• by Sarah Mahoney , Staff Writer @mahoney_sarah, April 3, 2023

The Estee Lauder-owned brand is rolling out its new digital retail concept -- the Clinique Lab -- in the United States. This virtual storefront infrastructure has a photorealistic 3D environment, and aims to recreate the iconic in-store Clinique Counter in a virtual world.

Shoppers can customize their avatars and explore products, as is true of its many competitors. But Clinique has also built in some history lessons: Users can thumb through Vogue to read about the brand's accomplishments, for example, and click on bubbles that elaborate on Clinique's many firsts.

The company says the inspiration came from recent remodels to its in-store approach, particularly in Shenzhen and New York City, that aim to combine personalized skincare diagnostics with immersive shopping. There are gamified elements, opportunities to explore ingredients, unique offers and the chance to interact with consultants.

"The Clinique Lab serves as a digitalized expansion to retail marketing," says Michelle Freyre, global brand president of Clinique and Origins, in its announcement. "The launch of our new online retail concept now provides customized skincare solutions attainable to consumers globally. The digital Clinique Lab integrates best-in-class consumer experiences with accessible retail."

The program is starting with a spotlight on a top performer, Moisture Surge 100H Auto-Replenishing Hydrator, and focusing on the new "Protect Your Glow" marketing campaign.

The digital shopping experience, built by Journee, comes at a challenging time for prestige beauty.

In its most recent quarterly results, Estee Lauder reported an alarming 17% drop in sales, which fell to $4.62 billion in its fiscal second quarter, compared to $5.54 billion in the prior-year period. Much of that stems from the negative impact of global currency exchange and COVID-related store closures. But even in the Americas, sales fell 3%.

Worldwide sales of skincare products -- Clinique's strong suit -- plunged 20%. Clinique's net sales declined, although its cosmetics showed improvement in the quarter.

Part of those shortfalls are driven by a shift in how consumers see luxury beauty. "Consumer brand perceptions are changing as new brands with strong value propositions enter the prestige beauty space," writes Jennifer Famiano, beauty industry analyst at Circana. "Consumers' definition of luxury, particularly when it comes to skincare, is also a moving target."

Price is a significant part of this new equation. Famiano says that while customers seem to understand paying more for luxury fragrances and are happy to do so, they're sizing up skincare purchases differently.

Sales of prestige skincare products, including those from Clinique, account for less than 10% of all skincare products sold. And in terms of units, those sales have been flat in the first two months of this year versus 2022.  Luxury brands grew 2%, well behind the overall category's 14% growth.

"The biggest hurdle for luxury skincare to overcome is that lower-priced brands with prestige positioning have entered the consumer's universe," Famiano says. "These brands peeled back the curtain by providing consumers with ingredient and formulation transparency that hadn't been seen before."

Customers now understand that they can pay $15 or less for products with the same ingredient and get the same results. About 64% of shoppers Circana has polled believe the brands they can buy at stores like Target and Walmart are as effective as department store brands.