Drugstores and supermarkets are used to dominating the private label beauty market, but they’re losing out to a host of new rivals. It’s time for a strategy review. Here, Vivienne Rudd, Innovation & Insights Director, Beauty & Personal Care, and Sarah Jindal, Senior Innovation & Insights Analyst, Beauty & Personal Care, share three ways new private label brands are disrupting the beauty and personal care market.
1. BE PREPARED FOR COMPETITION
Drugstores’ and supermarkets’ private labels are being squeezed from above and below, with premium and budget labels chipping away at their online and in-store business. Currently, Amazon focuses its efforts on becoming a significant sales channel for name brands, but there are signs that the online giant is considering a move into private label, particularly after its acquisition of Whole Foods Market. Whole Foods’ private label beauty business is small but ripe for expansion and would provide a comfortable platform for an upmarket collection of natural skin and haircare products.
Smaller scale online retailers have already made the transition to brand ownership. Birchbox launched its LOC makeup brand in 2015, joined a year later by Arrow skin and colour cosmetics. The brand had the advantage of knowing the beauty habits and desires of its many subscribers and buyers, something shared by newer arrivals such as K-beauty importers Peach & Lily and Glow Recipe. Peach & Lily launched its own Good Skin Day sheet mask range at the end of 2016 and in 2017 created the Peach Slices beauty brand for CVS. Glow Recipe unveiled its own skincare collection in May 2017, which sold out on its day of launch.
2. MOVE BEYOND PRICING
Specialist beauty retailers are already creating tertiary private labels to introduce new concepts and add more personality to their offer, but they must be aware of stumbling blocks. Traditionally, private label products have been easy to pick out on the shelf with simplistic packaging and a ‘generic’ appearance lending an impression of lower quality. Times have changed as retailers seek ways to stand out against the competition and recognize the value of investing in private label products.
Brand incubators are popping up at large retailers across the category, with Target and Sephora serving as two main examples. The advantage of this type of incubator activity is in mining the field for innovation, supporting it from infancy and creating brands that target specific consumer demographics to build a well-rounded and robust product offering. You Are Amazing, an incubator brand at Target, offers an alternative to the Bath & Body Works crowd with more affordable prices and colourful, graphic packaging. Kendo, started as part of Sephora, now operates as a standalone entity and has fostered and launched several successful brands, some of which have gone on to be purchased by multinationals.
3. GO WIDE WITH DIGITAL STRATEGY
Online marketing strategies give private label brands the real estate required to create a brand story and demonstrate personality that resonates with their target consumer. Younger shoppers use online predominantly, so having a digital presence is critical, and the ability to leverage customer data is important when so many brands are competing for shelf space.
To capture the youth market, private label brands will have to incorporate social media shopping into their multi-platform retail model. This will call for seamless shopping experiences that modify the core brand image to suit each medium. For example, Sephora and Boots both have added shoppable social media by smoothing the path between Instagram posts and product payment pages. Drugstores can also unlock the potential of their young, beauty-hungry shoppers by creating their own brands for social media stars and vloggers, such as Target’s agreement with Zoella, a UK beauty vlogger.
Vivienne Rudd, Director of Global Insight & Innovation, Beauty & Personal Care at Mintel, has been writing about the beauty industry for more than 20 years. The former editor of European Cosmetic News and Cosmetics International, Vivienne has travelled the world, interviewing leading industry executives and reporting on corporate, consumer, marketing and product innovation developments.
Sarah Jindal is Senior Innovation and Insights Analyst, Beauty and Personal Care, at Mintel. In her role she regularly interfaces with key beauty clients and lends her expertise developing ingredient technologies for beauty and personal care.