Physical & Digital Retail Heads in New Directions

Click here….shop there…with hundreds of new doors opening in various formats, the expanding cosmetics specialty and vertically integrated stores, such as Ulta, Sephora, Bluemercury, NYX, Kiko Milano and e.l.f., which have grown at a compound annual growth rate of nearly 19% over the past five years, now account for an estimated 20% of total beauty market sales, finds Kline’s just-published Beauty Retailing USA: Channel Analysis and Opportunities report.

“While traditional department stores experience declining traffic and store closures, brick-and-mortar is not a dying breed, but a rising phenomenon of specialty retailers and vertically integrated stores that set trends, provide open-sell environments, offer solution-based approaches in digital formats, and enhance the overall consumer experience,” said Naira Aslanian, the study’s project manager.

Bluemercury has made headlines in recent weeks, opening its digitally-enhanced flagship location in New York City, with plans to open 40 more stores by the end of the year. In 2017, Sephora opens its largest store in North America in New York, and a few days ago its smallest 2,000 square foot freestanding concept store, Sephora Studio, as reported in Happi, opens in Boston. This concept is one step towards creating more curated and digital experiences for consumers in the real world. Alongside digital tools, increasingly demanding younger generations require one-on-one services, including 15-minute facials and 45-minute makeovers that drive consumers seeking a spa-like experience into stores.

Department stores, however, are not giving up. They’re mimicking tactics applied by successful multi-brands specialty stores to draw more traction. In early 2017, Bloomingdale’s launches the first Knockout Beauty boutique composed of prestige brands with a natural/organic slant.  Nordstrom’s beauty area continues to evolve, bringing in brands with limited distribution. Nordstrom also adds beauty concierges in remodeled locations to help guide consumers across brands, showcasing the top products in each beauty category. Neiman Marcus launches its Memory Mirrors to help consumers remember the steps and products used during the in-store makeover.

A different type of revival is evident in the person-to-person segment of the direct sales channel as well, found Kline in its report.