Elle Morris, CEO, HMS Design06.15.17
Without a doubt, Amazon has become a global phenomenon. We are all used to logging in and placing our order – and voila, for most, our desires are delivered to our doorstep within 24 hours. Amazon has had a huge impact on traditional brick & mortar stores: Sears, Macy’s, Kohl’s, and J.C. Penney have lost billions of dollars in market value over the past 10 years. Why? In the fast-paced digital world, consumers can easily price-shop online, making brick and mortar a dinosaur in many cases. Many retailers clung to outdated store concepts and didn’t have the vision to diversify or update their merchandise/brands. To drive footfall, these retailers began to drop their prices and their profits declined.
As retailers lost their hold on the consumer from an in-store traffic perspective, Amazon became an increasingly popular option for consumers and redefined the shopping experience as we know it. As of December 2016, Amazon had a market value of $355.9 billion, which is bigger than Walmart, Target, Best Buy, Nordstrom’s, JC Penney, Sears and Macy’s COMBINED at $297.8 B. (source: Google Finance 2016).
The “Amazon-effect” is impacting how retailers are thinking about their customers, their stores, and merchandise. If they’ve learned nothing else, retailers now know they must up their on-line game if they are to be successful with today’s consumer.
This is all well and good for clothing and hard goods, but what about beauty? Beauty is the category that has remained somewhat of an exception. Beauty consumers still want and need consultation from the “pros” and they love an environment where they can experiment. Try before you buy, is the beauty consumer’s mantra. It’s an emotional purchase since it promises some sort of transformation – so seeing it to believe it and buy it is critical to the beauty consumer.
The on-going growth of Ulta and Sephora bear witness to the fact that beauty retailers seem to be immune (for now) to the Amazon-effect.
“Take companies like Ulta Beauty or Sephora. They are insulated from Amazon.com” say Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm headquartered in NYC. “Amazon can’t put makeup on you. They are doing something that Amazon can’t do. That’s a very big deal.”
Ulta and Sephora offer the consumer mini-makeovers and consultations. Their loyalty programs and gifts encourage the consumer to order online as well. So even if they can’t make it to their local Ulta or Sephora, they are incentivized to re-stock online so they receive their loyalty points.
How does this effect retail? Some retailers are stepping up their game – in larger Target and Duane Reade locations, beauty aisles are equipped with beauty consultants to help the consumer make the right choice. Macy’s is stepping up their in-store events with celebrity counter artists and has Blue Mercury taking a premier spot on their beauty floors. JC Penney has brought Sephora in under their roof.
Ulta has upped its game on Sephora by adding Drybar to its stores in 2016. Mary Dillon, CEO of Ulta Beauty, was recognized by the National Federation of Retailers as a Power Player in January of 2016. Given she came from U.S. Cellular prior to Ulta, this is particularly impressive. Ms. Dillon has managed to revamp Ulta’s loyalty program which now boasts over 12 million members and her strategy of opening 100 stores per year has her hot on the trail of Sephora and Blue Mercury these days.
For now, brick & mortar stores continue to be the venue for the beauty consumer. Until Amazon or some other online retail pioneer figures out how to the deliver beauty consultation and try before you buy via the Internet, my big bet is on the in-store experience.
About Elle Morris
As retailers lost their hold on the consumer from an in-store traffic perspective, Amazon became an increasingly popular option for consumers and redefined the shopping experience as we know it. As of December 2016, Amazon had a market value of $355.9 billion, which is bigger than Walmart, Target, Best Buy, Nordstrom’s, JC Penney, Sears and Macy’s COMBINED at $297.8 B. (source: Google Finance 2016).
The “Amazon-effect” is impacting how retailers are thinking about their customers, their stores, and merchandise. If they’ve learned nothing else, retailers now know they must up their on-line game if they are to be successful with today’s consumer.
This is all well and good for clothing and hard goods, but what about beauty? Beauty is the category that has remained somewhat of an exception. Beauty consumers still want and need consultation from the “pros” and they love an environment where they can experiment. Try before you buy, is the beauty consumer’s mantra. It’s an emotional purchase since it promises some sort of transformation – so seeing it to believe it and buy it is critical to the beauty consumer.
The on-going growth of Ulta and Sephora bear witness to the fact that beauty retailers seem to be immune (for now) to the Amazon-effect.
“Take companies like Ulta Beauty or Sephora. They are insulated from Amazon.com” say Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm headquartered in NYC. “Amazon can’t put makeup on you. They are doing something that Amazon can’t do. That’s a very big deal.”
Ulta and Sephora offer the consumer mini-makeovers and consultations. Their loyalty programs and gifts encourage the consumer to order online as well. So even if they can’t make it to their local Ulta or Sephora, they are incentivized to re-stock online so they receive their loyalty points.
How does this effect retail? Some retailers are stepping up their game – in larger Target and Duane Reade locations, beauty aisles are equipped with beauty consultants to help the consumer make the right choice. Macy’s is stepping up their in-store events with celebrity counter artists and has Blue Mercury taking a premier spot on their beauty floors. JC Penney has brought Sephora in under their roof.
Ulta has upped its game on Sephora by adding Drybar to its stores in 2016. Mary Dillon, CEO of Ulta Beauty, was recognized by the National Federation of Retailers as a Power Player in January of 2016. Given she came from U.S. Cellular prior to Ulta, this is particularly impressive. Ms. Dillon has managed to revamp Ulta’s loyalty program which now boasts over 12 million members and her strategy of opening 100 stores per year has her hot on the trail of Sephora and Blue Mercury these days.
For now, brick & mortar stores continue to be the venue for the beauty consumer. Until Amazon or some other online retail pioneer figures out how to the deliver beauty consultation and try before you buy via the Internet, my big bet is on the in-store experience.
