GCI Magazine

Channels Sponsored by

Email This Item!
Increase Text Size

New Perspectives in Beauty Retailing

By: Ada Polla
Posted: August 27, 2012, from the September 2012 issue of GCI Magazine.

As a beauty brand, one of the most significant challenges is determining your distribution strategy. It used to be simpler—you either launched in a department store with an exclusivity clause in your contract (if you were pursuing a high-end positioning in the marketplace) or in a drugstore (if you were pursuing a mass positioning). However, over the past 10 years or so, it seems that distribution is constantly shifting.

At the 2012 HBA Global Expo, a panel of beauty industry insiders—including Jani Friedman, vice president of new brand development for Guthy-Renker; Marcia Gaynor, general merchandise manager for beauty and Look Boutiques for Duane Reade and Walgreens; Jennifer Walsh, founder of Behind the Brand Media and The Beauty Bar; and Susan Yara, editorial video and interactive director of NewBeauty magazine—discussed the most recent beauty distribution trends, as well as where the highlights are showing through.

Having also previously moderated similarly retail-themed HBA panels in 2010 and 2011, I shared additional retail perspectives in an article titled “The Changing Face of Beauty Distribution” in the March 2012 issue of GCI magazine. Here, I would like to share with you what came of this year’s panel. As you will see, the only real constant continues to be change.

Beauty Retail in Numbers

Friedman started the discussion by setting a context with some beauty industry retail numbers. Overall, there has been some recent growth, with numbers indicating skin care and color cosmetics (including nail care) are the categories growing the fastest. The stats indicated that beauty and personal care sales reached $63.1 billion in 2011, with the industry expected to achieve $72.6 billion by 2016.

Further, premium beauty is growing faster than mass, seeing an 8% rise in sales in 2011 versus the mass rise of 2.1% in the same time period.

In terms of channels, there were both similarities and contrasts between the data presented in 2012 and 2011. In 2012, as with 2011, e-commerce is growing the fastest. However, the direct channel seems to be seeing more of a setback in 2012 while department store beauty sales saw 7.4% growth in 2011, followed by pharmacies (+5.6%) and beauty specialist retailers (+5.2%). And like direct sellers, mass merchandisers underperformed.

Following the Trends

Following the stats and numbers breakdown, the panel looked at the most recent distribution trends that emerged during the past 12 months.

Increased use of video as a sales tool. As Yara’s NewBeauty title indicates, video is playing an increasing role in both the consumers’ shopping experiences and in the magazine industry. When asked about this development, Yara suggests this video reach is helping inch closer to online consumers being able to smell and touch products, which still eludes current online technology. Instead, consumers watch videos of day-to-day women applying creams, cosmetics, masks and other products in order to get a sense of the product’s texture and spreadability.

Furthermore, blogging is being replaced or complemented by vlogging, aka video blogging. In addition to providing more information, video also enhances the shopping experience. Per Yara, both raw iFlip videos and professionally edited ones are effective. And the more amateur videos, often created by “real women,” sometimes are even more influential.

The key takeaway is that it’s becoming more imperative for beauty brands to incorporate video into their online presence. It’s a way to connect and get closer to the “touch” than online retailing has ever been able to get.

Growth of the new type of masstige channel. Call it pharmacy, masstige, prestige or something else, but consumers are staying in designated retails channels less and less, hopping to the venue that provides the products and results they’re looking for most conveniently.

The Duane Reade Look Boutique concept, comparable to the traditional European pharmacy, offers niche beauty brands in an open-sell environment and with widespread distribution. The popularity of this concept is evident in the rapid rise of the Look Boutique, which debuted in October 2009 and now has a slew of locations, including high-profile placements such as at 40 Wall Street in New York, as well as in Walgreens locations. And according to Gaynor, the plan is to roll out more than 200 new Look Boutiques in the next few years.