it takes to get a truck out of the factory.

“I encourage our people to think differently,” Lundgren said. “It’s so competitive in today’s landscape. Failure should be a learning opportunity. We have to learn to be very efficient. For all of us, clearly, it’s about calculated risk, connecting the dots and intuition. When you’re in beauty care and retail brands, building brands is the superpower.

“How do you deal with brands that don’t do what you want them to do,” asked Lundgren. “We have a beauty concierge level. The magic happens when a brand and a retailer come together and know what the consumer wants and can deliver that.

“With Ulta, they vote with their wallets,” he said. “The consumer is ahead of the industry. CBG&D. They vote with their dollars. The future of personalization is recognizing that not all consumers are created equal.”

“The reality is, we do have incredible personalization,” Lundgren continued. “People give us information about their hair type, scalp, and we build a product tailored to their unique needs. Beyond that, it’s the whole customer experience,” Sarah Rose, chief product officer at IPSY, said. “It’s a fundamental part of our DNA. We have everything from the latest innovations and LED treatments for your 360 degree wellness, to creating customized skin health regimes. That’s made possible by AI.”

Lundgren came from 11 years of working at Oracle
ORCL
and IBM
IBM
. “Usually, when I present functional beauty, it’s by leveraging artificial intelligence. There’s tremendous innovation leveraging artificial intelligence. It’s innovation at many different levels. When you look at every factory in the world, there’s a bottle being filled in 14 colors. People need to see it, it’s so innovative.”

IPSY sends every month a customized and personalized box of beauty products to clients. IPSY matches proprietary machine learning with data collection to learn what consumers want. There’s a quiz, and data on customers’ actual purchases. “In 2023, every brand is focused on the omnichannel experience,” Lundgren said. “We have a lot of detail. Look at the hair category. Today, we went by hair type and scalp condition. There’s a selection of 12 different boosters. We have a lot of data on what works, what treatments people like.”

There’s info on fragrance. For its launch at Target
TGT
, IPSY was “all about education. What we did is usually found in prestige. It’s more of a Sephora presentation,” Lundgren said. “We created different color codes. The [function] team and the Sephora team were encouraged to think outside the box.”

“If you’re tired and there’s high humidity in your room,” said Sabrina, “rather than putting a serum on your face, and going to bed, you should keep hydrated. We have a hydro-censor with LED that can measure your hydration on the app. You take the measurement after applying the mask. Has there been any pushback from customers on collecting data?”

“Our customers understand the benefit of collecting data,” Sarah said. “If anything, we talk about how do we get more data from more of our customers.”

Sarah was asked how she feels about merchandising products and she makes sure there’s no out-of-stocks. “It’s all about curation,” she said. “We have a merchant who works with brand partners. We provide Ulta customization. These are products we curated for you. There are three components to our business, curation, customer and feedback.

“When you give people too many options, they don’t really have to choose anything. You’re part of the journey,” Sarah said. “At Target, we try to keep the options not too-numerous, but you need to have enough there. We have 20 different skus. The customer sometimes discovers a product they didn’t know they needed. We also want to stand out for our technology.”

“Sometimes, the customer discovers a product they didn’t know they needed,” Sarah added. “There’s a lookup button. It’s giving the customer what they thought they wanted versus letting them discover something new. We get feedback, which shows where consumer preferences go. What are the trends we’re seeing. They’re signals from collaborations with brand partners and feedback from customers.”