Beauty brands ready for a rebound
Officials at beauty brands across the country have one big message for retailers: Don’t forget about us.
In fact, despite anemic results throughout 2018, when beauty brands sit down with top retailers at this year’s National Association of Chain Drug Stores Annual Meeting in Palm Beach, Fla., they will have a compelling story to tell.
A year ago, with health care all the buzz, retailers and suppliers struggled to find out how beauty fit into the mass market landscape. Retailers were looking for space to build out clinics and health screening testing areas. All front-end categories were at risk because pharmacy produces nearly 70% of most drug store retailers’ sales.
Now, it is clear that beauty has held its own and maintained its square footage. In fact, some said that beauty has found its place in the wellness revolution. As Stefano Curti, global president of Markwins Beauty Brands, said, “You can’t be beautiful without being healthy.”
Wellness will be on everyone’s lips again at NACDS Annual, brands and retailers who are packing their bags said. Citing statistics from the Global Wellness Institute, wellness and beauty expert Jennifer Walsh said “wellness” is now a $4.2 trillion global market. Beauty is an important component of the total picture.
“Drug stores have a huge opportunity to tell their wellness story and come out ahead, and they have the perfect audience,” Walsh said.
There already are examples of chains taking action. More than 3,000 Walgreens beauty consultants have been trained to manage the physical changes associated with cancer treatment, including the loss of eyebrows and eyelashes; dry hair, dry skin and discolorations; sunlight sensitivities; and changes to nails and cuticles. The program, called Feel More Like You, follows a test last year and is the first-of-its kind that merges pharmacy and health and beauty expertise to help people living with cancer.
As part of CVS Pharmacy’s four-store pilot that offers on-site “Glamsquad” experts, skin care is among the services offered. Living healthier also was a major push behind the chain’s Beauty Mark initiative, where digitally altered images in the beauty aisles are being eliminated.
“As a purpose-led health care company, as well as one of the largest beauty retailers in the country, we want the millions of customers that visit CVS Pharmacy locations each day to see a more authentic and diverse representation of beauty,” said CVS Pharmacy president Kevin Hourican at the reveal of the first of the unedited images earlier this year. Other better-for-you beauty moves from the chain include the removal of parabens, phthalates and, the most prevalent, formaldehyde donors from more than 600 store brand beauty and personal care items (to be completed this year), and more natural beauty items on shelves.
“Our purpose is to help people on their path to better health and to pass on a healthy self-image to the next generation,” said Maly Bernstein, vice president of beauty and personal care at CVS Pharmacy, during a tour of the Times Square store, where the images were first displayed. “We are partnering with our lead brands in the marketplace to advance the initiative to promote a healthier mindset and healthier access to beauty.”
Target and Walmart also are going deeper into beauty products with fewer chemicals. Under the direction of Christina Hennington, Target’s senior vice president of merchandising, essentials, beauty and wellness, the chain has added more naturally positioned products at accessible prices.
More informed shoppers, who study labels, also encouraged Target to adopt its Chemical Strategy two years ago to bring transparency to ingredients. There also is a wellness icon program, where beauty is among the first categories to feature the marker.
“Whether it is products free of phthalates, sulfates or parabens, we want our guests to have clear information on the products they are looking for and find them quickly,” Hennington said.
Walmart also is making it clear that wellness is on the front burner. A case in point: The chain just launched Evolution_18, its first line of beauty supplements sold in its beauty department, according to Jody Pinson, vice president of beauty at the chain. Evolution_18 is created by the legendary Bobbi Brown.
“At Walmart, we are always expanding our assortment to meet customers’ needs, and with that, we believe inner beauty is very important. It was a natural fit to partner with Bobbi Brown on the launch of 10 new Evolution_18 products,” Pinson said. “All will be available exclusively at select Walmart stores and on Walmart.com. We also believe beauty and wellness products should be accessible to everyone, and with the emergence of beauty supplements, we saw an opportunity to introduce Evolution_18 at Walmart’s everyday low prices.”
The lineup of supplements will be priced under $20. Walmart also sells Found, a naturally-positioned cosmetics line, along with many natural hair care ranges.
Pharmaca, the drug store chain that places a tremendous emphasis on natural, continues to outpace mass beauty gains and remains a leader in wellness and clean beauty with such brands as Jane Iredale, Dr. Hauschka, Sanitas Skincare and Juice Beauty.
Another example of fusing beauty with pharmacy that U.S. retailers are watching is at Toronto-based Shoppers Drug Mart. The retailer is testing the Beauty Clinic by Shoppers Drug Mart, offering Botox injections, fillers, laser treatments and medical-grade peels. Rachel Huckle, senior vice president at Shoppers Drug Mart, said the company’s research shows these types of cosmetic procedures are in high demand with its customers.
Beyond adding more nontoxic products, mass retailers are attempting to serve needs of younger shoppers with independent brands. CVS Pharmacy is adding the Essence makeup line as part of the launch of 60 brands that also included Sun Bum and Bliss. Walgreens now has lines not sold in other mass doors via its Birchbox pilot, including RMS Beauty, Embryolisse, Wander Beauty and Sand & Sky. Rite Aid offers Cake, a vegan and cruelty-free brand. Target has added eight brands to serve the needs of multicultural shoppers, including The Lip Bar and Urban Skin Rx.
Brands also are embracing the wellness culture. Cover Girl got certified as cruelty free by Leaping Bunny. Yes To masks became part of self-care Sunday routines, and the brand amplified its natural ingredients messaging. Pacifica is expanding its product lineup, including supplements offered at Target.
Clean makeup often is thought of as a prestige or specialty niche. Yet Markwins’ Wet ‘n Wild brand is working toward being totally vegan — 70% of its products already are classified as vegan.
The beauty industry’s place at the wellness table helped it maintain its footage, but there is no way to sugar coat the past year in mass market cosmetics sales.
Stephanie Wissink, an equities analyst at Jefferies, said for most of 2018, cosmetics sales were down — but results were mixed by categories and brands. Skin care, however, was an overall category savior, producing gains all year. Within food, drug and mass, she said, cosmetics categories are struggling because of shoppers’ waning interest in the category at mass, online competition and digitally native brands.
Evelyn Wang, the new chief marketing officer at Milani Cosmetics, confirmed that skin care is trending up and color is experiencing contraction.
“Part of this is just math and normal cyclical category behavior: What goes up must come down and vice versa,” she said. “Part of this is ‘trend fatigue,’ after many years.” She said that after a few years of heavy makeup looks posted on Instagram, consumers are on the hunt for products that enhance rather than cover up or transform their features.
“By no means does this mean that consumers have stopped wearing makeup,” she said. “However, I believe there is also a deeper change happening in that consumers are actively using their buying power to choose brands that they feel have an authentic voice and story, and in a lot of cases that means buying a product from an indie brand.”
There already are hints of improvement — the result of plans put in place by retailers and manufacturers over the past year. Lip category sales, for example, were up 1.5%, according to IRI data for the 52-week period ended Feb. 24. For the first time in five years, the nail care segment showed a small increase at 0.6%. Cosmetics accessories rose 2.4%. Other segments with the broader categories showed more success, such as a 34% uptick in sales of lip treatments, continued interest in brow makeup with sales expanding 18.2%, and a 27% jump in artificial nail volume.
Also, efforts to burnish the image of mass beauty could be paying off, Wissink said. “Unit sales are tacking below dollar sales for each category, implying an ongoing trade up into masstige,” she said.
Brands spent the past year upping their game with new products, many quickly brought to market to keep up with specialty and direct-to-consumer foes. They hope efforts will pay off.
Already there is reason to celebrate at e.l.f. The brand, once the darling of the industry, had some hiccups last year. Swift actions helped the Oakland, Calif.-based company rebound. E.l.f. unveiled a program, called Project Unicorn, that involved new packaging and fresh shelf space strategies.
Those moves already captured the attention of retail analysts. Wissink said that sales have “meaningfully improved.” She also said that e.l.f. focused its presentation on three to four most popular categories, including primers, brushes and eye products that separated it from competitors.
Although John Irvine, national sales manager for Beauty 21, agreed mass has been challenged, he said his company has bucked the trend. “Due to strong collaboration with our retail partners, our L.A. Colors business was up 17.6% in dollars driven by increases in all subcategories —eye, face, lip and Nail. Our outlook for 2019 remains strong across all categories.” He added L.A. Colors is the number sixth in units sold in all mass cosmetics.
“Our model of building on-trend, high efficacy, and high value product resonates with the consumer,” he said.
Eyes also are on Milani as it builds out an executive team expected to help broaden its reach. Milani has long had a stellar reputation for its inclusive and quality cosmetics. The new team in place has high-wattage beauty power. Most recently, David Berk was named chief financial officer. He joins Grace Ray, who came to the Gryphon Investors-backed Milani last June from Living Proof. Also, Milani scored a coup with the hiring of Wang as chief marketing officer from Wet ‘n Wild.
“You will see us continue to build out our eye category in the second half of the year with new items that showcase Milani’s signature high quality, and also have been designed to capture one’s attention visually,” Wang said.
Revolution Beauty, a newcomer to the U.S. market, is making a mark after becoming a leader in the U.K. The brand doubled its space in Ulta Beauty with additional room awarded for sibling brands Revolution Pro and I Heart Revolution, launching in early August. Revolution’s viral hit Conceal & Define concealer extended its conealer and foundation shade ranges to 50 in January.
“We have the ability to react quickly to create the products our consumers are passionate about and are fortunate to have a great partner with Ulta Beauty, who fully supports our fast beauty model and embraces our entire portfolio of brands,” said Shawn Haynes, the Revolution Beauty CEO of North America.
The mass market also caught onto the Fenty Effect when such major players as Revlon, L’Oréal and CoverGirl extended shade ranges to meet all skin tones.
L’Oréal, in particular, has consistently posted gains despite the fact that many heritage brands are declining. Some retailers singled out key items under various L’Oréal brands, including Age Perfect for L’Oréal, Maybelline Master Chrome metallic highlighters and L’Oréal Infallible Full Wear concealer, that are outperforming the market.
With color cosmetics sales soft, retailers are turning to accessories, which posted a 2.4% increase in sales in the most recent IRI period. The classification includes makeup brushes, artificial nails and lashes. Walmart officials said the chain does a big business in makeup brushes.
In nails and lashes, Kiss Products is rolling out nails that are slimmer and fit more snugly, and it is adding new lashes to its Lash Couture Faux Mink collection with the release of Lash Couture Naked.
Anna DeVita-Goldstein, Kiss senior vice president of global marketing, said, “Women want more volume and length, and it simply cannot be achieved with mascara.”
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