Online sales continue to surge, but store-based retail still holds sway with shoppers. At in-cosmetics North America in New York City, Kayla Villena, senior analyst, Euromonitor International, gave a presentation entitled “Where Do Consumers Shop for Beauty?” In her presentation, she spoke about the current beauty and personal care landscape and winning retail strategies.
 
Euromonitor estimates global beauty and personal care sales topped $488 billion last year. The industry grew 6% in 2018 and is expected to grow another 6% each year until 2023. Key megatrends that are driving the industry, according to Euromonitor, include ethical living, healthy living, personalization, premiumization, shopping reinvented and striving for authenticity.
 
Most consumers still purchase beauty and personal care products in-store, but brick and mortar operations are quickly losing ground to non-store retailing. Internet retailing in particular is driving non-store retailing in Asia Pacific and North America.
 
Food and mass merchandizers are the largest distributors in the industry, but the Euromonitor presentation focused primarily on the strategies employed by beauty specialist retailers, drugstores and parapharmacies, department stores and internet retailers.
 
Beauty Specialist Retailers
 
Driven by “shared ethos” shopping, beauty specialists provide a consistent environment among like-minded brands. Offering engaging experiences is one way that beauty specialist retailers seek to attract consumers. For example, many beauty specialist retailers host beauty masterclasses in their stores. Some companies, like Sephora, are even engaging people at home. Sephora has launched an app for Amazon Alexa that provides beauty tips.
 
Exclusives and collaborations are popular among beauty retailers right now. e.l.f. Beauty recently collaborated with Nabella Noor for a product that was exclusively available at Ulta Beauty stores. Related to exclusives are accelerators and incubator initiatives, which are a great way for companies to support emerging brands and create more niche or exclusive items that may entice consumers.
 
Brands in this space are trying to win by leveraging personalization, qualifying for attractive certifications and introducing premium private label products.
 
Drugstores and Parapharmacies
 
Drugstores and parapharmacies are focusing on driving consumer engagement by offering experiences and services. Wellness services are offered at retailers such as CVS Pharmacy and Walgreens. Some new CVS stores include a Health Hub, a wellness center that offers blood-tests and health screenings, among other services. Walgreens is taking an approach that involves private label products. They offer their own line of Walgreens cosmetics and personal care products and have even entered into a partnership with Kroger supermarkets to expand the distribution and availability of these products.
 
Another major strategy of drugstores and parapharmacies is taking advantage of micro-trends. A few years ago, these retailers were quick to hop on the K-beauty trend when it was becoming popular. CBD is the current big trend among retailers (and everyone else).
 
Department Stores
 
Department stores have posted notoriously weak sales for the past several years, mainly due to the rise of beauty specialist retailers and internet retailing, but there has also been some signs of recovery. “Consumer purchasing habits of skin care still favor brick-and-mortar,” Villena said. Euromonitor suggests that department stores shift focus from smaller underperforming categories like sun care, and bath and shower products to main beauty categories with high growth potential.
 
Like the other retailers, department stores strive to create engaging experiences to attract consumers. Macy’s in Chicago, for example, offers curated pop-ups which create a feeling exclusivity and are a fun way to catch the attention of consumers with limited-edition offerings. A recent pop-up shop at Macy’s coincided with the back-to-school season.
 
Internet Retailing
 
Gains in the internet retailing space are greatest in skin care, but hair care is growing, too. Internet retailers are disrupting the industry with digital offerings, such as AR, VR and AI, which offer engagement and unparalleled convenience. Online exclusivity with third-party retailers, like Lady Gaga’s recent release, are also driving people to internet retailers.
 
Amazon recently experimented with platforms specific to certain segments. Other retailers have found success in creating subscriptions based in personalization. Moving forward, internet retailing will remain the fastest growing retail channel, followed by specialist beauty retailers, although apparel retailers offer some new competition. Euromonitor forecasts 13% annual growth for internet retailing sales of beauty and personal products, adding $10 billion in sales by 2023.

Successful retailers are offering private label products, curation, exclusivity, digital engagement, wellness services and experiences in an attempt to get ahead in retail. What are some solid strategies you can employ to get ahead? According to Villena, brands can showroom to leverage brand education and human touch, host pop-ups to introduce newness and experiences, collaborate with companies that overlap with their target consumers and incentivize through loyalty programs. Retailers can strengthen experiential, immersive retail, consider experiences that overlap into other industries, expand omnichannel strategies, personalize offerings and outreach and leverage sustainability.