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Beauty Report: Category offers big money for private brands
March 4, 2020
Source: Store Brands

More and more mass retailers are using private label as their latest weapon to win greater share of the beauty and personal care category, hoping that it will attract a more loyal consumer and greater profits down the road.

According to the Private Label Manufacturers Association, health and beauty store brands are worth roughly $16 billion, representing an 18% share of total category sales. And that’s a number on the rise, doubling since 2017, according to Euromonitor.

CVS Pharmacy, Walgreens, Target, Walmart, Aldi, Ulta Beauty, Kroger, Amazon and even Dollar General are among the mega retailers putting a fresh spin on beauty exclusives. The goal is to halt the migration of shoppers to specialty stores or online beauty purveyors.

To do so, there has been an overhaul in store brand beauty strategy — rather than merely mimic national brands, the beauty entries seek to fill white spaces in mass market assortments. Sure, there are still store brand alternatives to Head & Shoulders or Cetaphil, but the new breed of proprietary brands are designed to build loyalty to the retailer and fill an assortment gap.

“Traditional private label business, where the retailer’s name is front-facing on the package, is still relevant. However, we are seeing proprietary branding emerge in the space,” said industry consultant Ben Bennett. “Proprietary branding treats the business as a third-party business, with a brand name and often its own commerce and social media presence separate from the retailer. In many cases, the consumer is unaware that the retailer owns or is involved in the brand.” While national brand equivalents are still key, top retailers want innovation to rival upscale lines, according to Bennett.

Offering something different from the store across the street is paramount. “People can buy the same beauty brands at many other places now,” said Scott Oshry, chief marketing officer and partner at Maesa Group, which is behind Flower Beauty by Drew Barrymore, Target’s blockbuster Kristin Ess hair care, Dollar General’s Believe and the recently announced Hairitage by Mindy for Walmart. “The best way to drive people to stores is to give them something they can’t buy elsewhere.”

Another quest for retailers is to serve up products that address unmet consumer needs and the onus is on the suppliers to find these niches. “We always look to solve a problem for a retailer and bring value,” said Tracy Holland, the CEO of HatchBeauty.

To accomplish this, retailers are turning to a cadre of specialists that includes Maesa, HatchBeauty, Cosmax and Beach House Group, as well as other contract manufacturers. Realizing their main goal is to sell products, many retailers concede creation is best left in the hands of experts.

Social media also has been a great equalizer — retailers can promote their own brands without the need for mega marketing dollars. “An influencer with 10 million followers who mentions your brand can give you overnight awareness,” Oshry said.

Walmart, in particular, has been ramping up its first-to-market and exclusive strategy. Hairitage fuses two big beauty trends — a Walmart-only brand and influencer collaborations. The 16-SKU range was devised under the tutelage of Mindy McKnight, founder of YouTube channel CuteGirlsHairstyles. McKnight — who has experience with various hair textures because of her biological and adopted children — said the goal with Hairitage was to create a line of products that work for all hair textures.

Walmart is doubling down in exclusives ranging from Found, a naturally-positioned makeup line to two clean skin care collections. One is called Cleen Beauty from Beach House; the other is Earth to Skin, which was devised by Cosmax. There is also the homegrown ingestible brand in conjunction with Bobbi Brown called Evolution_18, which is a Walmart retail exclusive.

Target always has been an innovator in private labels, especially in fashion and home. Under the direction of Christina Hennington, senior vice president and group merchandise manager for essentials, beauty, hardlines and services at Target, beauty has moved to the front burner. A key example is the Maesa-developed Kristin Ess hair care range that has morphed into more than a $100 million business. Ess is a celebrity hairstylist who has handpicked the items which have generated a positive consumer buzz on reviews. “We partner with experts in their field to develop products that are first to market and can only be found at Target,” she said.

Walgreens has remodeled its beauty departments to move its homegrown products up front and center. The roster includes No7, Your Good Skin, Liz Earle and Soap & Glory. Walgreens’ documents have pegged private label beauty at 15% of the chain’s beauty sales.

Often house brands are being called upon to fill something a retailer doesn’t have — in the case of Amazon, the launch of Belei ushered it into skin care. Priced between $9 and $40, it offers Amazon a brand to retail between mass and class. Many skin care brands have been slower to add to Amazon’s roster, so it fills a white space.

It is a bold move that could accelerate Amazon’s progress to build out its beauty platform and national roster, according to Stephanie Wissink, equity analyst for Jefferies, which she notes has had “relatively slow” progress to date.

Additionally, PLMA director of public relations Dane Twining said private labels help court younger shoppers — a target of mass beauty merchants — who are “far less focused” on brand names.

Kara Trousdale, head of beauty for private brands at Amazon said in a statement that the brand is about spending less time and money on the hunt for the right skin care. “We took a simple, no-nonsense approach when creating Belei, developing products with ingredients that are both proven to deliver results and also offer customers great value for the quality.”

Not to be left out, supermarkets and dollar stores are looking to private label beauty as a traffic and basket builder. Trader Joe’s offers up its own creams, body butters, hair care and masks. Aldi wins kudos from families for its Little Journey baby essentials. Costco has turned to HatchBeauty to help it offer a premium hair care line in conjunction with celebrity hair-stylist Orlando Pita — something HatchBeauty’s Holland said the retailer was missing.

Even Dollar General jumped into the private label beauty sector with a line called Believe Beauty, codeveloped with Maesa that is sold in more than 15,000 of its stores. There are 150 makeup products that all retail for under $5. Maesa’s Oshry sees Believe as an avenue for Dollar General to dive deeper into cosmetics. Dollar General also sells Studio Selection, a range of hair and skin products.

Not all brands rocket to success. 7-Eleven added makeup two years ago, but visits to stores did not show it being currently stocked. CVS Pharmacy and Walgreens also have eliminated some of their homegrown logos over the years. And, as mass merchants seek to beat upscale merchants to consumers, department stores that include Hudson’s Bay, Belk and Saks Off 5th have cooked up their own house brands.

Sidebar: New Products
Amazon Extends into Private Label Skin Care
Amazon launched Belei, a line of skin care products offering solutions for various skin types and featuring ingredients with proven effectiveness.

The collection has 12 different items, including a retinol moisturizer and vitamin C serum, as well as products to address acne, fine lines and wrinkles, dark spots, dehydration, dullness and more. All Belei products are free of parabens, phthalates, sulfates and fragrance and are not tested on animals. Belei product bottles are made of post-consumer recycled resin and carton packaging is 100% recyclable.

Kristin Ess Launches Fragrance Free Collection
Kristin Ess has extended her Target-exclusive, eponymously named hair care brand with a Fragrance Free Collection. Currently rolling out is a line of seven products: fragrance-free shampoo, conditioner, styling products and hair treatments. “Fragrance can be polarizing,” said Ess, who noted that the line was developed in response to consumer demand for products sans scent.

She also freshened the packaging for the Fragrance Free line, making each bottle transparent — a move she also hopes will produce a gender-neutral image that will build sales among men and women. The range retails for under $15 and has names that include Soft Shine Grooming Cream, Detangling Tonic, Daily Cleaning Shampoo, Shine Enhancing Conditioner, Texturizing Paste, Deep Treatment Mask and Dry Shampoo Powder.

Dollar General’s Beauty Push
Dollar General launched Believe Beauty into more than 15,000 stores. Codeveloped by Maesa, the prestige-inspired line consists of 150 makeup items including foundations, lip and eye colors — all priced under $5.

The lineup features custom packag- ing and a 3-ft. freestanding display that Maesa likens to the type of fixturing found in Sephora. “The formulas in this line are the equivalent of those that would cost up to $19,” said Scott Oshry, Maesa’s chief marketing officer. Besides the Believe Beauty launch, Dollar General has been pushing deeper into beauty, recently upgrading the department look.

Maesa and Walmart Debut Hair Care Line
Walmart is rolling out Hairitage, a range of hair care products for all hair textures. Produced by Maesa in collaboration with YouTuber Mindy McKnight, the 16 SKUs are at $7.94 each.

The formulas are developed with natural ingredients and considered clean, and the packaging was developed as sustainably as possible. McKnight, whose channel is called CuteGirlHairstyles, is the mother of twin influencers, Brooklyn and Bailey McKnight. McKnight’s biological children are white, but she also has two adopted children who are black which has given her experience with various hair types.

McKnight wanted a line where products could work for all and were marketed to people of all hair textures rather than having to make them purchase separate products.

Earth to Skin Focuses on Affordable Luxury
Cosmax introduces Earth to Skin — products with real ingredient and luxurious formulas that are clean and simple. Sold exclusively at Walmart, there are four collections: Super Fruits, Super Greens, Tea Time and Bee Infused. The entire collection is priced under $10. Products include cleansers, toners, serums and creams, “designed to layer weightlessly.” The Earth to Skin collection is featured in a special off-shelf display as well as in a new natural skin care area on shelves.

“We’ve really tried to offer something that will bring shoppers who are going elsewhere for these products into Walmart,” said Ketan Patel, senior vice president of development at Cosmax. “People would pay much more for this quality in specialty stores.”

Beach House Goes Cleen
Cleen Beauty is the latest Walmart-exclusive brand to hit the retailer with a focus on accessibly priced effective products. The line, which retails for less than $10, features powerful and premium formulas that omit parabens, phthalates, synthetic fragrances and dyes, SLS/ SLE, and mineral oil.

Cleen Beauty includes 14 offerings targeted to cleanse, treat and moisturize the skin. The line is formulated with such ingredients as açaí, vitamin C, blue algae, eggplant, grapefruit and avocado, the collection includes the Rosehip Jelly Face Cleanser, Vitamin C Papaya Glow Serum, Cooling Eggplant Eye Balm and Lavender Chamomile Night Cream.

All Cleen Beauty products are made in the USA, cruelty-free and vegan, as well as formulated for every complexion, gender and skin concern.

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