Channel Agnostic Beauty Retail Strategy

Omni Channel: Beauty’s New Lowest Common Denominator

Kline has its finger on the pulse of beauty retailing, and this week we interview Donna Barson, Senior Associate, who handles Kline’s beauty retail research, to highlight some of the findings from our recently published Beauty Retailing USA: Channel Analysis and Opportunities.

Donna, how are marketers changing their retail strategies to reach today’s consumers?

Donna: As modern consumers will search for what they need on tablet or other mobile device, use online diagnostic tools or augmented reality to help determine appropriate products, test them out in local stores, and then purchase online or wherever is most convenient at that moment, brands and retailers adopt strategies to capture this fickle but enthusiastic audience. From what used to be a single focus, or multi-channel strategy, smart marketers are transforming to use a much higher channel-agnostic strategy, where often boundaries are erased. Very few marketers compete in one channel, and even those department store stalwarts, such as Estée Lauder and Lancôme, can now be found in an ever-expanding number of retailers in various channels.

Aside from mobile devices, how else is technology affecting the beauty retailing arena?

Donna: Technology continues to work towards optimization of the beauty shopper experience. Retail stores are adding more technology in-store to become more virtual, while online stores are adding more diagnostic tools, to mimic physical locations. In our Beauty Retailing reports, we provide an analysis of some of these new developments, such as the use of beacons, augmented reality, diagnostic tools, and new payment and delivery options. Additionally, several online retailers are utilizing same-day delivery to help simulate an in-store purchase, along with the ability to pick up products in-stores.

What new stores have impressed you the most this year and why?

Donna: One of the most impressive is Credo Beauty. Originally started as an online store dedicated to natural personal care brands, this retailer recently opened its first physical location on Fillmore Street in San Francisco, with the hope of becoming the first national multi-brand beauty specialty store chain to focus solely on natural personal care products. Besides several U.S. brands, new retailers entering the U.S. beauty market in 2014 are also impressive. Kiko Milano, an Italian masstige vertically integrated color cosmetics retailer with over 500 stores in Europe, plunged into our shores in the past year and continues to open stores around the country. Tony Moly, a Korean beauty chain with locations across Asia, is testing the viability of a chain in the United States due to the popularity of beauty products from Korea. The Irish retailer Primark is testing out locations and product assortment in the United States. Known for extremely low prices, the retailer also offers a complete array of private-label color cosmetics at prices much lower than nationally advertised mass brands.

Where do you expect the biggest shifts for retailing of beauty products to occur in the next few years?

Donna: Marketers and retailers will continue to evolve to meet the needs of the changing consumer. Retailers will continue to strategically open and close locations as they work to reduce the number and square footage of their stores. Many successful retailers are expected to decrease the size of their physical footprints due to the increasing number of sales likely to occur online. Our research indicates that major growth will remain in the specialty store and direct sales channels. Marketers will continue to carefully monitor purchasing shifts and make sure that their products are available in the appropriate venues. More strategic alliances between retailers in various channels will likely occur, like the expected Bluemercury boutiques to open in select Macy’s locations.

Thank you, Donna!

More information about the developments within each channel and sub-channel and retailer profiles can be found in our Beauty Retailing USA report. To take a deep dive look at the high growth direct sales and specialty stores channels, we also launched Beauty Retailing USA: Alternate Channel Monitor in 2014. Due to the increasing demand for on-going detailed information, in 2015, we just issued the first edition of two new reports: Beauty Retailing through Television Home Shopping: U.S. Channel Analysis and Opportunities and Beauty Retailing through the Internet: U.S. Channel Analysis and Opportunities.

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