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Some things are just a tough sell online. Traditionally, makeup and fragrances have fallen squarely in the category of goods that consumers want to sample in person. Yet even this industry may not be immune to the pandemic’s effects on consumer behavior.

Major department stores like




got around a quarter of sales through e-commerce channels in the fiscal year ended Feb. 1. Cosmetics retailer

Ulta Beauty,

however, derived only 13% of its sales online.

Yet e-commerce sales are growing fast at Ulta: by 200% in the quarter ended Aug. 1 compared with a year earlier. Even when stores had fully reopened, online sales were up 90%, hinting at some e-commerce stickiness.

This might pose a dilemma for beauty retailers. Push hard on e-commerce and they risk making consumers too comfortable with online shopping, potentially lowering the barrier for online competition and rendering their store fleets obsolete. A similar dynamic has played out with apparel, for example, as newer competitors flooded the market, notes

Simeon Siegel,

an analyst at BMO Capital Markets.

On the surface, Ulta Beauty’s decision to place its shops inside Target stores and Sephora’s plan to set up inside Kohl’s department stores look like bets on traditional bricks-and-mortar. But look more closely and they are also smart hedges against an online future. These setups require less resources than stand-alone stores and also include an online component, as




will be showcasing Ulta Beauty and Sephora’s products on their websites.

The online share of sales of beauty products—defined as prestige products sold in department stores and specialty retailers such as


-owned Sephora—roughly doubled in 2020, accounting for nearly half of all sales, according to

Larissa Jensen,

beauty industry adviser at market research firm NPD Group. And yet, overall sales have declined. Through November, beauty product sales were down 21% compared with the same period of 2019, according to NPD Group data.

Still, consumers’ newfound familiarity with buying beauty products online could have far-reaching impacts. Even when consumers choose to go out to shop in person again, there is the risk they will treat bricks-and-mortar stores as showrooms—places where they try out products but ultimately transact online. That will be less of a concern if customers are going directly to those retailers’ websites, but a headache if they migrate elsewhere.


is dipping its toes into beauty, just as it has with a few luxury brands. The category is attractive: Makeup and fragrance tend to be high margin, small in size, popular as gifts and also something that needs replenishment. In 2019, Amazon announced a deal with Lady Gaga’s beauty product line.

Beauty retailers might take comfort in

Best Buy’s

example. The retailer was once known as Amazon’s showroom for electronics, but impressively managed to hold on to its market share through investing in e-commerce capabilities and creating a great in-store experience.

Ulta Beauty and Sephora can end up like Best Buy if they make the right moves now, or else face the fate of Barnes & Noble.

How will the pandemic affect America’s retailers? As states across the nation struggle to return to business, WSJ investigates the evolving retail landscape and how consumers might shop in a post-pandemic world.

Write to Jinjoo Lee at jinjoo.lee@wsj.com

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