The Retailer Arms Race for Indie Beauty Brands
Who is the coveted MVB (most valuable brand) of the beauty industry? Rather than a brand name, the answer is a collective group: indie beauty brands. Formerly the underdog of the industry, the “up and coming” is here and taking beauty retail by storm. Now labeled as the voice of the people, indie beauty brands are quick in giving beauty enthusiasts the trends and innovation that they want, especially when compared to their mass beauty counterparts.
The small teams that make up these brands are able to get things done more quickly. From rapid-fire decision making, to developing a product, to implementing consumer feedback, indie brands are able to quickly churn out popular products because they have smaller teams and make their brand more attractive to consumers and retailers alike. According to The NPD Group, indie beauty brands have accounted for half of sales in the industry and 55 percent of the growth in luxury beauty in 2017.
Now, beauty retailers are finally catching on. In 2017, Forever 21’s sister store and beauty retailer, Riley Rose, opened its first stores filled to the brim with indie beauty brands. In August 2019, Ulta announced their new initiative ‘Sparked’, a place dedicated to indie beauty brands both online and in-store. Some of those brands include Uoma Beauty, Elcie, Zoeva and Love Wellness. Senior Vice President of Merchandising at Ulta Beauty, Tara Simon, tells Beauty Independent, “This new collection represents our understanding that our guests have an insatiable desire to ‘get it first,’ ...Sparked at Ulta Beauty exists to pique their curiosity and need for discovery with a mix of must-have brands and products.”
They year before in 2018, Ulta assembled an emerging brands team to identify key indie brands with growth potential. They now carry more than 20 indie brands. As part of their strategy, they plan to refresh their Sparked display for the holiday season in an effort to keep things fresh and grow their reputation as a place where indie brands can find more success.
Uoma beauty founder, Sharon Chuter, appreciates the attention Ulta is paying to up and coming brands. “I created my brand for the others: the misfits, anyone who has been told they aren’t enough,” she says. “Ulta has believed in my crazy concept and allowed me to tell my story. Some companies would tell you to go online first, but Ulta put us in 200 stores, and we already have a strong following, especially for our Say What! Foundation.” In the fourth quarter, Ulta reported as much as 7% of its merchandise was exclusive.
Similar to Ulta, both Sephora and Target have already made indie brands part of their retail strategy. In March 2019, Sephora announced ‘The Next Big Thing,’ a retail space devoted to indie brands like Major Glow and Melt Cosmetics. The retailer launched the initiative at their Times Square location and will roll-out nationwide later this year with the goal to continue to educate, personalize and provide great customer service.
2018 saw Target significantly overhaul their beauty department to include indie, women-owned brands like Coloured Raine, EveryHue, Hue Noir, The Lip Bar, and Violet Voss. According to the Business of Fashion, Target sold $18 billion worth of beauty products and household essentials last year, more than Ulta and Sephora combined. This new retail model seems to benefit both the consumer and the brand. Consumers appreciate being able to try out brands that were previously only available online. Retailers who strike while the iron is hot benefit from exclusive partnerships with these brands.
Brands like Kylie Cosmetics and The Lip Bar, exclusive to Ulta and Target respectively, have become a point of differentiation for fans of the brands or those interested in trying their products. According to Beauty Independent, insiders familiar with Target’s beauty business say it’s expanding rapidly and as much as 70% of sales increases are attributed to relatively small brands. Nielsen data suggests that in 2018, cosmetic sales would have had negative growth if it weren’t for indie brands.
It seems like indie brands finally have a seat at the table and retailers are now more than ever motivated to give them a voice.