Experts prescribe remedies for ailing beauty sales in languishing chains.
For many shoppers, the average mass-market beauty department is one big yawn. Retailers have elevated the assortment, but clunky, overstocked displays make finding many products difficult. Shoppers know just what to expect when they walk into their local chain store, and that’s the problem, said retail experts polled by WWD. The sameness across retail nameplates is prompting consumers to look elsewhere for beauty. For the first time in years, department and specialty store beauty sales are growing faster than mass.
According to data from IRI for the 52-week period ended Sept. 6, in multiunit stores, most beauty category sales expanded an average of 4.5 percent over the year prior. While that shows some improvement over 2 percent inclines in the first half of 2015, it is below the 7 percent increase in prestige recently reported by The NPD Group.
That’s a tough reality given beauty products produce the second largest portion of sales in drugstores behind pharmacy, and the category ranks within the top five departments at discount stores. Consumers are looking for change.
For years, chain stores have presented beauty in much the same way, with cosmetics brands lining one wall, and skin- and hair-care and bath products filling rows and rows of shelving. They are only occasionally interrupted by photos or graphics.
“Build me my magic box,” that’s what consumers are clamoring for, according to in-depth consumer research just completed by WSL Strategic Retail. “We’ve spent the last 10 years worrying about logistics or the implication of digital. But the reality is, 90 percent of sales are still in a store. People think about digital as a black box, they think about stores as a place to exercise and mingle with people,” said Wendy Liebmann, the founder and chief executive officer of WSL. “We’ve left the box to itself and shoppers are calling for change.”
That’s the clarion call. But a mind shift could be a challenge. “It’s tough for mass [merchants] to change up the way products are merchandised,” said Ben Bennett, cofounder and chief creative officer at Hatchbeauty. “Success is measured by dollar per square foot with products packed in rows in the aisles.”
Bennett, along with several other creative thinkers, suggested retailers station beauty at the center of the store, and have products build out from there.
The aisles and aisles of products, most of which are hidden behind bulky outer cartons, make beauty shopping more of a chore, said Jeanine Recckio, beauty futurologist of Mirror Mirror Imagination Group. “We expect the consumer to do all the work. We’re making shopping too hard and not fun to do….Retailers are so stuck on the numbers that they’ve forgotten the experience.”
At the root of the problem is the enormous volume of inventory housed within the beauty department. “The model is built for visual impact,” said Joe Magnacca, a former drugstore executive who most recently was ceo of RadioShack Corp. “It’s excessive from an inventory point of view, with 80 percent of the sales coming from 20 percent of the stockkeeping units,” said Magnacca, who is credited with sweeping improvements during his time at Duane Reade and Walgreens.
Joe Bona, president of branded environments at CBX, a branding agency, agreed beauty needs an overhaul. “Mass-market retail has always been about ‘stack it high and keep the prices low,’ but beauty is bigger than that,” he said. “People go out of their way to shop at, say, Nordstrom or Sephora because these are sumptuous environments with elevated levels of service. These are places where women can relax and take care of themselves.” Bona envisions an oasislike approach where retailers jettison prosaic beauty aisles for more theatrical space. “You want women to cross the threshold, smell pleasant fragrances, hear soothing music, see softer lighting, and just relax. You want them to go ‘Wow. This is like a spa.’”
Victoria Buchanan, a visual trends researcher at The Future Laboratory, said there is simply too much stuff for shoppers to peruse. In her view, rethinking the beauty department hinges on the idea of curation.
Dylan Lauren, founder and ceo of Dylan’s Candy Bar, also called for an edited approach, and a more inviting environment. Recalling the idea behind Dylan’s Candy Bar, she said, “I wanted my customers to experience candy differently. Our mission was to awaken the inner child.” Mass merchants could do the same with beauty with a leaner assortment, enticing packaging, better lighting and digital images, she said.
Enticing the Millennial consumer is a must for the mass business to turn around. Not only are Millennials quickly becoming the biggest demographic group, they have a halo effect on other age segments, especially Baby Boomers who bristle when pegged as old and stodgy. “Millennials are drawn to experiences that involve their peers and friend endorsement. They want instant feedback on what they purchase and approval by their social followings. Playing to those elements is key for discount beauty retailers to draw in this audience,” said Amy Levin, founder of College Fashionista, a Web site popular with Millennials. She said current product displays cheapen the experience. Her advice: merchandise by occasion, such as brunch or a night out. Monetary rewards for those who spread the good word on a retailer can also sweeten sales.
Another hurdle to sales is that shoppers generally cannot try a product first. Betsy Olum, cofounder of Beauty Innovation Group, suggested offering samples of key launches, noting that most shoppers want to see, smell and touch a product before buying. “One of the most important things about beauty is being able to explore and play with the products,” said Olum, whose experience includes posts at Sephora and HSN.
Originally published in WWD.