It is an interesting time to be a brand in today’s beauty retailing environment. While retail is a unique experience for every brand and each brand must assess where their consumers are shopping, Kline’s latest Beauty Retailing: U.S. Channel Analysis and Opportunities study finds that there has been a shift in where consumers are shopping for cosmetics and toiletries. Among these market-moving channels, it is evident that there are sub-channels that will continue to push growth of the industry forward. Kline predicts that the sub-channels that will grow the strongest during the forecast period are the Internet, cosmetics specialty stores, and vertically integrated specialty stores.
In today’s retail environment, we cannot talk about moving a business forward without talking about selling online. At the very least, most mass beauty brands and even some prestige brands find that it pays off to be accessible to their customer through Amazon. Others, such as Wet n’ Wild, a mass brand that has traditionally been found only in retail, launched online through its own website at the end of 2015. This accessibility has helped Wet n’ Wild reach an even broader audience, one that is social media- and trend-driven.
Cosmetics specialty stores, such as Sephora and Ulta, are moving the market forward not only through new and enhanced stores, but also through the addition of exclusive products and brands. Sephora, for example, begins offering Colourpop in stores in 2017, a brick-and-mortar retail move unprecedented by the brand until now. These stores will continue to push the boundaries of what is offered in store and will challenge existing brands to diversify and innovate their product offerings, while also scouting up-and-coming brands that will resonate with consumers.
Finally, Kline’s Boutique Beauty Retailers: Channel Analysis and Opportunities study found that while the total door count of vertically integrated stores in the United States increased by 2.0% in 2016, sales from the same stores grew by 7.0% from 2015-2016. Kline will be updating this study to track market swings from 2016-2017 in the United States and Japan, given the rapidly changing environment, such as new entrants to the market and the announcement that BareMinerals will close 100 stores globally. Despite store closings, Kline expects that the sub-channel will continue to grow strongly by its market leader, Bath & Body Works, as well as by brands that are aggressively entering the boutique market, such as Philosophy, NYX, and e.l.f. Legacy boutiques will also continue to be relevant, as they invest in enhanced features, as MAC has recently done with its collaboration with ModiFace.
For more information on these topics, please refer to our upcoming Boutique Beauty Retailers: Channel Analysis and Opportunities, tracking one of the leading and fastest growing channels for beauty—specialty stores, and Beauty Retailing: U.S. Channel Analysis and Opportunities, offering a full view on all beauty channels, including the dynamic direct sales channel.