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THE BEAUTY REVOLUTION AT FOOD, DRUG, AND MASS

April 28, 2021
April 28, 2021
CVS

Food, drug, and mass market stores benefited from their status as essential retailers during the pandemic, and those with pharmacies are also attracting huge foot traffic due to the vaccination effort. Mass merchants hope efforts they undertook pre and during the pandemic to burnish their departments will help them nab a bigger portion of the $82 billion US beauty and personal care market.

The mass beauty revolution is both aesthetic and merchandise driven. Several chains elevated the ambiance of their stores, including Rite Aid’s new Store of the Future, CVS’ BeautyIRL prototype, HEB’s experiment with prestige brands, Dollar General’s buzzy Popshelf, and Target’s “beauty breakout” doors along with the eye-opening deal with Ulta Beauty.

“The beauty business is coming back."
By Barry Shields, Managing Partner, Beauty Partners LLC

The most recent new format was revealed this week at Raley’s O-N-E Market in the Sacramento market that features a natural beauty store-within-a-store. The mix includes health and beauty products that are free of artificial preservatives, colors, and aluminum. The items are also hypoallergenic, paraben free, phthalate free, sulfate free, cruelty free certified, and Rainforest Alliance certified. Some experts see this as the future of food store beauty presentations to compete with Whole Foods and other wellness retailers.

Other grocery news comes from Erewhon, the Los Angeles retailer known for a cool vibe with organic prepared foods and wealthy clientele. The retailer has been expanding beauty but the selection is about to get even bigger with the news that Maren Giuliano has joined as vice president of health and wellness. Currently some of the brands stocked include Osea, Dr. Bronner’s and Weleda.

Giuliano helped nurture the beauty focus at Whole Foods Market’s Whole Body (she left in. 2017) but continued to have active roles in the health and wellness industry.

Beyond physical advancements, brand executives say, there is a new attitude on the buying side. “Mass retailers are less risk adverse,” says one major brand executive, noting there is a new and younger breed of mass category buyers.

“They are more aggressive, testing more ideas and scouring for digital-native brands to bring to physical stores.” They are also pioneering categories like ingestible beauty and sexual wellness. Clean beauty has moved to the forefront, as well, which has primarily been more of an upmarket category.

The mass industry is about to find out if its efforts are enough to keep shoppers, who were funneled to their doors as essential retailers, will continue to plunk down their dollars at mass. All signs point to a surge in the demand for beauty. After more than a year of declines in makeup usage, a survey by Wells Fargo found 40% of those polled plan to buy makeup as their first purchases post-pandemic.

Sales are starting to percolate. “The beauty business is coming back,” says Barry Shields, managing partner of Beauty Partners LLC, noting his company’s Red Carpet Manicure volume is up 30% and Arches & Halos brow items soared 50%.

Still, the mass market faces challenges, especially attracting young shoppers. One of the biggest obstacles is freshening up thousands of door—a feat that can’t be accomplished quickly. So even if Rite Aid and CVS have sparkling new looks, not all stores can be upgraded in a matter of months. Efforts seem to be paying off.

“Our Store of the Future sales are on fire,” says Erik Keptner, Chief Merchandising and Marketing Officer at Rite Aid, of the chain’s new Store of the Future format. The retailer reports front-end sales in the flagship stores are up 400 basis points versus other stores in the market.

Rite Aid, the nation’s third-largest drug chain, is in the middle of a $700 million store overhaul that includes a new logo and décor package. The new look puts an emphasis on wellness and beauty from the inside out.

There are currently only three stores opened, but learnings from the look are being implemented chainwide. With a footprint of 2,443, Rite Aid can be nimbler than CVS with almost 10,000 doors or Walmart’s 11,000-plus retail locations. Rite Aid also acquired Bartell Drugs last year, which adds upscale markets to its portfolio.

Dubbed by many as a mass market Sephora, the new Rite Aid beauty department has an area to experiment with products (which eventually can be tech-enabled), elegant wooden fixtures, and trained beauty advisors (some who have migrated from specialty retailers).

Supplementing the physical enhancements, beauty suppliers applaud a new way of procuring brands. Instead of demanding promotional monies for displays, big ad budgets, pay on scan, and other costly practices smaller brands can’t digest, Rite Aid is giving nascent lines easier entry, especially for those with wellness positionings.

National brands like Maybelline and Cover Girl are in the mix, but so are names not as well known. “We want to work with brands, including digitally native ones looking for a brick and mortar footprint,” says Keptner. A sampling of these lines includes Doll Face (a brick-and-mortar exclusive for Rite Aid), Arches & Halos, W3ll People, Ella +Mila, Fleur + Bee, Essano, Hempz, Seaweed Bath Company, and Purezero. “We want vendors and suppliers to know we want to be that platform [to facilitate physical store growth].”

Keptner likens beauty, especially clean formulas, to the thrust in grocery stores to fresh produce.

The vaccine is a boost for Rite Aid (which administered 500,000 shots in its fourth quarter and more than 2 million to date in its Q1) and an opportunity for new eyes on the beauty department. According to COO Jim Peters, about 75% of those entering the retailer for a vaccine are new to Rite Aid: “Many of those people who hadn’t been to a Rite Aid store were blown away by the noticeable changes. They have been buying more products like beauty.”

Optimism from the vaccine also builds impulse sales. “When people come out of the consultation rooms [post vaccine], they are cheering and euphoric,” says Rite Aid CEO Heyward Donigan, noting that that exuberance results in bigger baskets.

CVS’ BeautyIRL store also elevates the traditional drugstore experience, and according to Andrea Harrison, VP Merchandising Beauty and Personal Care, is bringing in younger consumers. The stores have makeup chairs which, when allowed, will again offer makeovers. There is a wall devoted to up-and-coming brands, often ones that were born direct to consumer. CVS is leveraging its health care positioning to fortify beauty by marrying its BeautyIRL to the HealthHUB format. Those stores have rooms for yoga classes, dietitians, and other services. By the end of 2020, CVS had 122 BeautyIRL stores—69 were stand-alone and 53 combined BeautyIRL/HealthHUB stores.

“I can’t wait for those getting vaccines to see all we’ve added in the last year,” says Harrison. Indie brands have netted CVS more consumers, but Harrison gave a nod to advancements heritage beauty brands are making in beauty, too.

Rather than just churning colors, major brands are bringing out innovation. In some cases, that is saving their footage in major chains. Target continues to innovate with the addition of brands like Winky Lux and Function of Beauty. Both have showstopping displays in the beauty department, which has eliminated the use of old-fashioned endcaps.

Target also just launched three exclusives incubated with Maesa. Mix:Bar is a fresh take on layering fragrances that could help inject life into the languishing mass fragrance business. The next is Anomaly Haircare from Priyanka Chopra Jonas that enters the celeb haircare field. The latest is Hey Humans in collaboration with Jada Pinkett Smith (and her family), a gender-neutral collection of personal care products retailing for under $6. The products are 99% plastic free and vegan and cruelty free.

The beauty proposition at Target will be an even more formidable competitor with the 100 Ulta sections that will be implemented in 100 hand-picked locations. The goal is to offer higher-end brands in stores that don’t compete against an Ulta Beauty, suppliers said.

Walmart might not be associated with cutting-edge exclusives, but the retailer is also stepping up its game. Recently the chain doubled the number of liquid products in its exclusive Hairitage line created by YouTuber Mindy Knight and added 33 hair accessories. The fashion-forward line is more of what Musab Balbale, Vice President and General Manager for Walmart US Beauty, says the chain is eyeing as it bolsters beauty.

Supermarkets, which are also offering vaccines, have been tossed to the forefront of beauty—often because for some they were the only game in town. As reported by BeautyMatter, HEB is the gold standard in beauty departments with service and brands like Smashbox in its Beauty by HEB format. Hy-Vee, Kroger, Fred Meyer, and Albertsons are other food chains mentioned for expanding beauty offerings, especially over the past year.

The traditionally slow-turning cosmetics category had almost disappeared from many food stores in favor of fresh and natural groceries. The pandemic changed that, according to Tara James Taylor, SVP Beauty Personal Care Vertical for NielsenIQ, who said grocery stores became the main shopping destination for consumers last year. Beauty brands found their emails humming with requests from supermarket retailers—rather than having to market to them.

While not benefitting from vaccines, Dollar General opened a concept that is getting attention in the beauty category. Late in 2020, Dollar General rolled out Popshelf, a 9,000-square-foot format it hopes will court a slightly higher income than its conventional stores. Beauty is one of the biggest categories in the bright and bold stores which also feature home décor, party supplies and other items mostly priced under $5.

Plans call for 30 Popshelf stores to open this year. There are currently five stores in Georgia, Tennessee, and North Carolina. A Dollar General exclusive created by Maesa called Believe Beauty is one of the mainstays of the department.

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