CVS is following in the footsteps of other mass retailers by overhauling its beauty and skin care departments to appeal to more trend- and health-conscious consumers who are increasingly drawn to niche brands.
The company introduced more than 2,800 new products to the space in 2016, and has since launched a CVS-exclusive line called Enlite and rolled out K-Beauty-themed sections to over 2,100 doors. The chain continues to sell its older proprietary lines like MUA Makeup Academy and Nuance by Salma Hayek, which received a brand refresh earlier this year.
It’s also taking notes from specialty beauty retailers by remodeling its beauty and skin care sections to feature more prominent, streamlined displays of new product, implementing a “Beauty on the Go” section near the checkout line that evokes the travel-sized product cubbies seen in every Sephora, re-training its beauty consultants and adding an Essie nail polish bar in 1,500 stores.
“This category ties in with the way millennials shop, which is experience-led,” said Katie Smith, a retail analyst at Edited. “Retailers like Sephora have really set the bar with their store layout, testability of their products and rewards scheme.”
But CVS is looking beyond the obvious touch points for keys to its success, including the burgeoning online beauty conversation and the foundations of cult-followed companies like Glossier and Peach & Lily. For its new Enlite line — which was manufactured by Maesa, the industry stalwart responsible for brands like Flower Beauty — the company looked to social media for inspiration.
“We started doing some ‘social listening’ and after several months of hearing what influencers and enthusiasts were talking about, we assembled a collection of hero items that are effective and addicting,” Renee Ryan, Maesa’s vice president of marketing and product development, told WWD at the time. All of the products, which include the Clay Time Deep Cleansing Treatment Mask and the Spot Eraser Hyperpigment Potion, retail for under $23.
CVS is introducing K-Beauty products to court new customers
For its K-Beauty HQ initiative, first announced in late March, CVS worked with Alicia Yoon, the trailblazing founder of the online beauty shop Peach & Lily, to pinpoint 100-plus of the best products for the retailer to sell, featuring brands like Frudia (a waterless, fruit-based collection) and ElishaCoy (made with a CVS first: snail mucin). Yoon also worked with the company to launch an offshoot of her namesake line, known as Peach Slices.
Like Target before them — which announced in January that it would be overhauling its chemical strategy to eliminate harmful ingredients by 2020 — CVS is also cleaning up its assortment. Hoping to beat Target’s timeline, the company vows to remove seven chemicals, including parabens and formaldehyde, from all of its private-label beauty and skin care products by 2019.
“Beauty is one of the few industries experiencing growth in a stagnant retail market,” said Becca Edelman, a research associate at L2. “The industry is a bright spot and potential growth channel for retailers because it remains an experiential product category where consumers want to touch and see products before they buy.”
Indeed, Research and Markets found the beauty and personal care sector to be worth $433 billion in 2016 and estimates that it will reach $699 billion by 2023. Euromonitor’s latest research also found that the premium sector continues to outperform the mass offering, growing at roughly 6 percent and providing greater incentive for chains to elevate these sections of their stores.
Although health and beauty only accounts for half of CVS’s front-end sales right now, the retailer hopes these changes will drive that number to 80 percent.
Duane Reade had a head start with this market, as the exclusive U.S. retailer of the U.K.’s popular Boots No7 products and a host — alongside your usual drugstore finds — to upscale skin care brands like Avene and La Roche-Posay since 2009. “I think the visual cosmetic displays at Duane Reade are pretty nice and have great lighting, [too],” admitted Kathleen Hou, a beauty editor for New York Magazine’s The Cut.
“Consumers want to feel like they are getting access to products that are not harmful to their health or the environment, and desire products that feel fresh and authentic,” said David Pierpont, the vice president of performance media at the marketing agency Ansira, of CVS’s efforts. “These changes are not just a smart move, but one of survival.”