Glowing With the New Glossier

Speaker 1:

Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Oliver Chen:

This is Oliver Chen. I'm TD Cowen's retail, new platforms, and luxury analyst. I'm here at Glossier, an iconic beauty brand I grew up with. Thank you for joining us today for our Retail Visionary series where we feature people and premier brands and companies changing the world of retail through new ideas, inclusivity, and technology. We have the privilege of hosting Kyle Leahy, the CEO of Glossier. Kyle was previously head of North America at Cole Haan. Glossier makes products inspired by real life. It started as Into The Gloss, a beauty website and community devoted to sharing real information with real people about really amazing products. Glossier stands for thoughtful design, cultivating conversations. And at Glossier, beauty is about celebrating freedom of expression, individuality, and having fun. Kyle, thanks for joining us today.

Kyle Leahy:

It's great to be here, Oliver. Thanks for having me.

Oliver Chen:

So what makes Glossier different? It's a really iconic brand. What would you say are your core competencies and what you stand for?

Kyle Leahy:

Well, I think Glossier has been so important and impactful and disruptive in the beauty industry and really transcends beauty across the consumer industry over the last decade. And I think first and foremost, it was exactly what you just said, what Glossier stands for and the idea of beauty in real life and celebrating wherever you are on that beauty journey. Obviously, the beauty industry is an incredibly strong, resilient, longstanding industry that has had tremendous success in really positioning how women should maybe look a certain way or feel a certain way. And I think Glossier has and really led an innovation and disruption around celebrating wherever you are on that journey and putting our customer and our community at the center. And the idea of you look good is wherever you are in that journey, you're welcome here and you should feel good about how you look through the products and experiences you have with Glossier.

I think a notion that is, I think, largely because of what Glossier did 10 years ago, more common in the beauty space. I think Glossier was really at the forefront of leading that revolution and leading how beauty can be transformed and how community-driven brands can really come to the forefront and celebrate beauty in that way. So first and foremost, I think that was Glossier's peak of disruption, which was really creating a new idea around beauty. And then I think there was a tremendous amount of business model innovation that Glossier was at the forefront of a decade ago. The direct-to-consumer, bringing beauty online, and innovating a direct-to-consumer model for beauty where we can really connect with consumers through the integration of content and commerce and social platforms really putting, again, our community at the forefront was incredibly disruptive at the time and continue to propel not just the beauty industry, but I think the consumer industry over the last decade and really has been a differentiator.

So for me, it's largely about the bigness of our brand and how we've really created something that stands for something much bigger than any one person or any one idea. It's about changing how people feel in a beauty industry and all that can come around that. And then around a lot of business model innovation that we continue to evolve over the last decade. And as we look to the next decade ahead, really excited about the continued evolution of Glossier as a brand and as a business and as a community-driven platform.

Oliver Chen:

Personally, I've always used Balm Dotcom and Futuredew. And I'm thrilled and excited to be here with you because the brand has stood for inclusivity in community for a long time. Would love to hear how has the brand evolved over the last few years? What's your perspective now on where you're headed?

Kyle Leahy:

Well, I think so many of the core tenets of our brand have actually stayed true, which I think is what is one of the most remarkable things of brands that lasts for decades. And Glossier certainly believe is one of those brands we say often that we're entering our 10th year and run year 10 of 100-year brand. And I think brands that have that longevity and have that resilience really have a very deep and authentic values-based position. And Glossier certainly has that and has had that over the last 10 years and will continue to have that. And that comes to our ethos and our mission, which is changing how the world sees beauty. And exactly what you just spoke about, Oliver, a brand that connects on a deep emotional values-based level with our customers and our community of people want to be a part of what Glossier stands for and a part of the community that we represent, which is that you're welcome here. And no matter where you are, where you are on your beauty journey, who you are, what you look like, you are part of the Glossier story.

And we want to tell that story and where you are on that beauty journey. And I think that has remained really consistent part of our ethos and still is our mission today around changing how the world sees beauty. At the same time, the marketplace has evolved, the consumers evolved, and so we have are very much evolving our business and our business model to meet the customer and our community where they are. And I think that's where you've seen tremendous evolution of Glossier, particularly over the last several years and what will continue to propel us into the future. So we started, as I mentioned, as a direct-to-consumer brand that was incredibly innovative at the time. It was incredibly important for us to build that direct one-to-one connection with our customer and to build our brand in a very pure and a very powerful way. But the marketplace has evolved rapidly over the last decade, and we've evolved with it.

And so we've evolved our business model from one channel of distribution now to a synergistic omnichannel network of distribution where we can meet our customers and our community where they are. And so that has been opening up retail stores, which is an incredibly important part of our strategy. We are as much an experiences company as we are a products company. And so our ability to bring our brand to life in brick and mortar retail has been an extremely powerful and important part of our strategy where we can truly tell the Glossier story in real life with people and with that human connection. And really not only drive an experience, but also drive a profitable growth channel for us. And then we've also entered Sephora over the last year. We had an incredible launch in Sephora. And they're a very important and exciting strategic partner for us really to bring more Glossier to more people and respond to what we heard from our customers and our community, which is they wanted us to be in more places.

They wanted to discover Glossier, where they experience and discover beauty in a very prestige and premium beauty discovery environment, and so we found that with Sephora. And that has allowed us to stay very true to our brand. And the notion of beauty in everyday life and our community and how we change the industry of how we see beauty, but also evolve our business model and our business through our channel evolution that allows us to stay where our customer is and is going and drive tremendous business performance and strength behind that. So it's a really integrated evolution, I think, of the brand and the business that really positions this company and this brand for success in the next 10 years and then decades to come.

Oliver Chen:

Kyle, your stores are lots of fun, highly Instagrammable, and experiential, really exciting places to go to. What about your products? Could you discuss your core hero products in the portfolio? How do you ensure they keep refreshed and how do you intersect product innovation with community?

Kyle Leahy:

Well, I love talking about our products because they are what authenticates our brand. Our brand is what I think people connect with and what people embrace and what people want to stand for when they associate with Glossier. When you wear a Glossier sweatshirt, when you're waiting in line for a store, you want to be part of what this brand stands for. But our products ultimately are the way that you can experience and touch and feel and bring our brand to life. One of the most special and I think important things about Glossier is that we're a multiax brand, we're a multicategory brand. We don't just operate in just makeup or just skin care, just fragrance. We really think about your entire beauty routine and your entire lifestyle through that lens. So we offer makeup, skin care, fragrance, body, even merch products. And I think through that lens, Glossier really transcends traditional beauty and really operates more as a lifestyle brand.

And so when I think about our beauty portfolio, we have iconic superhero products across all of those categories, whether it's our skin care portfolio and things like Balm Dotcom or our makeup portfolio, where we have things like Cloud Paint or Boy Brow that have been icons in the color space. To fragrance, which is a space that I'm especially excited about when I look at what is happening with fragrance for Gen Z and Gen Alpha and the next generation of fragrance innovation. And how Glossier You, which is the number one fragrance at Sephora last year and showing incredible momentum and connectivity with consumers and with our community. And the power of that fragrance and the fragrance opportunity for this brand. So I think for me it's about the multidimensionality of this brand and having core icons in each of those major beauty categories, makeup, skincare, and fragrance. And what that means for the future opportunity for us to connect and build upon those superhero franchises, but then add newness and innovation across all of those dimensions of the brand, particularly excited about opportunities and fragrance, but also across makeup and skincare.

Oliver Chen:

Kyle, what do you think about points of differentiation that you'll have as you think about product innovation, and how do you approach developing iconic products in these categories?

Kyle Leahy:

I think for us, product innovation and really our brand always starts with listening deeply to our customer and our community. Our community, we are in constant conversation with our community. It was a huge differentiator of the brand at our early days and something we continue to keep at the forefront that we are a community-driven brand in everything that we do. It drives our strategy and how we think about brand development, channel evolution, and product creation and innovation. So we're constantly in dialogue listening in our social channels. We have the largest community on subreddit and a really active Reddit community that we're in active conversation and dialogue with where we're getting feedback and insights into what our community is looking for and how we can solve and develop products that surprise, delight them, meet their beauty needs, and continue to move the brand forward. So that ongoing dialogue with our customer and our community is incredibly important, not just to our brand ethos and our brand positioning, but also to our product innovation and product development cycle.

And so we pair that with an incredible team. We've made incredible investments in our creative marketing and product team over the last several years to continue to elevate talent that was already at Glossier but add new talent to really give us both the art and science behind innovative product development. So that we could bring products that are intuitive and easy to use and very much embrace Glossier's position as beauty in everyday life, but also extremely efficacious and they work. And so that combination, it continues to be a key differentiator for us and that we have the ease, but also the function and the performance that you get. And a really accessible price point at a really elevated high design ethos that almost feels like an everyday luxury. And I think that is what really consumers and community resonate within our products is that it has that feeling of luxury while still being a really everyday accessible item that they can participate in and partake in and really make them feel a little bit more joy and a little bit more confident about themselves.

Oliver Chen:

Yeah. Investing in yourself and this integration of high design, as well as efficacy, it's quite powerful. This segues nicely, Kyle, into your customers. So who are your core customers? How often do they engage with you? How do you approach customer lifetime value and retention?

Kyle Leahy:

I think one of the most powerful things about this brand is that we are multi-generational. And when I think about brands that do transcendent beauty brands that last for decades, they share a couple of really key tenets. They have a deep emotional connection with their customer and their community that's value-based and is really authentic. And Glossier certainly has shown that we have that and over the last 10 years shown incredible resilience on that. The other key aspect is that they have core iconic products. And we just spoke about that Oliver, and I think that's so important to not just the current but the future growth of how do you build a brand built on icons that are your core products that drive the majority of both your business but also your customer connection. And then from a customer standpoint, our multi-generational. And Glossier has shown that we were born of the millennial generation born on Instagram and we're growing up on TikTok and seeing immense connectivity across both of those platforms.

And for a brand to make the leap from being a millennial brand into Gen Z, and now we're seeing even Gen Alpha, and that multi-generational connectivity is incredibly differentiating and incredibly important I think to the longevity and power of Glossier. And we're certainly seeing that in terms of our customer metrics and the customer engagement that we see across all of our channels and with our brand. Deep resonance with millennials and on platforms like Instagram where we're seeing 2000% monthly growth of Instagram followers, continued resonance on that platform. TikTok, we just passed 3 billion views of #Glossier, so certainly engaging where Gen Z is connecting and discovering beauty in a very real and authentic way. And then when you look at our stores, one of my favorite things to do is to walk the lines outside of our stores and you see mothers and daughters shopping together. You see Gen Alphas exploring and really having their first engagement with beauty and you see millennials and even older engaging in a very powerful way. So to me, it's about the transcendence across that generations and we certainly see that in our experiences and in our channels.

Oliver Chen:

On stores, Kyle, you currently have 12 in major cities. What's your goal here? Why does it make sense to have your own storefront? You really are very customer-centric leader. So this distribution model that you're pursuing sounds quite compelling.

Kyle Leahy:

That's exactly it, Oliver. Everything that we do strategically is driven by what our customer is driven. I think the most iconic and powerful brands have that relentless focus on the customer and for us and our community. So that has driven our omnichannel strategy at the forefront, which is how do we put our customer at the center and meet them where they are in a way that's highly differentiated and highly multidimensional through our own stores, our own site. And then strategic wholesale partners like Sephora. Those all operate together, and I think in a very differentiated way that you don't see often in beauty, that there are not a lot of beauty brands that have their own retail stores. And for us, our stores are incredibly differentiated, they're incredibly experiential. I think this brand has been a pioneer and a leader in experiential retail for this generation.

And I think that is across categories. Glossier's stores really represent the power of what excellent retail can be. I think often sometimes there's been rhetoric around, is retail dying or is brick and mortar dead? And to me it's like bad retail is dead, but amazing retail, differentiated retail, retail that brings a humanity and experience is as alive and well as ever and can be really successful. So for us, our stores serve a couple of different functions. They are marketing and customer acquisition drivers for us. They're halos to our brand in the marketplace. And we see that in the fact that we're acquiring hundreds of thousands of customers through our stores over the last two years. So they're incredibly powerful brand driver for us. There're also a community and customer engagement center. So our customers that shop in our store and are engaging in an omnichannel, higher lifetime value, they're more engaged and we see that come through in the way that they interact with our brand across the ecosystem.

And the third is that they're four-wall profitable. They are a profitable growth driver for us, so they play a really important part of our business. And so our retail stores, as part of our omnichannel, synergistic ecosystem are an incredibly powerful and differentiating part of our strategy.

Oliver Chen:

Kyle, we talked a lot about innovation in this session. What's the mix of new products in any given year? And a second part of this is fragrances, that is very exciting. What's the opportunity here? Why did it make sense for you to enter the category? Your fragrance brand and your fragrance product has unique properties as well.

Kyle Leahy:

Yeah. From a product innovation standpoint, for me it's always a balance between how do we really amplify and continue to build our core iconic superheroes that will last for decades. And those are products like a Boy Brow, a Cloud Paint, like Glossier You, which we'll talk about more as it relates to fragrance, things like Balm Dotcom. So we are really amplifying and animating those core products through newness, whether that's extensions in formats or shade extensions like we just did with Cloud Paint or Cloud Paint Bronzer to how we think about building on a product like Boy Brow over time. So for me, it's about how do we continue to amplify our core superhero iconic programs that drive the vast majority of our business and really give us that stable foundation and future runway for growth. And then adding exciting innovation. So one of the things we've done over the last several years is really speed up and recommit to product innovation. Again, because it's something we heard loud and clear from our community. They wanted more products from Glossier, they wanted to have more and exciting newness.

And so we have sped up our speed of launch to have newness every four to six weeks, so we really can speak to the customer in a very dynamic and innovative way while we're building our core superhero franchises. So it's the combination of those. And I think because this brand is multicategory, we can do that in a very curated and edited and thoughtful way where we're expanding upon categories while still seeing very focused and curated and edited. From a fragrance standpoint, we're so excited about Glossier You. I mean the Glossier You fragrance, you know it well, Oliver is I think one of the most iconic products for Glossier and really represents the idea of the product. So the name is Glossier You. Obviously, it is you are the top note. The fragrance is built intentionally missing its top note, so that it smells a little different on everyone, and therefore really represents that individuality that you can bring to the own beauty in real life and your own journey.

The thumbprint on the bottle, all of that, the name, the product proposition, the idea, I think certainly represents the next generation of fragrance. When you think about what consumers are looking for fragrance as part of their identity, what we're seeing in the next generations about fragrance as part of your individual beauty routine and what you can sign about yourself by the way that you smell, and the fragrances that you use and the way that you can really show your individuality through fragrance. And so I think there's deep resonance with our fragrance positioning and especially next generations are looking for out of fragrance. And so I think that's why you're seeing such outsized performance to be the number one fragrance at Sephora. We actually sell off of our makeup gondola, so we're not even in the fragrance department of Sephora. So people, our consumers are finding it.

We sell a bottle every 40 seconds. It is truly, I think the next generation fragrance and we're leaning in. We're building around that, we've hired and brought in talent to help us build and develop fragrance into thinking about how do we expand on this idea, how do we make Glossier You truly that next generation fragrance. And I'm so excited about the early results we're seeing, the runway for growth. And I think there's a huge business opportunity for us as well on what fragrance can mean for the Glossier brand and how we can really be that next generation fragrance in the future.

Oliver Chen:

Kyle, you have an iconic history of leadership in the retail industry. What past experiences have really informed how you're approaching this opportunity at Glossier as well?

Kyle Leahy:

Yeah. For me, I've always been a lover of consumer brands. And I've had the opportunity across industries to be a part of building and shepherding and stewarding brands that have lasted for decades, whether that's Nike or Cole Haan, now Glossier. And for me, what I think about the things that are so common and what I've learned from those iconic brands that have lasted for so long is that they are relentlessly focused on their customer and on the community that they're serving. And I think that level of customer focus and how that can drive product innovation, brand innovation, and continuing to keep your brand and your customer at your forefront is something I have seen across my career as such a powerful differentiator of brands that really have the resilience and longevity to last for decades. And I carry that with me, I think, as part of how I think about leading and driving the most iconic brands in the industry and in culture because I think that allows us to really differentiate and we're certainly doing that at Glossier.

And then the opportunity to build an incredible business behind those brands. So that you have not just an incredible brand, but a very powerful long-standing sustainable business that is striving consistency, sustainable growth, and profitability. Something we're also doing at Glossier. I'm really excited about the business momentum that we're seeing. We're at record high revenue growth, continuing expansion of profitability. So really excited about the combination of brand and business growth. And then I would say team. I mean, ultimately, amazing brands are built by incredible people, and we have such a special and incredible team here at Glossier. One thing I'm incredibly proud of is that we have an all-female leadership team, something unfortunately quite rare in the beauty industry. But it's an amazing combination of women from in and outside of beauty, from tech, from editorial, from beauty, from fashion and lifestyle, from luxury. And the power of that team where one plus one plus one can equal 10 is remarkable.

And so the creative team that is leading our creative vision under our Chief Creative Officer, Marie Suter, to our marketing team, to our product team, to the way that we're driving growth and innovation across the industry is I think really a reflection of our team and our entire company and the amazing talent that we have. And I've seen the power of that over my career and I've never seen a team, I think quite as powerful as this one. I'm really excited and proud of what this group is doing and how we're moving the industry forward in a really differentiated and powerful way.

Oliver Chen:

Kyle, one question we ask all CEOs, what's the hardest part of what you're doing now?

Kyle Leahy:

That's a good question, Oliver. I mean, I think there's so many wonderful... I always think of challenges as opportunities. So I'm thinking about what are the things that we're facing day in, day out. I think any CEO, we're facing an incredible amount of change, and the speed of change that's happening in the industry I think is only accelerating. So we're always thinking about how do we stay not just in line with but ahead of the curve. And I think that that is something that we spend a lot of time thinking about, which is where is the community, where is the customer evolving to and how do we continue to surprise, delight and operate in culture in a way that really differentiates our brand. And so I think that speed of innovation is only continuing to accelerate.

So I think that's one of the most challenging things. But also, one of the things that makes me so excited and why I love being in the consumer industry is because when you do have a brand that is truly differentiated and a company that's built by listening and staying ahead of curve with the customer, you can continue to innovate and lead that conversation. And I think that's certainly what we're doing at Glossier,

Oliver Chen:

The class I teach is at Columbia Business School is called Magic and Logic, New Frontiers in Retail. As you think about logic and supply chain and technology, what are some highlights about what you're focused on here?

Kyle Leahy:

I mean, I think for us it's about how do we continue to evolve and where the customer is going from taking our brand now to where more people around the world. We're at the early stages of global expansion. I think one of the most powerful things about Glossier when I think about the next decade ahead is that still 80% of our business is done in the US and close to 100% done in the US and the UK. And so we're at the very, very early stages of international expansion. And we launched things like global shipping last year and saw incredible early results to the demand pull that we see from around the world. And we see customers, more than half of our Instagram followers are coming from outside the US, so we're seeing incredible resonance that this brand has globally. So that for me is the next frontier for our expansion, is how do we continue to now take more Glossier to more people around the world.

And the potential that represents from not just a brand standpoint, but when you think multicategory, multichannel, and now the market opportunities that exist across the globe for Glossier, it's incredibly exciting. So we are focused around how do we now bring our brand to the world in a really powerful way. And so that means that we're now scaling and driving our supply chain infrastructure and all the infrastructure that allows us to help meet those customer demands in, I think, a very forward-looking and innovative way.

Oliver Chen:

As we do close out Kyle, there's many exciting things to be excited about. What are your thoughts on the views for the next five years, the next 10 years? What do new and existing customers care about next and what will they care about in 10 years?

Kyle Leahy:

I think one of the things I'm so excited about to enter... This is Glossier's 10th anniversary. And I think for us that's incredibly powerful that we have a brand that has shown the resilience and longevity that is withstood 10 years and now looks ahead to our next decade and the next decades. And so I truly believe this brand is the next modern legacy brand in beauty. And we are building something that when we look out in the next 10, 20, 30 years, this brand will be the one that has defined beauty for this generation and is already doing that. And I think that comes with deep commitment to a values-based positioning that is, I think, highly differentiated and highly emotional and has shown deep resonance with our customer across generations. It's supported by product innovation in things like fragrance, makeup, and skincare like we talked about. And I'm excited about the pipeline for product innovation, but also experience innovation.

I think Glossier has always been at the forefront of what we bring to life in our retail stores or go to market innovation, experience innovation on how we connect with our customer and our community. And then continuing to evolve and expand our distribution, so that we can bring this brand to more people in a way that allows us to build a business size and scale that really matches the size and scale of this brand. So there's so much potential ahead for Glossier. I'm so energized and excited by how this brand has defined culture and how it continues to operate in a way that has led the consumer industry and is continuing to lead the consumer industry, how we're innovating in product and experience in a highly differentiated way that I think will continue to lead at the forefront of beauty. And then the business momentum that we have that I think will only continue to drive outsized results in the industry.

And last, I'll end with my same comments about the people and the team building it. Because to me, we are not just building a brand that is changing how the world sees beauty. We're building a company led by this incredible female leadership team, incredibly modern and diverse in how we think about the way we operate our company and the values we uphold in the way that we operate. And then the impact work that we do. Things like our grant program for Black-owned beauty businesses, which is just named as fast companies, most innovative companies for that social impact work. The level of change that this company can drive because of our brand, our leadership, our company, and our impact work, to me makes it so much bigger than just beauty. It's so much bigger than just a company. It's changing the world and changing how people feel about themselves and the power and the bigness of that I think is unlimited. And we're just getting started.

Oliver Chen:

Well, Kyle, this was an amazing opportunity to speak to you and this brand. And it really represents inclusivity, community, disruption change on many levels. And there's a huge opportunity to address this customer, as well as address this at corporations. So thanks for your time.

Kyle Leahy:

Thanks for having me, Oliver.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.

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