Digitally-native Function of Beauty is going all-in on an omnichannel strategy.
After launching a version of its customized hair-care products at Target in Dec. 2020, Function of Beauty is now taking a similar approach to the U.K. and Canadian markets with retail partners Cult Beauty and Shoppers Drug Mart. The brand will enter the Canadian market at Shoppers Drug Mart in September, distributing in 1,100 stores and online. Like in Target, customers can select one of four shampoo and conditioner bases — straight, wavy, curly or coily — along with a recommended two out of 10 boosters to add to the products’ base formula. The same goes for shoppers of Cult Beauty, which is an online-only retailer. Function of Beauty also sells custom skin care, however, there are no retail expansion plans for that category, as of now.
“We have awareness and a customer base in the U.K., and we’re making a bet that they want to shop Function of Beauty in an even more accessible way,” said Alexandria Papazian, CEO of Function of Beauty. “Cult is an [online] player like ourselves, so we speak the same language, And there is a clear alignment of where their brand stands, who their customers are and their place in the beauty market.”
Papazian said two main takeaways from the initial in-store launch at Target confirmed the brand hypothesis that customized products can thrive in a brick-and-mortar environment. The first was a significant appetite for customized hair care, and the second was the control that bespoke products offer to consumers. Papazian said that, at Target, wavy and straight-hair bases are the most popular. Meanwhile, on par with the brand’s DTC observations, the top-selling boosters are volume, strengthening and shine. She declined to share what percentage of sales external retail partners are expected to account for in 2022 or 2023.
In response to why people would purchase a more limited customization offer from the online retailer as opposed to a fully customized product at the company’s e-commerce site, Papazian said it works for customers who are loyal to the retailer and also want to shop a less expensive version of the brand. For its part, Function of Beauty ships to 45 international markets. In the U.K., the limited customization base products are priced £12 ($14), compared to approximately £17 ($20) for 8 ounces on Function of Beauty’s DTC e-commerce site.
“Hair health priorities will continue to drive a preference for treatment products, while scalp health remains an area of interest,” said Maddie Malone, beauty and personal care analyst for Mintel, on the British beauty consumer. “Women show a willingness to trade up in this category, suggesting that hair care is considered an affordable luxury.”
Function of Beauty occupies a unique position in the beauty space, given it’s a fully customized brand trying to break into the brick-and-mortar and wholesale space. Its closest competitor, Prose, has remained online-only. Meanwhile, Walmart now sells customized hair care brand Strands, since August, with its own series of base shampoo and conditioners to mix with targeted boosters. Heritage brands like YSL Beauty and Clinique that sell in brick-and-mortar environments have also sought to develop more personalized and customized products, but these attempts have been limited in scope. Function of Beauty recently built a new C-suite, with Marianna Trofimova joining as the new CMO, Matthew Eberhart as the new CDO and Boyoung Lee as chief creative officer.
“There’s a tremendous risk when you take on an initiative like [brick-and-mortar]. It’s always a calculated risk, but [the key is] finding the right retail partner, so you never take that risk alone,” said Papazian. “Through exclusivity, both partners can come together to launch the brand in a compelling way.”
Cult Beauty has undergone its own significant changes in the past year. British company THG acquired the premium e-commerce retailer for $382.91 million in Aug. 2021 on a cash and debt-free basis. In April, Alexia Inge, co-founder and co-CEO of Cult Beauty, resigned. THG has had a turbulent time under the scrutiny of its corporate governance and path to profitability. Its public stock fell 90% between Jan. 2021 and August, when its height was $9.66 per share. THG also owns subscription company Glossybox, retailer Lookfantastic, and brands Christophe Robin, Perricone MD and ESPA. Within the U.K. beauty market, Cult Beauty has remained well regarded in the online beauty space by stocking niche brands and categories, leaning on creative editorials to promote its offerings, and avoiding discounting.