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The Changing Face of Beauty Distribution

By: Ada Polla
Posted: February 29, 2012, from the March 2012 issue of GCI Magazine.
  • Beauty products are less seldom defined by their retail channels nowadays, meaning there has been a proliferation of product lines to a variety of retail outlets.
  • From traditional channels of department and mass stores to the development of online retail and beyond, each venue offers its own benefits and costs and allows brands to diversify for a greater reach while still catering to niche consumers.
  • The future of beauty retail continues to advance, following trends of convenience, curated selections and recommendations, and even safety regulations, but most are looking to be where the consumers are—and where they are headed next.

Thirty years ago, if you wanted to launch a high-end beauty brand, you would create your product and call on the top department stores—likely Bloomingdale’s, Saks, Nordstrom or Neiman Marcus—to exclusively launch the products. Today, the beauty distribution landscape is amazingly more complex and the launch strategies much more blended. Indeed, in a 2010 issue of WWD Beauty Biz, Carlotta Jacobson, president of CEW, was quoted as saying, “Distribution no longer defines a product’s value or status.”

HSN general manager, beauty and merchandising strategy, Betsy Olum admits today’s retail world “is like the wild, wild West.” The only constant in beauty distribution is change and cross-channel shopping. Indeed, Frédéric Fekkai himself was reported as saying, when discussing his brand’s move to mass channels after its acquisition by Procter & Gamble, “I love to go to Target, and Whole Foods, and Hermès.”

In both September 2010 and June 2011, I moderated panels on the shifting face of beauty distribution for the HBA Global Expo, discovering insights into the inner workings of these various beauty retailing avenues. I also have started working on putting that panel together for HBA 2012, informed by the content of the previous panels, as well as current beauty industry and consumer trends, uncovering pertinent trends and numbers.

Beauty in Numbers

Karen Doskow, industry manager, consumer products, Kline & Company, set the stage for the 2011 panel by sharing some industry statistics. Highlights included:

  • The U.S. beauty market reached $36.5 billion in sales in 2010, surpassing pre-recession levels.
  • Industry growth bounced back after a dip in 2009, up 2.4% in 2010.
  • On a product level, skin care continues to be the largest product class, while makeup is the fastest-growing.
  • On a channel level, all of the trade classes posted growth in 2010; mass market, the largest trade class, showed the lowest growth.
  • The direct sales channel had a higher compounded annual growth rate (5.2%) than the industry average of 1.7%. (This channel includes home shopping and infomercials, as well as person-to-person sales and online shopping.)
  • Within the direct sales channel, online shopping had the highest compound annual growth rate (26%).

Channel Tension, Niche Developments

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