How specialty retailers are shaping the new color cosmetic landscape

Such has been the success of both Ulta and Sephora in the US market in recent years, that according to a recent study* by market researcher TABS Analytics, gains in the color cosmetics have been mostly attributable to these retailers, and have even eaten into online sales.

Indeed, the US retail market tends to be the fastest paced and the trends set in the color cosmetics category invariably trigger similar patterns in other major markets in Europe and Asia Pacific, which is why it's worth focusing in on to also get a global perspective.

What is underlined by the research is the fact that the mainstay consumer is the millennial generation, and this is a consumer that wants the distinctive, creative and innovative type of products that are often being marketed by the more reactive and forward-thinking indie brands.

Why are the specialty retailers winning?​

Cosmetics Design spoke to Dr. Kurt Jetta, CEO at TABS, to find out why Ulta and Sephora are setting the pace for the US color cosmetics category.

“They provide lots of selection and offer many new and innovative brands not available in the mass market,”​ said Jetta.

“Their focus on Beauty gives them an advantage vs. mass market retailers that have other categories competing for their attention.  Ulta, in particular, offers both Specialty brands and Mass Market brands, and the majority of consumers want and buy both.  Both retailers offer an upscale experience, which is important because the majority of heavy buyers see these purchases as indulgences.”​

Millennials hooked on color cosmetics​

The TABS research also emphasizes how millennial women are really hooked on buying color cosmetics, with a visit to one of these specialty stores invariably necessitating a shopping basket, such is the volume of purchases.

“Our research shows that the average buyer purchases five brands in a year, and the number goes to 8 for heavy buyers.  Experimentation is a big part of the Beauty shopping experience, and millennials, more than other shoppers, are more likely to experiment with new brands.”​

But Jetta points out that it has not only been the major specialty retailers that have been a part of the growth in the US color cosmetics market of late, Target has also played a part in the growth, which he believes is attributable to a broad selection of mass market and speciality brands, the common denominator between all three retailers.

 Color cosmetic consumers have no brand loyalty​

Jetta also warns that color cosmetics consumers are a fickle breed, and suggests that in the next three to five years there is likely to be a big swing in the most favoured brands, as they look out for the next big innovations.

 “There is an interesting phenomenon with many of the younger shoppers, in that favorability for the most popular brands diminished among these consumers. There is an ethos of finding the new, undiscovered products and brands,”​

Jetta also explains that the specialty stores are most likely to profit from this trend, because they are in a position to react fast to it.

  “The Beauty Specialty outlets have an easier time of stocking them.  You really see this ethos on the Beauty blogs, and 47% of the Heavy Shoppers use them to make choices,” Jetta said.

A consumer that is almost impossible to please​

But Jetta warns that because color cosmetic consumers are almost impossible to establish any long-term loyalty with, business strategies have to carefully incorporate this.

 “The one thing that could derail success is if retailers start to focus on their private brand or proprietary brands.  There is nothing they can do to capture the “loyalty” of these shoppers.  By their nature of experimentation they like to bounce from outlet to outlet,” ​said Jetta.

So what’s the best way to tackle this problem?​

“The goal should be to convert as many potential buyers into actual buyers and once converted maximize their purchases.  Brand selection and innovation is the key to accomplishing this.  There is more upside to a retailer cycling in 2-3 new brands for their shoppers to try vs. trying to develop their own brand,” ​he concludes.

*Conducted in late 2015, the survey results highlighted how the millennials are driving this market and also the fact that too much choice means that online purchasing is confusing and does not allow consumers to sample the products personally.