Specialty stores tap into digital for growth

By Simon Pitman

- Last updated on GMT

Specialty stores tap into digital for growth

Related tags Retailing

Specialty stores such as Sephora and Ulta have been ruling the beauty retail channel in the US in recent years, and a new report by Kline Group shows that digital technology is boosting their growth.

Latest figures from the market research group show that both specialty and vertically integrated beauty retailers have grown at a compound annual growth rate of 19% over the past five years, accounting for 20% of total beauty spend.

What is helping to bring consumers in to the stores is a broad selection of carefully curated product lines that also feature a lot of the freshest indie beauty brands.

Blending digital with traditional shopping

But beyond that, Kline’s report, titled Beauty Retailing USA: Channel Analysis and Opportunity, shows that as well as getting the format right in stories, the approach to digital technology has also helped to engage consumers.

“While traditional department stores experience declining traffic and store closures, brick-and-mortar is not a dying breed, but a rising phenomenon of specialty retailers and vertically integrated stores that set trends, provide open-sell environments, offer solution-based approaches in digital formats, and enhance the overall consumer experience,”​ comments Naira Aslanian, the study’s project manager.

Smaller, more boutique-style players that have added to the mix include Bluemercury, NYX, Kiko, Milano and e.l.f., but all have fused digital retail elements into their bricks and mortar concepts.

Bluemercury's artificial intelligence mirror

Bluemercury has made a particularly big splash in this area, having just opened up it’s digital-enhanced flagship store in New York City, with plans to open up 40 further stores nationwide by the end of this year.

The store is referred to as a ‘digital hub’ and also includes an artificial intelligence mirror that allows consumers to just walk into the store, zap any type of beauty product in front of it, then get all the digital information available, including ingredients listings, marketing information, reviews and even video content.

Sephora is also going for a more curated digital focus for its stores with the opening of Sephora Studio, in Boston, which, despite being the retailer’s smallest store in the US, has managed to pack in a big selection of digital services into the 2,000 square foot floor space.

Vertical and direct sales players

Meanwhile, vertical-orientated retailer/brand owners such as as NYX and e.l.f. are tapping into their younger consumer base by offering in-store digital enhancement such as NYX iPads that help create new looks and connect consumers with influences such as vloggers.

In response to the changing landscape proffered by these types of channels, older retail channels such as department stores and direct sales players are also responding with digital initiatives, evinced by the Nieman Marcus memory mirrors.

In the direct sales space, rising stars are tackling the established ground of players like Avon and Mary Kay, with players such as Rodan + Fields, Younique, Beautycounter, Ever Skincare, and Monat successfully tapping into a younger generation of consumer through social media.

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