Retail Reconfigures

A Publication of WWD

OCTOBER 29, 2021

Retail ReconfiguresWho’s rising — and who’s not — in the great beauty retail

shake-up of 2021. For more, see pages 8 and 9. PLUS: Addison Rae’s strong feelings for fragrance and beauty’s biggest Astros fan.

ISSUE#72

2THE BUZZOCTOBER 29, 2021

Kn

ock

ou

t B

eau

ty p

ho

tog

rap

h b

y Ju

lie F

lori

o

¬ As the scales tip further toward at-home beauty treatments, celebrity aesthetician and Ziip Beauty founder Melanie Simon has rejiggered her offerings.

The aesthetician, who counts Margot Robbie and Jennifer Aniston among her clients, has rethought her at-home micro and nanocurrent device as consumers and clients alike focus on doing treatments at home. The business has benefitted from the at-home treatment boom, having grown 60 percent in the past year, with sales expected to double in the holiday season when compared to last year's, according to the brand.

This week, Ziip Beauty relaunched

its iOS app, which pairs via Bluetooth to the brand's devices. Users can then pick and choose between each program, which range from one-time facials to 30-day boot camps, and reprogram their devices accordingly.

Simon said the new treatment protocols are meant to mimic professional results more closely.

"In the beginning of the pandemic, it was like, OK, when are we getting back to work as aestheticians," Simon said. "This has continued to be the new normal, clients are incorporating Ziip into their home life, and I wanted to give people the best possible way to give treatments at home."

The brand's new treatments combine various different current wavelengths for optimal purported benefits, ranging from radiance to antiaging, and can target areas such as forehead lines and jowls.

Simon's app has seen 10 million downloads since it launched in 2015, and its clientele is equally as star-studded, with Kaia Gerber and Dan Levy among its devotees. The brand went into Goop last year, and is eyeing further retail expansion.

Ziip Beauty Relaunches App Ziip Beauty's aesthetician founder said the update was precipitated by lasting interest in at-home treatments. BY JAMES MANSO

¬ Knockout Beauty is opening a new, 1,200-square-foot space on Manhattan's Upper East Side.

The beauty retailing and services concept is the brainchild of Cayli Cavaco Reck, who started documenting her skin care routine via her Knocking on Forty Instagram account. Knockout previously operated a small store in Manhattan, on Lexington Avenue, but the new, expanded location at 1316 Madison Avenue, at 93rd Street, will include two service treatment rooms, as well as retail space. It is Knockout's largest location yet, Reck said.

"I definitely wanted to create something where there was a space where people could come and be and sit and feel comfortable and have those treatments. We used to do our treatments just behind a curtain —

now we have two full-size treatment rooms," Reck said. Those spaces will allow Knockout to bring its body treatment services, which are offered in Los Angeles and the Hamptons, into Manhattan, she noted.

"We never did them in New York City because we didn't have a full treatment room," she said. "I personally did not feel comfortable having people just drop trou behind a curtain."

Knockout will offer lymphatic drainage treatments, which it does using a cupping method, as well as a variety of facials.

The location is in the landmark Claremont building, which is covered in greenery, similar to Knockout's Hamptons and Locust Valley, Calif., stores. Reck said the spot is "cozy," and that the neighborhood has lots

of cute shops and restaurants, as well as schools.

"I always loved how neighborhood-y it is," Reck said, speaking about the location. "Diagonally across the street from the store there is an adorable little book store. It reminds me of that movie with Meg Ryan and Tom Hanks," she noted, referencing 1998 rom-com "You've Got Mail."

Reck expects customers to be locals who live or work in the area, as well as women commuting from downtown or Connecticut. "It's an easy place for them to get in to shop with us or see their aesthetician," she noted.

Knockout has long had a personal approach to beauty shopping and services, and offered virtual consultations even before the pandemic, Reck said.

"A lot of times, there's this idea of people being in a monogamous relationship with their retailer, which is important, but I think you have to earn that," Reck said. "How do you earn that with somebody — you earn that by showing up for them, by delivering results by giving great customer service by being present for them."

"Almost everybody that works with us works with a specific person on our team," Reck continued.

She plans to scale those levels of personal service using Knockout's franchise model. Knockout opened its first franchised store in Locust Valley, N.Y., earlier this year.

Industry sources expect the new Knockout location to do well, and noted that even with the 200-square-foot location on Lexington Avenue, the retailer did about $1 million in sales.

By The Numbers: Clean Beauty's Growth in the Mass MarketData from NielsenIQ shows sales in clean beauty overindexing the category's growth in the mass market.BY JAMES MANSO

THE CLEAN BEAUTY boom has gone mainstream.

According to data from NielsenIQ, the movement for free-from and natural products has hit the mass market. Growth in such products overindexed when compared to beauty and personal care sales, which grew 2 percent in the past year.

Anna Mayo, client director, NielsenIQ, believes the result is due as much to retailers as it is to consumers. "People have really taken the time and are educated on it," Mayo said. "There's been a lot of retailer push behind it, Sephora has a clean program, which is probably the most famous. Ulta has done a lot of work with its Conscious Beauty program, and Target and Walmart have badges now."

Equally considered, though, are claims around sustainability — a hot-button issue Mayo expects to only gain more traction. "Where we really see things move in the future is around sustainability. Consumers have really adopted this mind-set of their products that are "free-from," and now they're looking for recyclable packaging, water-free packaging, refillable, and maybe products in glass packaging," she added.

HERE, SEE A SNAPSHOT OF CLEAN BEAUTY'S GROWTH,

ACCORDING TO NIELSENIQ.

1. Total beauty and personal care grew 2 percent in the past year.

2. Products free from parabens grew 3.6 percent, those free

from parabens and sulfates grew 5 percent, and those free from

parabens, sulfates and phthalates grew 13 percent.

3. In total, clean beauty grew 8.1 percent.

4. Of the most important product attributes, 40.2 percent of consumers look for natural

ingredients.

5. 17.6 percent of consumers look for products that respect the

environment.

6. 15.8 percent of consumers look for recyclable packaging,

while 7.9 percent of consumers look for reusable packaging.

7. Gen Z shoppers are 1.3 times more likely to

want to try products that are "environmentally friendly."

Beauty Bulletin

Cayli Cavaco Reck in Knockout Beauty's new

Upper East Side shop.

Inside Knockout Beauty's Newest Manhattan OutpostThe new location is the retailer's largest yet. BY ALLISON COLLINS

Ziip Beauty has rejiggered its app after seeing prolonged interest in at-home treatments.

Focusing on every angle, Indie brand founders will tell their stories: challenges, opportunities, and pathways to success! Speakers include:

LUCIANA COUTINHO

Moderator/Chair

luluble

DANIELA CIOCAN

Panel ModeratorAccess Beauty

Insiders

MALIKA JONES

KEBEDE

Brown Girl Jane

INDIELEE

Indie Lee & Co. Inc

JEANINE LOBELL

Stila Cosmetics

RONROBINSON

BeautyStat

ROBB AKRIDGE

Opulus Beauty Labs

JAMES MACPHERSON

Olaplex, Inc

INDIE 360 PROGRAM

WWW.NYSCC.ORG/SUPPLIERS-DAY

REGISTRATION NOW OPEN!

PAVILION SPONSORS INCLUDE:

NYSCC Suppliers' Day brings you a Week of Beauty - highlighted by an "INDIE Immersion." Experience the innovators from ingredients to independents who are creating tomorrow's brands in beauty and personal care!

Over 400 exhibitors covering 75,000 square feet await. Make your plans now to safely attend the definitive North American sourcing event in the beauty capital of the world.

@ NYSCC SUPPLIERS’ DAYNOVEMBER 10-11, 2021

JACOB K. JAVITS CONVENTION CENTERNEW YORK CITY

INDIE 360 PAVILIONPARTICIPANTS INCLUDE:CHEMIST CONFESSIONS

DR J’S NATURALS PCA

HEAR ME RAW

IMMUNOCOLOGIE

OPULUS BEAUTY LABS

ORGANIC APOTEKE

SKIN MODERNE

URBAN HYDRATION

Bossing Up features black-owned businesses creating innovative brands for our neighborhoods and communities.

BREE & MILLYEXUDING WELLNESSJUST BECAUSE HAIR NYCLOVELY LEO SKINCAREMADAWES HAIR PRODUCTS

CHECK OUT THESE INNOVATORS:

BOSSING UP

NEWS FEED

Tk Caption

Tammy Fender Holistic SpaHolistic wellness pioneer Tammy

Fender’s approach to growth

follows the same philosophy as her

product formulas: organic. While

others race for world domination,

the Palm Beach-based Fender has

taken a steady approach to building

her business. But even this slow

beauty believer couldn’t resist the

opportunity to expand when the

Opal Grand Oceanfront Resort &

Spa in nearby Delray Beach offered

its 8,000-square-foot spa with

Atlantic views.

“I realized that I could offer so

much more in this space and expand

my wellness message,” said Fender,

whose second spa and retail location

opened in October. “The original in

West Palm Beach is an intimate jewel

box, whereas Delray has room for

energy modalities like meditation and

other workshops in addition to our

signature treatments.”

The spa and wellness center’s

separate entrance with valet parking

is as inviting to her large local

following as to hotel guests. Inside,

they’re greeted by a concierge, as well

as a full-service hair and nail salon

and large retail area. Her niche magic

happens upstairs, however, where

eight treatment rooms dedicated

to various services like facials and

scrubs also feature amenities such as

salt walls, an infrared sauna and a

crystal light therapy bed. The second

level also houses a coed relaxation

lounge and a spacious outdoor

terrace, both overlooking the ocean.

“We offer early morning meditation

in the relaxation lounge and use

the terrace to host guest speakers

and other programs in the holistic

realm,” said Fender, of the growing

demand for education. “The last year

and a half have been extraordinary

for wellness. So many people have

realized the importance of health.”

Design emulates her original spa’s

calm, simple aesthetic through blond

wood, oodles of natural light and

white uniforms, which she describes

as humble in the ashram sense.

Fender is a huge nature lover, too,

so elements favor fresh botanicals

and healing stones from a quartz

crystal meditation room to honoring

the resort’s opal theme.

“We worked with the vibration of

the plants’ essence, healing stones

throughout and the call to the ocean

to bring that energy into the space.”¬ 10 North Ocean Blvd, Delray Beach, Fla.; 561-278-8111.

CocowalkA slew of beauty and wellness

concepts are part of Cocowalk’s

grand reinvention. The open-air,

lifestyle center in Miami’s Coconut

Grove signed leases for Bluemercury,

Glosslab, 3D Brow Studio, holistic

fitness center Antidote Wellness Labs

and SkinLab by Barba Skin Clinic,

the Florida foray of SkinCeuticals’

SkinLab through a partnership

with Dr. Alicia Barba. Barba, a

Miami dermatologist who sits on

SkinCeuticals’ advisory board, has

used the line at her decade-old clinic

for noninvasive skin treatments

in the same building as her medical

practice. Her second clinic opens

in November.

The 2,000-square-foot clinic with

4

OCTOBER 29, 2021

South Florida's Beauty BoomThe area’s beauty and wellness scene is heating up just in time for the return of the snowbirds. Here, a look at new spas, stores and fitness and wellness centers throughout the region. BY REBECCA KLEINMAN

Tammy Fender in her new Delray Beach spa.

Ve

gan

Fin

d B

od

y p

ho

tog

rap

h b

y D

an

Cu

tro

na

; Ra

che

l Ap

fel G

lass

ph

oto

gra

ph

by

Ma

tt O

live

r

six treatment rooms will feature

SkinCeuticals’ signature treatments,

in addition to her own. “With

so many K to 12 schools in the

neighborhood, plus University of

Miami nearby, acne treatments will

be a focus,” said Barba. Patients can

also pick up prescriptions for acne,

customize SkinCeuticals products

and touch up their makeup after

treatments with Dermablend, the

only other brand carried here.

Launching in early 2022, Cocowalk

is Glosslab’s first of three Miami

locations; the hygiene-oriented,

membership nail studio also plans

to open in South Miami and South

Beach next year.

“Miami is filled with so much art

and culture, and we look forward to

giving the city's residents a chance to

share that art and expression through

their manicures and pedicures,” said

founder Rachel Apfel Glass.

Lynet and Paco Aspuru, owners

of Antidote Wellness Labs in Miami’s

affluent Pinecrest suburb, will open

their second location in March. The

couple also founded LIV Fitness

Clubs in Puerto Rico, but saw a void

in boutique gyms with a holistic

approach. They offer dietician

services for custom nutrition plans,

body analysis scans, metabolic

testing, classes that rotate running,

weights, climbing and boxing,

and recovery amenities such as

infrared saunas.

“Fitness alone isn’t enough, which

we especially saw during COVID-19,”

said Lynet.¬ 3015 Grand Avenue, Coconut Grove, Fla.

Vegan Fine BodyThey say it takes one to know

one. Steven Smith teaches business

management and leadership for

Florida Atlantic University’s College

of Business, but he’s also a longtime

vegan who turned his lifestyle into a

start-up that appeals to like-minded

and inquisitive parties. Vegan Fine

Body boutique launched a few

months ago in Boca Raton, Fla., with

a grand opening slated for November.

“I guess I have two full-time

jobs now,” said Smith, who straddles

his responsibilities by using his

entrepreneurial venture as case

studies in the classroom.

Smith learned a lesson about small

business the hard way, when he

opened the first, short-lived Vegan

Fine Body in Fort Lauderdale just

before the shutdown. It briefly existed

next door to his much larger Vegan

Fine Foods, a market and café that he

plans to reopen somewhere in South

Florida in 2022. Their concepts were

inspired during his travels to Berlin,

where he discovered and fell in love

with the Veganz supermarket chain.

“We stand out because we’re

entirely plant-based versus just a

section for clean beauty like at Target.

Shoppers don’t have to sort through

items and read labels to make sure

there’s no animal testing and other

factors that are important to them,”

he said, of vetting 100 brands for

skin, hair and nail care, cosmetics,

supplements, fragrances, feminine

products, candles and other gifts,

and a small but growing section for

men’s products. “We offer about 2,000

skus that meet our clientele’s criteria.

They’re comfortable knowing we did

the homework for them.”

Since all that product can be a bit

overwhelming, especially for newbies,

he and Sara Kary, the company’s

president, whom he describes as

“the face of the store,” make it fun by

offering a glass of wine and sample

kits. She’s also the mastermind

behind the Sara Kary Signature Rose

Collection, whose face cleanser, face

cream, eye cream and toner retail

from $38 to $58.

“Many skin care brands’ ingredients

are too complicated, and just

because something’s vegan doesn’t

mean it’s healthy,” she said, of only

using four ingredients in her line.

“Everything is made from scratch

locally with ingredients from small

farms and herbalists.”¬ 5250 Town Center Circle, Boca Raton, Fla.; 954-368-2632.

Rachel Apfel Glass will open a new

Glosslab in March.

Vegan Fine Body has a cross-category offering.

A number of new beauty and wellness openings are planned for Miami's Cocowalk.

NEWS FEED 5

OCTOBER 29, 2021

6

OCTOBER 29, 2021

NFTS, THE TRENDY PIECE

of technology that can uniquely

authenticate digital goods, are clearly

having a moment across high fashion

and art, with transactions for digital

works pulling in millions across high-

profile sales this year.

While the uniqueness and rarity of

these digital products work for sectors

already steeped in exclusivity, the

applicability and opportunity in the

beauty sector has been somewhat hard

to pin down. 

Is it an extension of branding?

Product marketing? A bid for

customer loyalty? 

Perhaps all of the above — and

more — judging by Clinique’s latest

digital project, a trio of NFTs unveiled

earlier this month. The digital assets

symbolize the brand’s marquee

products, Moisture Surge 100H and

Almost Lipstick Black Honey, and the

company’s own identity and heritage. 

The NFTs represent (from left)

Almost Lipstick Black Honey,

Moisture Surge 100H and the

Clinique brand itself.

For the Estée Lauder company,

its "MetaOptimist" NFTs are more

than just a stab at hopping on a hot

blockchain trend. It's a stepping-stone

toward yet another buzzworthy tech. 

"We've been looking at what are

the next rising platforms to create

true experiences and what's the role

of these platforms," Carolyn Dawkins,

senior vice president of Clinique

Global online, consumer engagement

and product marketing, told WWD.

"So, just as much as we're all

obsessed with hearing what's

about to land on October 28, with

Facebook and the metaverse, and

where the metaverse is going — the

interim is NFTs. What we wanted

to make sure we were really clear

on was the role of this rising digital

platform," she said.

The metaverse is a vague term

that has generally come to mean

shared virtual environments that

can be accessed in various ways

— through connected eyeglasses,

phones, computers and more —

with immersive features that offer

a greater sense of presence than a

mere video chat or social feed. Silicon

Valley has been mulling it over

for years, but in recent months,

Facebook chief executive officer

Mark Zuckerberg has been waxing

especially enthusiastic, even going as

far as changing his company’s name

to Meta on Thursday.

Silicon Valley has been mulling it

over for years, but in recent months,

Facebook chief executive officer Mark

Zuckerberg has been waxing especially

enthusiastic, even making it a crucial

part of his company's latest earnings

report. The social media giant aims

to transform itself into a metaverse

company, and that has implications

for a new breed of social media,

e-commerce and consumer experience.

Dawkins' view of NFTs as a gateway

to the metaverse speaks to a broader

notion that such digital assets will

fuel commerce in the virtual world

— an idea Zuckerberg touched on in

Monday's earnings call. According

to the tech CEO, the company is

building an ecosystem that includes

AR and VR devices, a new operating

system "and digital commerce

platform," among other facets. More

details may be revealed or at least

hinted at on Thursday, at Facebook's

next AR/VR conference. 

In a metaverse situation, NFTs —

whether for a digital sneaker, 3D

designer dress or some other virtual

item that's verifiable, and therefore

ownable and sellable — are primed

for commerce.

Clinique apparently sees major

opportunity in that, though it still

remains largely uncharted territory

for beauty. In May, Look Labs cast its

fragrance Cyber Eau De Parfum as a

digital asset, and nail art has already

begun dipping its perfectly manicured

fingers into the tech. But apart from

individual works, there aren’t yet

examples of any sustained efforts by a

major beauty brand. 

Without concrete examples to

follow, the company had to carve

its own path forward. Dawkins

said it knew it wanted to create

something that was true to its brand,

prioritizing a “high tech meets high

touch” experience, so it used that

as a north star. 

“[We thought,] ‘How do we craft

something that's of value and that's

desirable in the market today, but turn

it into something that has meaning for

this consumer?’” she said. “So what

we thought was most interesting is,

there's a lot of currency and story out

there at the moment. And consumers

want to feel like they have a more

active part of the brand.” 

The MetaOptimist NFTs aren't for

sale, but will be awarded through

a social media campaign asking

consumers to share their stories of

optimism and hopes for the future.

The three winners will be announced

on Nov. 2 by global ambassadors

Emilia Clarke and Melissa Barrera on

the company's social accounts. They

will receive the NFT, the physical

Black Honey product and, in a twist

designed to deepen loyalty, a decade's

worth of product, meted out once per

year over 10 years.

The details matter, because they

are the company's way of translating

rarity — the hallmark of NFTs — for

the beauty business.  

“One of the things that I'm

convinced of is that the digital world

ultimately mirrors the physical world,”

said Michael Smith, chief information

officer at Estée Lauder Companies,

which owns Clinique. “That idea of

being able to have something unique,

where you have digital ownership, and

you have rarity, and all the things that

you want to do for a consumer from a

loyalty standpoint, this [NFT] enables

that in the digital world, and is able

to create that sense of ownership in

something that is truly a unique part

of the brand heritage.

“That was why we zoned in on a

loyalty use case specifically.” 

As a whole, Estée Lauder has

ramped up its interests in technology

in recent years, from establishing

its own IT-focused innovation lab to

working with partners like Perfect

Corp. on artificial intelligence-powered

augmented reality makeup try-ons. 

Now that Clinique has broken

ground as the parent company's first

brand to take up NFTs, it likely

won’t be the last. 

“One of the things that has

happened with COVID-19 is our

consumers are much more likely to

adopt new technologies. They're much

more open [and] the expectation

of what technology can enable has

changed," he added. "And so we're

hyper-focused on making sure that

we leverage the latest technologies

to create new experiences, maybe

things that weren't happening before,

and so we are working with our

brand partners to identify where

there might be value."

As a major company with a portfolio

that includes some of the world's

most recognizable names in beauty

— including Aramis, Origins, MAC,

La Mer, Bobbi Brown, Aveda, Jo

Malone London, Bumble and bumble

and many more, including its own

namesake brand — its efforts could

light the way forward for the whole

industry's pursuit of NFTs. Whether

that path eventually leads to the

metaverse remains to be seen. But it's

a step pointed in that direction. 

Why the Clinique NFT Matters for The Beauty BizThe Estée Lauder company's MetaOptimist campaign is about more than just NFTs. It may be beauty's step toward the metaverse. BY ADRIANA LEE

The NFTs represent (from left) Almost

Lipstick Black Honey, Moisture Surge

100H and the Clinique

brand itself.

NEWS FEED

FAIRCHILDLIVE.COM

EVENT DETAILS OR ATTENDEE ASSISTANCE

SUE JIN [email protected]

SPONSORSHIP INQUIRIES

AMANDA [email protected]

PARTNER WITH FAIRCHILD LIVE | CONNECT YOUR BRAND AND MESSAGE DIRECTLY TO AN AUDIENCE OF FULLY ENGAGED GLOBAL BUSINESS LEADERS

SPEAKER SPOTLIGHT

Founder

JVN

JONATHANVAN NESS

BUY TICKETS

REQUEST SPONSORSHIP INFORMATION

SPONSORS

A World Changed,

A Business Transforming

C E O S U M M I T

November 17-18, 2021Cipriani South Steet, NYC

8

OCTOBER 29, 2021

DEEP DIVE

HOW MANY brick-and-mortar

retail stores does the beauty industry

actually need?

That's the question those in the

industry are asking themselves in

the wake of the COVID-19 pandemic,

which has led more people to online

shopping and majorly altered the

retail landscape. Shoppers today want

flexibility in their options, and to shop

how they want, when they want —

meaning brands and retailers need

to be prepared for purchases coming

from anywhere from traditional brick-

and-mortar stores to TikTok.

The pandemic has accelerated retail

trends that were already in place,

including the rise of digital, ascent

of specialty retail and decline in

department stores, experts said. 

The resulting retail ecosystem is one

where specialty retailers, including

Sephora and Ulta Beauty, as well

as mass merchants like Target and

Walmart, are poised to take even more

market share than they had before

the pandemic, retail analysts said.

Department stores and drugstores on

the other hand, may see sales slip even

further, analysts believe, and single-

brand retail concepts will likely curtail

the amount of stores they choose to

operate, underscored by the Estée

Lauder Cos. decision to close about

150 freestanding stores recently. 

"[The retail landscape] is moving

more specialty and digital," said

Stephanie Wissink, a research

analyst with Jefferies. "What you're

seeing is the breaking down of the

conglomerate counter into these

experiential kiosks. The department

store footage is being reimagined and

at the same time, the digitization of

the category is leveling the playing

field. [Department stores] can

compete head to head with Ulta

online, but what they lose in is the

store experience."

WSL Strategic Retail chief executive

officer Wendy Liebmann called the

moment a “reality check” for retailers

trying to decide “how many stores is

too many.” 

"This is the moment — they're now

stepping back and saying, how many

of these do we really need? How

many physical stores do we need to

deliver this category to this shopper,

knowing what we know now about

the omnichannel environment? That's

part of the reason you're seeing some

of the slowdown [in store openings],"

Liebmann said.

Retailers are asking themselves,

"Where is the beauty shopper today,

and how can we meet her and him

where they are," Liebmann continued.

"That's why the partnerships [between

Sephora and Kohl’s, and Ulta and

Target] — it's a means of making

themselves more available."

"We've been so real estate-focused

as retailers in this country, because

we have the luxury. What COVID[-19]

and digital are forcing the retailers

to do is say, 'what role does beauty

play?' And then, 'Do I have to do it

in every store?' Or, 'how do I connect

it better with the rest of the offer?'"

Liebmann said.

Jane Hali from retail investment

research firm Jane Hali & Associates

called shifts in retail strategies

a "rightsizing," and said that the

changes have occurred since the

pandemic took hold, as online

shopping took off. "If you compare

e-commerce penetration in 2021

versus 2019, it is shocking how much

more it is," Hali said. According to

eMarketer, retail e-commerce sales

jumped from $598 billion in 2019,

to $791.7 billion in 2020, and are

projected to reach $919 billion in 2021.

Collaborations between Sephora

and Kohl's, and Ulta and Target work

for the current retailing environment,

Hali said. "What they're doing is

playing on the traffic in the store

already. That is market share. That

makes more sense than expansion of

brick-and-mortar — you want mind

share," Hali said.

U.S. specialty beauty retail

took a big hit in 2020, during the

The effects of the COVID-19 pandemic have specialty retailers including Sephora and Ulta Beauty poised to gain even more market share in the U.S., experts said. BY ALLISON COLLINS

Inside Ulta Beauty at

Target.

Beauty's Retail Reckoning: Specialty And Mass Retail Poised For Further Gains

9

OCTOBER 29, 2021

DEEP DIVE

pandemic. According to Euromonitor,

specialty beauty retailers in the U.S.

generated $11.2 billion in sales, a

28 percent decline from 2019. But

before that, the category had been

gaining steadily — about $1 billion

per year between 2015 and 2019

— Euromonitor data shows. 

Ulta is the largest specialty beauty

retailer in the U.S., while Sephora is

third. Bath & Body Works is second,

Euromonitor said.

Despite category challenges during

the pandemic, analysts said that both

Sephora and Ulta are well positioned

to pick up market share going

forward, partially due to adjustments

they’ve made in their strategies due to

the pandemic. 

Both Sephora and Ulta have slowed

the rate of brick-and-mortar store

openings. Ulta had previously targeted

100 new stores per year, and is now

aiming for 50, and pre-pandemic,

Sephora had aimed to open 100 new,

freestanding stores in 2020, and is

opening 60 in 2021. 

They've also both inked new,

shop-in-shop-style partnerships that

give them access to more shoppers.

Through a partnership with Target,

Ulta will have 100 shops-in-shop inside

Target open by the end of the year.

With the Kohl's partnership, Sephora

aims to have 200 Sephora at Kohl's

locations open by the end of the year.

Both retailers have also added new

features to make shopping with them

more appealing to today’s consumer,

analysts said. 

"The biggest play here is buy online,

pick up in store," said Mousumi

Behari, a retail expert with Avionos.

"Say you have a wedding tomorrow

and you cannot wait for delivery —

you could quickly look online, get the

things you need, then go pick it up.

Because of this, I don't necessarily

think the brick-and-mortar experience

needs to be 2,000 square feet of

beauty expo — it needs to be a couple

counters of 'take a look, see if you like

it.' Curbside pickup will still be huge."

Both Sephora and Ulta are

experimenting with same-day delivery

options, and Ulta said in October

it was working on "the digital

store of the future" — meaning an

update to its website meant to fuse

informational content with product

shopping. It will roll out gradually.

Combined with a personalized search

function, Ulta plans for "the browse

and discovery journey [to] start to

come together more," said Ulta's chief

digital officer, Prama Bhatt, recently.

"The goal is to allow for search to

become more, over time, of a two-

way conversation where you get the

responses you're looking for and it

guides your beauty discovery journey,"

Bhatt said.

Sephora, too, has developed a live

digital shopping tool that connects

beauty advisers to shoppers, and

has rolled out buy online, pick up

in store options, as well as curbside

pickup and two-hour delivery in

some markets.

Digital innovation, including

the incorporation of AR and AI

technologies in retail, is another side

effect of the pandemic, said Behari.

"Beauty is becoming much more

accessible," she said.

Those types of services have also

been rolled out by mass merchants

including Walmart and Target in

the never-ending quest to compete

with Amazon. 

Mass merchants fared well during

the pandemic, posting an uptick of

about 3 percent, to $8.2 billion in

sales, according to Euromonitor.

In the few years pre-pandemic,

mass sales had been relatively flat,

hovering between $7.9 billion and

$8 billion between 2015 and 2019,

according to Euromonitor.

"The mass channel is evolving

and they are trying to make more

of an effort within beauty," said Neil

Saunders, managing director of

GlobalData Retail. 

Saunders said that Target and

Walmart are leading the pack in the

mass market.

"A lot of people go there to discover,

to buy and Target's had great success,"

Saunders said. "Walmart, to be fair,

isn't as edgy as Target, but Walmart

has done a lot as well. It's partnered

with some d-to-c brands, it's tried to

improve the look and feel of its beauty

stores, and it's had some success,"

Saunders said.

Walmart has a large presence and

"a lot of potential," Saunders said.

Under vice president of beauty Musab

Balbale, Walmart has aimed to move

beyond a replenishment stop, into a

place for discovery, storytelling and

new brands. 

Target, Saunders said, stands out

for its selection of direct-to-consumer

brands. In the past few years, Target

has become a mass-market specialist

in rolling out digitally native brands,

starting with Harry’s but now

including personalized hair care brand

Function of Beauty and others.

Saunders said that the pandemic

has also caused grocers to up their

beauty game. "They come from behind

in beauty, they’re never going to be a

key destination, but they have made

a bit more effort and they are trying

to spruce up the stores and have a

bit more emphasis on beauty and

wellness,” he said.

Other areas of the mass market are

not likely to fare so well, Saunders

said, noting that drugstores are

lagging behind.

“Rite Aid is probably the best one

out of all the mainstream drugstores

because it is trial-ing a new store

format, trying to focus on wellness

more, and trying to push more into

premium products,” Saunders said.

“Some of the new stores — they

haven’t got many of them — actually

look nice,” he added, noting the better

lighting and fixtures. 

He said that Walgreens has done an

OK job, and tried to push some of its

owned brands through stores, but that

“CVS is absolutely awful,” and that

executives are exclusively focused on

health care. 

“If you’re coming in to use health

hubs and other things, walking into

a dismal, down-at-heel store with

bad lighting, bad fake carpet tiles,

feels dingy, feels dirty, does not speak

wellness to anyone,” Saunders said.

“No one wants to go into that kind of

environment for health care services,

it’s completely dispiriting.”

Department stores, too, are falling

further behind, experts said.

Between 2015 and 2019, beauty sales

in U.S. department stores declined by

9.2 percent, according to Euromonitor.

In 2020, they declined 24.6 percent,

year-over-year, to $5.3 billion.

Several have already begun

rightsizing store fleets, including

Macy's which has been closing stores

for years; Nordstrom, which closed

several stores in California, and J.C.

Penney and Neiman Marcus, which

both filed for bankruptcy during

the pandemic with plan to close

some stores. Now, some department

stores are eschewing the idea of an

omnichannel world and considering

separating their online and offline

operations altogether.

"What you have left are the

survivors," said Wissink, of the

department stores. "The other thing

that the department stores saw pre-

pandemic was they were not able to

capture the next-generation customer.

Their customer was aging up and out,

they weren't filling the funnel."

Department stores had a tough time

during the pandemic because foot

traffic declined, Saunders said. "They

made up some ground online, but not

all of it. That had a very bad effect

on beauty because a lot of beauty

in department stores is bought on

impulse — it's bought because people

are in the store already," he said.

Foot traffic has improved since the

early days of the pandemic, he noted,

but "department stores are still losing

market share," he said.

Liebmann said she still sees

an opportunity for relevance for

department stores, but it would

require rethinking how they present

the beauty category. "Am I delivering

[beauty] in a more specialized offer

like you see department stores around

the world do? Not 500 Macy's, but

rather more of a flagship special

concept, and removing those stores

that are more regional, or spinning off,

like Harrods has done in the U.K. with

H Beauty," Liebmann said.

Creating flagship offerings — like

Nordstrom has done in New York with

added beauty services — is relevant,

but won't be able to improve the

larger business or channel, Saunders

said. "You can do things in a one-off

store, but it doesn't make a difference

as far as the chain or as far as the

department stores in general are

concerned," he said.

As far as the ultimate flagships go —

the brand store — the key is restraint,

experts said. "Taking a brand to a very

big one-off relationship is still viable,"

Liebmann said. "It's just not viable in

2,000 stores."

Part of the issue in the U.S. beauty

landscape is that retailers have

marketed through scale, rather than

through "personalized, customized

offerings," Liebmann said.

"The big challenge, and I don't

think we can blame COVID[-19] for

this, is we've lost that quality of the

uniqueness of the merchandise,"

Liebmann said. "Goop, like it or don't

as a brand, you know where you stand

with Goop. That's what we don't have

much in the big national brands."

Inside the first Sephora store at Kohl's.

Ph

oto

gra

ph

by

Lexi

e M

ore

lan

d

MATTER OF INFLUENCE

ADDISON RAE wants to know

your current mood.

Rae has partnered with

manufacturer Hampton Beauty to

create a debut line of fragrances

that pairs moods with scents. The

AF Collection by Addison Rae

will release at the beginning of

November via its own website, with

each 50-mL fragrance — there are

three — priced at $40. The "clean"

line will be shoppable via TikTok

and Instagram, where Rae counts

85 million followers and 40 million

followers, respectively.

The AF Collection is Rae's second

beauty venture, though first in

fragrance. Last summer, Rae

launched Item Beauty, the cosmetics

company she co-created with

incubator Madeby Collective. Item

launched direct-to-consumer and

entered Sephora doors in August.

Rae, who is 21 years old, told WWD

Beauty Inc in an in-person interview

in September that she felt fragrance

was "that next thing" to add to her

growing beauty portfolio.

"Progressively, as I've gotten

older, I've been super interested in

fragrance," Rae said, speaking from

the set of her AF Collection photo

shoot. "It's such a different area to

put yourself into and get to know

and see the behind-the-scenes."

Rae was an ideal match for

Hampton Beauty, which, like most

beauty companies, is keen to capture

Gen Z market share.

"[Rae] wanted to bring something

different to the market," said Lori

Mariano, managing partner of

Hampton Beauty. "She wanted not

only for her audience and fans to

smell good, she wanted them to feel

good. Her whole concept was how

do we take fragrance to a different

approach? The Gen Z audience wants

you to do something a little different

than the norm. This answers that

question for them. We gave Addison

a platform to approach fragrance

from a different angle."

AF Collection launches with three

scents: Chill AF, Happy AF and

Hyped AF. Created with upcycled

materials via green chemistry, each

scent is cruelty-free and features

a water base. The alcohol-free

fragrances are meant to be hydrating

and long-lasting; they can be sprayed

on the skin or in the hair.

New scents will launch every four

to five months, according to Mariano.

"We want to build a portfolio of

scents for Addison and constantly

bring in new and exciting scents,

packaging, all of that," Mariano said.

Hampton Beauty declined to offer

a sales projection, but industry

sources estimate AF Collection by

Addison Rae will bring in $14 million

in first-year retail sales.

Rae worked directly with

perfumers to develop the scents,

employing neuroscience technology

in the process, according to Mariano.

"The ingredients were put in front

of respondents, and they read the

reaction to the scent, and it affects

the part of the brain that has to do

with emotion," Mariano said. "If

the calming part of the brain was

affected, those ingredients became

[Chill AF]. It's completely science-

based. We thought it was such a fun

and new way to approach fragrance."

The packaging, too, is tech-

inspired. The ergonomic bottles

employ heat-sensitive technology

that causes them to change color

according to temperature.

"It's like a mood ring," Rae said.

"It's something that's never been

seen before." She and Mariano

demonstrated the heat sensitivity

using a hair dryer from Rae's

dressing area nearby.

With a massive online following,

Rae has captured the attention of

many companies, particularly within

the fashion and beauty spaces. Her

level of internet influence affords

her the opportunity to experiment

while securing backing from

companies who want an easy way to

reach Gen Z.

"Because I'm a part of Gen Z and

most of my audience is Gen Z, I have

a pretty good sense of what they

like," Rae said.

Mariano said AF Collection by

Addison Rae will mark the first

time a brand in its portfolio is

selling via TikTok.

"Addison is so popular there,"

Mariano said, referring to the

platform. "Addison will do a lot of

social marketing, digital marketing,

and we'll drive to the website as best

we can."

Rae's audience is mostly Gen Z — a

much-sought-after demographic by

virtually any company with product

to sell. An early adopter of TikTok,

Rae shot to internet stardom during

the COVID-19 pandemic. Already, she

has parlayed her online influence to

offline business deals.

In August, Rae starred in Netflix's

"He's All That," her first film role.

Shortly after, it was revealed that

she had signed a multipicture,

multimillion-dollar deal with the

streaming giant.

Days after her interview with

Beauty Inc, Rae attended the Met

Gala as a guest of YouTube.

“We always look for people in

the style-adjacent space,” YouTube's

Derek Blasberg told WWD at the

time, noting that YouTube had a

“conversation with Vogue about

who we see having some traction”

within fashion before deciding

whom to invite.

“In quarantine, we saw new

personalities appear in pop culture

that transcended the way you used

to see celebrities come up,” he said.

“The democratization of style and

voices in the style space is ultimately

a good thing.”

Asked what she makes of her swift

rise to online fame, Rae said it has

been "a roller coaster" of a career.

"[TikTok] is so new for everyone,

and it's a new space no one's ever

experienced," Rae said, as Lady

Gaga's "Bad Romance" blasted in the

background. "You don't really know

the answers to many things, and it's

hard to ask people the right things

to do in any situation. I have been

staying true to who I am and trusting

my gut. I attribute most of the things

I have made to following my heart

and going with my true instinct."

Addison Rae to Release Mood-based Fragrance Line The AF Collection by Addison Rae will launch d-to-c and will be sold via Instagram and TikTok. BY ALEXA TIETJEN

10

OCTOBER 29, 2021

Industry sources estimate the AF

Collection by Addison Rae will reach $14

million in first-year retail sales.

ANALYZE THIS

AS CONSUMER interest in vitamin

C continues to escalate, brands are

responding with new technologies that

answer some of the traditional pain

points of the ingredients.

On the one hand, vitamin C is

lauded for its brightening benefits; on

the other, its reactive reputation and

difficulty to stabilize have set off a race

among brands of how to formulate

effectively with the star ingredient.

According to a September report

from Spate, vitamin C searches

have reached a monthly volume of

1.7 million, and coupled with the

term "safe," have grown 13.5 percent

year-over-year. When combined with

"sensitive," the volume has grown

31.3 percent, and it's the top searched

ingredient combined with "irritation."

"Consumer curiosity around skin

care ingredients peaked in May 2020,

and there was a ton of interest across

a wide variety of ingredients include

vitamin C," said Yarden Horwitz,

cofounder of Spate. "Vitamin C

and retinol are the top ingredients

searched across face care products.

Although interest in vitamin C for skin

care peaked in May 2021, consumer

awareness and interest in the

ingredient is still bigger than before

the pandemic and it's an ingredient

that's here to stay."

Horwitz added that while interest

remains high, consumer education has

given credence to concerns about skin

irritation and negative side effects.

"Despite being such a mainstream

ingredient, consumer search behavior

indicates that there are concerns," she

said. "Consumers are turning to the

internet to figure out whether they

should be integrating vitamin C into

their daily routines."

For Tiffany Masterson, founder

of Shiseido-owned Drunk Elephant,

her brand's global expansion paved

the way to address stability concerns

around its C-Firma Day Serum, one of

the brand's hero stock keeping units

and a stalwart since it launched. In

tandem with its introduction into Ulta

Beauty last month, Masterson took

the opportunity to update the serum's

formulation and packaging to improve

the potency of its hero ingredient.

"Most actives are delicate to

a degree — retinol and peptides

can also be tricky to work with —

especially when they're in higher

concentrations," Masterson said.

"But vitamin C, or more specifically,

ascorbic acid, which is the gold

standard, is a whole other level of

sensitivity due to its environment."

The reimagined product now

includes a two-part product: in the

powdered form of ascorbic acid, as

well as a separate vial of the formula's

liquid components. Renamed C-Firma

Fresh Day Serum, the product is

meant to be mixed ahead of first

usage to retain its efficacy. It is now

sold for $78 in Drunk Elephant's full

distribution network, which includes

Sephora and Ulta, and has a shelf life

of up to three years.

"Filling orders [for the serum] on

a monthly basis was big for us as we

were trying to control the freshness,

and we always made sure to tell

the consumer not to stock up on

it," Masterson said. "We did some

internal testing, even with color

change, it was active for up to six

months. When it was sitting on a

shelf and the consumer didn't get it

for three months, that's what I was

uncomfortable with."

Other brands have found other

means of stabilizing the ingredient,

such as modifying formulations

instead of repackaging them.

"Vitamin C, in its biologically active

form, is one of the most researched

ingredients. It's sensitive to light, air

and water," said Paul Baek, founder

of Matter of Fact, which launched its

Ascorbic Acid 20 Brightening C Serum

on Sept. 27 for $92. "Traditionally, our

best practice in delivering ingredients

to skin is to solubilize them, and

water can dissolve a large amount of

vitamin C."

Finding a waterless way to solubilize

ascorbic acid, Baek said, was a puzzle

that took him over two years to solve.

"There have been waterless delivery

systems for ascorbic acid, but they

don't dissolve the vitamin C, so they

feel sandy or gritty," he said. "Solvent

systems have to be liquid and the

solvents have to be solid, and that's

been really limiting."

Baek's fix was to find a base that

had other solid components, allowing

the ingredient to dissolve seamlessly

without deteriorating. "It took a lot of

counterintuitive thinking, a solvent

system has to be liquid in combination

but that doesn't mean all the

components have to be liquid," he said.

Other brands have opted to include

alternate derivatives of vitamin

C, which also purport to have less

adverse side effects like irritation.

HoliFrog introduced its Sunny Side

Glow Serum in September for $68,

which uses tetrahexyldecyl ascorbate

and 3-0-ethyl-l-ascorbic acid, two

derived forms of the ingredient.

The brand's lead chemist, Justin

Steinke of Evergreen Innovations, said

ascorbic acid's reputation for reactivity

has pushed the market in favor of

more stable ingredients.

"Ascorbic acid is unstable due

to its affinity to want to react with

excipients in formulations. We want

something that's reactive for the

skin, but once it's in an aqueous

solution, it's free to roam and free to

react," he said.

As such, HoliFrog's cofounder, Emily

Parr, didn't consider using ascorbic

acid in the product. "When we first

approached Justin [Steinke], he said

he would never recommend ascorbic

acid that is anything but a powder,"

Parr said. "Since we launched this

product, the questions have been what

the shelf life of the product is. A lot of

consumers have had bad experiences

with ascorbic acid, so they want to

know what form the vitamin C is."

Baek, however, said claims

around vitamin C derivatives can be

misleading. "They behave differently

than ascorbic acid does, so it's not an

apples-to-apples comparison," he said.

Steinke posited that the derivative's

different behavior made it a better

candidate, though. "They have a time

release-type of application," he said.

"You let it react slowly over time,

which lowers the irritancy, but also

creates a longer efficacy."

Kendra Kolb Butler, founder

of Alpyn Beauty, combined three

different types of vitamin C, including

ascorbic acid and two derivatives,

in the brand's new Triple Vitamin-C

Brightening Bounce Cream, which

launched this month for $49.

"For me, pound-for-pound vitamin

C is the most potent antioxidant we

have, it's the gold standard of skin

care," Kolb Butler said. Her brand,

which includes active ingredients

foraged in Wyoming, combined the

three chemical forms of vitamin C

with one found in wild chokecherry.

"Each form has different properties,

benefits, interactions and different

levels of stability," Kolb Butler

continued. "I combined three forms

of clinical vitamin C, along with my

natural form. [Ascorbic acid] does

have this potency I love, which is why

we've put it in, but we're not just using

the same ingredient we were using 25

years ago."

Consumer Interest Sparks New Launches, Innovations in Vitamin C With consumer demand for vitamin-C based products at an all-time high, more and more brands are looking to new and innovative ways of stabilizing one of beauty's trickiest ingredients. BY JAMES MANSO

HoliFrog Sunnyside C Glow Serum.

Matter of Fact Ascorbic Acid 20 Brightening C Serum.

11

OCTOBER 29, 2021

12

OCTOBER 29, 2021

Ph

oto

gra

ph

co

urt

esy

of

Jan

et

Gu

rwit

ch

FOUNDER'S CORNER

WHILE A LOT of beauty execs

will no doubt be tuning into the

World Series this week and next

between the Houston Astros and the

Atlanta Braves, one in particular

will be watching more closely than

most. Janet Gurwitch, the retail

executive turned entrepreneur, is an

investor in the Astros who also

sits on the team’s board.

Gurwitch took a stake in the team

in 2012, after businessman and

friend Jim Crane became its primary

owner and asked her if she would be

interested in investing. For Gurwitch,

who founded the Laura Mercier

cosmetics brand in 1996 and built

it into a leading player in color, the

answer was an immediate yes.

“I had read the book 'Moneyball' by

Michael Lewis and I was fascinated by

the statistical approach the Oakland

A’s took,” said Gurwitch, referring to

how then-Oakland Athletics manager

Billy Beane transformed the team’s

fortunes by using statistical analyses

to put together a competitive team

despite its relatively small budget.

“I gave the book to my Laura

Mercier team at the time and told

them, ‘We are the Oakland A’s

competing against the big guys like

Chanel and Lancôme.”

When Crane approached Gurwitch

a few years later, she told him she was

interested — but she had one caveat.

“I told him I also wanted to be on the

board,” she said.

While he didn’t doubt her ability

as a businesswoman, “he asked me,

‘What do you know about baseball

the game?’ recalled Gurwitch. Crane

did appoint her to the Astros board

— today she is the only woman on it

— and also gave her a book about the

game. “Today I know a helluva lot!”

laughed Gurwitch, noting she’s gotten

pretty good at being able to identify a

variety of pitches by sight and attends

as many of the 162 games in a season

as her schedule permits.

While she is still drawn to the

metrics aspect of baseball, Gurwitch

has also become emotionally vested

in the outcome. “You really see how

hard it is to be a professional athlete

— the players are just incredible,”

she said. “The psychology of sports

is fascinating. On any given day,

any one team can beat the other.

There are so many factors that

contribute to who wins.”

This will be the third World Series

for the Astros during Gurwitch’s time

with the team: They won in 2017,

lost in the seventh game and are

now back again in a matchup many

baseball experts expect will go the

full gamut, too. And it’s not the only

return for Gurwitch. The entrepreneur

recently joined Advent International

as an operating partner, which

acquired BareMinerals, Buxom and

Laura Mercier from Shiseido for

$700 million in August. Gurwitch will

be a key part of the team overseeing

those businesses, too. No doubt she’ll

hit it out of the park.

Game On!For big league beauty player Janet Gurwitch, baseball is much more than just a pastime. BY JENNY B. FINE

Janet Gurwitch with Houston Astros pitcher

Justin Verlander.

Gurwitch with the 2017 World Series trophy.

HOLIDAY

Partner with our family of brands on holiday-timed opportunities this fall/winter, and promote holiday shopping messaging, product placement and the art of gifting.

Retailer TalksA retail video series designed to give insight on working the holiday shopping rush

The Savvy Shopper A trend panel discussion in-store with WWD and FN Style Directors

Holiday HaulA behind-the-scenes social shopping experience with an influencer

CONTACT AMANDA SMITH AT [email protected] ADDITIONAL DETAILS AND CUSTOMIZED PROPOSAL PACKAGES.

Brand Opportunities

&

2O21