Beauty Report: Category offers big money for private 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.
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.