Boutique Beauty Is Booming

With hundreds of new door openings during 2015-2016, boutique beauty stores remain on a high growth trajectory. These vertically-integrated specialty stores offering an immersive, single brand experience and supported by obsession of younger generations, including millennials, are seeing expansion across all the countries analyzed in Kline’s upcoming Boutique Beauty Retailers: Channel Analysis and Opportunities report series.
 
These freestanding stores offer unique concepts, a fun environment, and highly knowledgeable staff. Unlike e-commerce, which is another strong channel, customers have the advantage of trying products and having in-store guidance. There is also no other direct brand competition like in department stores. “Boutique retailers offer a fun and interactive environment that isn’t found in other channels, which is appealing to younger, digital consumers,” notes Ewa Grigar, the study’s manager.
  
Realizing this new, engaging way of diversifying where their products are sold, many brands are opening their first doors or dramatically expanding their existing number of openings, particularly in Europe and the US.
 
·      British designer Burberry opened a high-tech beauty boutique in Covent Garden.
·      L’Oréal’s recently acquired NYX brand has grown from one store to 20 in a single year, while its long-established L’Oréal Paris brand opened its first branded cosmetics store in Paris in September.
·      In November, Estée Lauder debuted its first store with its millennial-focused collection, Estée Edit, in London’s Carnaby Street.
·      Even Bath & Body Works, which is already extremely well penetrated, added about 16 locations in 2015 and plans on opening 23 in 2016.
·      There is also fast expansion of retailers from abroad. Players, such as Israeli Sabon or Dutch Rituals, which is among the fastest growing retailers in terms of sales and door counts, have recently focused on international expansion.
 
“It is almost like a cult, the followership is often buying into the exciting concepts of these stores virtually more than the products themselves. The success of such stores depends on whether brands can keep up with the pace of younger consumers’ digital needs, as well as keep a store’s levels of innovation and engagement high,” said Kelly Alexandre, key analyst for the report.