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Where the Shoppers Are: Mass Beauty Retail Evolves

By: Ada Polla
Posted: August 26, 2013, from the September 2013 issue of GCI Magazine.

There are many things I love about the summer season. Beach vacations. Open-toed shoes. And the HBA Global Expo. Every year that I attend the HBA conferences, I see leaders of the industry, meet beauty entrepreneurs, and learn something—actually, usually many things. While this typically happens over the course of three days, it also happens simultaneously during a 75-minute session that I have the privilege to moderate. At the 2013 HBA, I was once again given the opportunity to lead the session on “The Changing Face of Beauty Distribution,” and for the fourth year in a row, I got to pick the brains of amazing retailers and brand builders, this year with the theme of mass distribution.

According to The NPD Group, the U.S. prestige market beauty segment (defined as department stores) grew faster in 2012 (versus 2011) than mass market beauty (defined as food, drug and mass, excluding Walmart); specifically, 7% versus 3%. [Globally, according to Euromonitor International in its June 2013 State of the Industry report, mass cosmetics were at the heart of the growth story in 2012, fueling more than $16 billion of growth in absolute terms.] And however numbers and data is parsed, exciting news is coming from mass—exciting launches, and celebrity launches in particular; shifts in teams (Ulta’s CEO change, for example); and incredibly innovative retail concepts, including the Look Boutique, Target’s The Shops at Target, and more. There is definitely a wealth of things happening in beauty at mass.

Mass Beauty Today

But really, what is mass? It used to be that mass was defined by price point, but today, beauty brands such as L’Oréal offer products at mass priced well above $20, the usual cut-off point for prestige/premium/luxury. Mass also used to be defined by the service offered by advisers at department store beauty counters. But today, Target has launched its Beauty Concierge services in stores in Illinois, California, Minnesota, Washington, D.C. and beyond.

Further, mass, in terms of products and brands, used to be defined by channel. But today, the Look Boutique, located in Duane Reade and Walgreens locations, would not define itself as mass. Finally, mass used to be defined by the lack of design. But today, mass borrows from the prestige channel with exclusive design partnerships.

So, back to our question—what is mass beauty today?

This is the first thing I asked the session’s panelists: Marcia Gaynor, general merchandise manager, beauty, Duane Reade/Walgreens; Christina Hennington, vice president, merchandising, beauty and personal care, Target; and Ido Leffler, co-founder, Yes to Inc.

To paraphrase Hennington, asking this question is really talking to ourselves. As she pointed out, “Channel words are industry terms, not consumer-facing terms. Who cares what the label is?” Because, indeed, the consumer will buy where she wants to buy, which is usually where it’s convenient to buy.

Gaynor picked up the thought, making a clear differentiation between Duane Reade, which represents true mass, and the Look Boutiques, which offer personalized beauty services. Perhaps, in the end, the level of service is what defines the experience. The traditional “prestige” expectations involve education, samples, makeover events—all experiences that happen at the Look Boutique. Hence the consumer will find brands there that she would not expect to find in a traditional mass outlet, Gaynor explained.

The next question for the panel was about which category is driving growth. Having just come from the WWD Beauty Summit and heard Marla Malcolm Beck, the owner of Bluemercury, implore her vendors “No more skin care,” it definitely seemed like topic ripe for opinions and discussion. Hennington and Gaynor agreed that skin care is still the focus of beauty at mass, with Hennington calling it “pivotal.” The bottom line is, skin care is the segment that drives the most loyalty in the long term.

However, skin care, at mass, is not where most of the growth is happening, nor where the most innovation is coming from. Growth is coming from the nail care segment—likely driven by the reigning economic conditions. Indeed, nails are an easy way for consumers to do something for themselves, to feel happy without spending a lot of dollars.

An infusion of innovation is also coming from hair care. The hair care category is becoming increasingly segmented, and it is, in some ways, becoming more like skin care (anti-aging conditioners, anyone?). This reminds me of another comment made by Malcolm Beck at the WWD Beauty Summit, a statement to the effect that hair care needed to become even more segmented. Forget about shampoo for colored hair—we need shampoo for dry colored hair, shampoo for oily colored hair, and so on.

Touching on an always-hot topic, Hennington brought up the naturals segment, which is “working really well for Target.” For her customer, Hennington said, this segment is not a trend but represents, instead, a lifestyle choice.

Leffler was happy to hear her say this, and of course agrees. A distinct representative of the naturals segment, Yes to Inc. is now one of largest natural beauty brands in the mass segment. Yes to Inc. represents 55+ products in 25,000 stores, in 29+ countries, giving rise to audience questions, including how did you do it? Why were you successful? And why did you decide to specifically launch in the mass channel?

To that last question, Leffler deadpanned, “We were amazingly smart.” But also, the mass channel is where they had an “in”—an individual who vouched for the brand and made an introduction, to Walgreens buyers. So, Walgreens is where Yes To went.

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