It’s a Beauty Revolution!

The beauty sector is booming with innovation. The most dramatic beauty sales growth comes from the direct sales channel, up over 13%, which includes e-commerce, social selling brands, and home shopping networks. Specialty stores, which include cosmetics specialty and vertically-integrated brick-and-mortar stores, advance at 9% in 2017. These two channels combined account for an estimated almost one-third of total beauty sales. They also include the top four fastest and above-market average growth subchannels, according to Kline’s recently-published Beauty Retailing USA: Channel Analysis and Opportunities report.
 
“Traditional department stores, in a quest to reverse declining sales and attract the younger generation of experimental consumers, are transitioning to become more competitive with e-commerce by employing more technology,” comments Donna Barson, senior consultant at Kline. “However, it is specialty retailers that are at the forefront of the retailing changes, attracting consumers by developing more engaging formats and more personalized customer experience. The retailers on both sides are now adapting. Traditional retailers are utilizing more in-store technologies while once online-only exclusives, such as Glossier and KKW Beauty, are establishing pop-up or permanent brick-and-mortar retail stores, to have a better dialogue with customers.”
 
Brands that continue to launch their own boutique locations are also joined by newcomers.
 
Digitally native brands lay out strategies to utilize pop-up shops to create meaningful experiences and learn more about their target consumers, and possibly even test locations for permanent stores, while introducing the brand to a new audience. Glossier has successfully implemented this strategy and opens another permanent location in 2018. Serious about its expansion, Glossier also acquires a tech company, which is another big trend that continues into 2018 where retailers are investing in tech firms.
 
Most recently, Macy’s made two notable investments that can be used to enhance pop-up themes by creating more experience-based concepts in stores. Nordstrom also makes two technology acquisitions in March 2018.