Retailers Rethink Beauty

Four of the major U.S. mid-tier and mass retailers are launching new beauty concepts, three this month and one in the fall. All have in common a focus on younger shoppers, synergies between in-store and online executions, and an emphasis on products for consumers of all ethnicities. The goal is to capture new consumers at a time when at least some are again starting to dress up to go out. But their reimagining of the category comes the midst of competition from not only traditional venues like department and drug stores but also a number of fast-growing direct-to-consumer brands.

A look at their respective approaches:

  • Target opened mini Ulta Beauty shops in some of its stores this month, highlighting more than 50 brands. Featured products include frequent collaboration partners MAC Cosmetics and Urban Decay, singer Ariana Grande’s fragrance line, and other best-selling labels such as Clinique and Drybar. The partnership brings premium beauty items typically found only at specialty and department stores into a mass environment. By the end of 2021, Target expects to launch more than 100 shops, with plans for a total of 800 within a few years. The shops’ floor space is about 1,000 square feet, 10% the size of a mall-based Ulta store, and will be located next to Target’s mainline beauty department. Target also has partner shop-in-shops with Disney and Levi’s in other areas of the store.
  • Kohl’s paired with Sephora in a 10-year deal, taking over from JCPenney as the host of the beauty retailer’s in-store boutiques. Seventy stores are opening Sephora shops this month, 130 more are planned for fall, and a total of at least 850 are expected by 2023. (Kohl’s has more than 1,160 stores as of the end of 2020.) The first Sephora shop, in a New Jersey Kohl’s, is 2,500 square feet, with more than 125 prestige beauty brands having a presence. Among the 8,500 SKUs are designer names like Tom Ford, Yves St. Laurent, and Giorgio Armani; top beauty brands such as Lancôme and Estée Lauder, and contemporary labels including Charlotte Tilbury and Rihanna’s Fenty Beauty. Sephora is leasing the space in Kohl’s stores, unlike at Target where the mass merchant is creating and staffing the shops with guidance from Ulta, to which it pays a royalty.
  • JCPenney is launching its own in-store department and online shopping platform under the JCPenney Beauty name. It will house both prestige and mass-market cosmetics. The initiative, announced in July, will launch in October in select stores, with a national rollout to all 650 locations from fall 2022 through 2023. Sephora, which has been with JCPenney for 15 years, will continue its JCP shops until fall 2022, after which it will be exclusive to Kohl’s. The focus of the new department is on diversity, with products to appeal to every ethnicity, gender, price range, age, and hair and skin type. Sales people will be trained in finding the right product for all of these customers. In addition, a shop-in-shop is being developed in collaboration with Thirteen Lune, an e-commerce platform specializing in Black- and Brown-owned beauty products.
  • Walmart is transitioning from what has been more of a convenience and value positioning in the beauty category to more of a destination approach. The company has enhanced its offering with more than 40 new brands this year, largely catering to Gen Z and ethnically diverse consumers. The list features a number of indie labels, including some tied to influencers and other celebrities, such as actress Taraji P. Henson’s TPH by Taraji and celebrity makeup artist Joyce Bonelli’s label. These new additions are joining existing Walmart collaborations, including Flower by Drew Barrymore, and established product lines from the likes of Maybelline and L’Oréal.

The beauty category has been a hotbed of licensing and collaboration activity of late. Examples just this month include Pebbles Cereal with Revolution Beauty for cosmetics, Cosmopolitan with Devoted Creations for tanning products, Barbie with CHI for hair products, and The Van Gogh Museum with Flora Street for fragrance.

Speaking of beauty, the Datapoint research spotlight in this month’s Raugust Communications e-newsletter, which publishes next Tuesday, August 17, 2021, will take a look at the specific products that are most commonly involved in licensing and collaboration deals in this category. The Licensing Topic of the Month will shine a light on experiential initiatives, which are making a comeback in a continuing period of uncertainty. If you are not yet a subscriber, you can sign up here.

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