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Outside the Box: Retailers Launch Skin Care Brands

Beauty emporiums including Ulta, Sephora and CVS are flexing their muscles in the category.

As a growing number of beauty retailers cross the threshold with their own proprietary skin care brands, one thing is clear: This is not the time to play copycat.

“If you can create a new category, you win,” declared Bluemercury co-founder and chief executive officer Marla Malcolm Beck, who in May will try her hand at product creation with the debut of her first skin care line, M-61, a nine-piece collection said to bridge the gap between the high-tech and the natural.

“Customers love technology, but not the chemicals,” said Beck, whose product formulas contain a blend of “dermatologist-loved ingredients” like peptides, vitamins C and E and alpha hydroxy acids, paired with “heavily researched naturals,” like bilberry extract, parsley-derived centella asiatica and gallic acid, which is found in blueberries, walnuts, apples, flaxseed and witch hazel. The Bluemercury-exclusive collection, named after one of the few resolved (science that is understood) galaxies in our universe, ranges from $19 for a hand cream to $92 for a serum, and could generate up to $3 million in its first year, according to industry sources.

Beauty emporiums like Ulta, Sephora and CVS are similarly flexing their muscles in the skin care space. On April 22, Ulta Beauty will introduce a proprietary collection called Ulta Skincare, a follow up to the company’s first private label initiative phased out several years ago. The range, priced between $8 and $25, will be exclusive to Ulta’s 449 stores and ulta.com, and is being billed as affordable, skin-improving and skin-protecting. It will feature a proprietary complex called Advanced Protection Factor+, designed to fight free radicals and environmental factors, reduce the appearance of fine lines and wrinkles and improve overall skin tone and texture.

In March, during an investors’ call, Ulta ceo Chuck Rubin singled out store exclusives as a driver behind increased market share across all major categories in the fourth quarter and fiscal year.

Some common ground among these newly emerging in-house brands? Products that offer simplicity of message, accessible price points and availability limited to the stores responsible for their creation. Beauty retailers, it seems, share the advantage of built-in consumer trust as well as access to customer feedback — including requests for products which do not yet exist. True to form, each retailer’s skin care brands are targeted towards its customers.

For her part, Beck said she designed M-61 to fill white space she observed within the highly edited merchandise in her 37 stores — the customer’s desire for natural ingredients, guaranteed results and non-bank-breaking prices.

“Our clients want truth and honesty and that’s where this line came from,” said Beck, who based her blends on new research — coming primarily out of Asia — centered on the efficacy of naturopathic-inspired healing plants. “Natural ingredients were always the stuff of home remedies and wives tales,” continued Beck, who, after perusing more than 500 articles on the topic, decided on nine formulas out of 175. Beck included only naturals with scientifically proven results, including gallic acid, which is said to have cancer-combating and melasma-easing benefits and tamarind seed extract, said to be an effective wound healer. “It was perfect storm of research on naturals and new research into technology.”

Bluemercury has doors on New York City’s Broadway and Walnut Street in Philadelphia, and Beck plans to utilize Bluemercury’s physical outposts for M-61’s advertising. “We’re starting at home first,” she said.

Having an automatic brick-and-mortar component to the business is certainly an added benefit to the retailer-cum-skin-care-brand model. “We are able to capitalize on our in-store designs to showcase the collection with clear signage on a designated fixture in our stores,” said Catherine Gore, director of Sephora Collection, the chain’s namesake brand, which was launched in January 2011. “Additionally, the collection is integrated into our seasonal catalogues and print advertising for further awareness.”

At stores like Sephora and Ulta, for example, advertising and selling ammunition comes mainly in the form of its arsenal of trained beauty consultants who can easily recommend the house brand. “It works well with their format of having so many choices, explained industry expert Allan Mottus. “Shoppers can buy a prestige foundation, a mass mascara and be shown Ulta’s own skin care.”

The Sephora Collection Skincare, introduced to all its 300 stand-alone doors in the U.S. and Canada as well as more than 300 Sephoras inside J.C. Penney locations, is expanding, with new items added every season.

Priced from $4 to $39, the range, whose hero ingredient is a proprietary plant-derived humectant said to moisturize more effectively than hyaluronic acid, is color-coded and boasts straightforward packaging and names, for an experience that is “easy to shop.”

To be sure, the history of private label skin care is one punctuated with successes and failures. A recent example of a particularly fine-tuned introduction is CVS’ exclusive cross-category range, Salma Hayek Nuance. A cornerstone of this 100-stockkeeping-unit collection, which contains color cosmetics and hair care, is skin care; and many formulas include local plants and herbs utilized by Hayek’s grandmother. Despite the recent shut-down of all of CVS’ Beauty 360 locations, the Salma Hayek line is far from shrinking. Insider executives say sales are growing and this past January seven new products — four of which were skin care — were added to the range.

“I’ve tried everything including $1,000 face creams,” said Hayek at the time of the launch. “I knew there was a way of making extraordinary products that make a difference, without spending that kind of money,” she added of the price points, which range from $2.99 to $19.99. Nuance was targeted to produce sales of $35 million by industry experts who believe current sales are on target and that at least 30 to 40 percent of that is generated by skin care items.

For many retailers, the creation of their own skin care ranges is also ignited by the confluence of aging Baby Boomers looking to do more with a smaller budget. According to Wendy Liebmann of WSL Strategic Retail, consumers are returning to stores, but shopping differently; while some will return to pampering, others like the value of private label. In fact, according to the Private Label Manufacturing Association, nearly one of every four mass products purchased is now a store brand. While consumers may have hesitated in the past to buy a moisturizer with a retailer’s logo on it, the trust retailers have built up has helped ease the trepidation. In fact, in 2011 in all mass outlets — supermarkets, drugstores and discount stores, including Wal-Mart — store brand sales advanced by 3.9 percent while national brands were up only by 0.6 percent.