CVS Pharmacy is betting big on beauty.
The powerful drugstore chain with more than 7,900 retail doors is doubling down its beauty assortment.
Its biggest play is in emerging cosmetics and skin care brands — especially lines to attract Millennials. CVS is mixing in names including Wunderbrow, Nip+Fab and Organic Doctor in a bid to attract beauty enthusiasts. Additionally, CVS has created its own masks to offer Korean beauty to shoppers.
Rolling the dice on newness could be the lifeline drugstores need to compete with specialty doors such as Ulta Beauty and Sephora.
Front of store sales at CVS account for 25 percent of sales, with beauty including hair and personal care is estimated to produce at least half of that sum.
During CVS’ recent analyst day, Helena Foulkes, president of CVS Pharmacy, said the chain will continue to add more space to higher profit front end categories such as beauty. She noted health and beauty items produce 1.7 times more profit than many other front-end categories.
Emerging brand names dominate CVS’s beauty direction. “We have a lot of new. In cosmetics alone, more than 2,800 products launched this year,” said Alex Perez-Tenessa, vice president of merchandising in beauty and personal care at CVS Pharmacy. Much of CVS’ sales growth during the year, in fact, came from smaller, trendier brands.
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The quest to discover up-and-coming products is fueled by consumer wish lists. “We felt we needed to be there to respond to that demand. Yes, we need to carry her all-time favorites, but we want to be the place where customers come to find the latest innovations at affordable prices to find her future favorites,” Perez-Tenessa explained.
Industry observers said the need to add fresh logos puts pressure on established drugstore brands. “All beauty retailers need new, new items for their customers to find, discover and enjoy. This comes at the expense of older items that now are deemed less attractive to Millennials and more adventurous beauty users,” said industry consultant Allan Mottus. “CVS and other drug chains need to experiment with their planograms or lose share to Ulta and Sephora.”
CVS is being proactive. Every inch of square footage is carefully gauged to ensure the right mix. Moving the sales needle are hip and trendy lines shoppers discover online or on social media sites. Displacing older brands with less relevance clears the path for products that resonate with CVS shoppers.
CVS is apparently on to something: Results from an elevated store environment in 400 stores produced not only a 2.5 percent increase in overall sales, but a notable 4 percent in beauty. The company said there is the potential to scale-up resets in 3,000 stores over next several years.
The speed to market of prestige concepts is quicker than ever, thus giving CVS an equal opportunity to hit upon hot trends as department stores. The indie brands aren’t tied to release windows that once dominated the beauty landscape. “Mass is getting items faster. The gap between the pace of innovations between prestige and mass is lessening,” Perez-Tenessa confirmed.
Furthermore, CVS is positioned to incubate growing lines, Perez-Tenessa observed, because of convenient locations, a burnished new beauty service program, an elevated store experience and its personalized approach gleaned through its ExtraCare loyalty program. “We can give smaller brands the capabilities they need to reach the right customers who will love them,” he said.
The chain has employed several tactics to make its store more relevant to shoppers, particularly beauty enthusiasts.
After discovering its beauty consultants’ time was often tugged by the need for housekeeping, Perez-Tenessa and his team tweaked the program. Now, its experts only goal is to service shoppers. That includes new tools such as iPads to allow them to tap all the available technology to feed information to shoppers.
From a physical standpoint, CVS is installing Trend Centers right at the entrance to the beauty department to aid in shopper discovery of what’s new.
One illustration of the type of product CVS will position on that display is Wunderbrow. Perez-Tenessa said CVS is the only U.S. physical chain to offer the brow gel, which allows women to fill, define and shape eyebrows with natural-looking color in under two minutes. This month, CVS shipped it to 500 locations with another 2,000 scheduled in 2017. Priced at $22, Wunderbrow offers CVS a chance to get higher register rings and cash in on the brow craze.
“We saw customer demand for brow solutions,” Perez-Tenessa explained. “The brow category is on fire in beauty right now,” he added noting celebrities have fueled the flame. The numbers prove him correct. Brow category sales soared 32 percent for the 52-week period ended Oct. 30 in multiunit doors, according to IRI to $226 million. It was a category dormant for years.
Michael Malinsky, cofounder and president of Wunderbrow parent of KF Beauty, shared the enthusiasm calling CVS’ new beauty look “impressive.”
Wunderbrow is just the beginning of a new beauty push at CVS. Over the next few months, the shelves will be reconfigured including shrinking some standby drugstore brands. On the plus side for those legendary brands is that they are grabbing up the hot brands via acquisition to help them “buy” innovation. A case in point is L’Oréal’s purchase of NYX or Unilever’s buy of Dollar Shave Club.
Among the lines stocked or being added at CVS are Skinfix, NYX, Ahava and a Kylie Jenner favorite, Nip + Fab.
Also, CVS has created its own brands for categories where it felt the need. To wit, under its exclusive Beauty 360 logo, CVS is rolling out Korean-beauty inspired masks. CVS’ Makeup Academy MUA continues to be a powerful traffic pulling line and its relatively new Enlite is gaining fans. Also CVS maintains its Nuance collection, which was freshened earlier this year.
Additions to CVS’ proprietary Skin+Pharmacy skin care include serums. “That brand really speaks to our commitment to health,” Perez-Tenessa added.
He’s also expecting big results from advanced skin technologies, which are featured in CVS’ Healthy Skincare Centers. The chain added 700 more of its revved up Healthy Skincare Centers last year and doubled its product assortment. The synergy will wellness and beauty will be visible he said as prebiotics roll out to the drugstore portfolio.
In the pipeline is the addition of Formula 10.0.6 — a chemist created line for troublesome skin — along with Organic Doctor, an organically certified range from the U.K. with on trend ingredient stories such as snail gel and coconut oil.
Physical changes are also under foot including a new front and center fixture where emerging brands will star. There’s also a nail bar highlighted by Essie Gel Couture in about 1,500 stores with more on tap. Beauty on the Go is a high-impulse fixture near the checkout with trial sizes of desirable beauty brands in 4,000 doors.
While health and beauty products comprise less than half of CVS’ front end now, the company intends to push that to 80 percent. “We will be laser focused on higher growth, profitable business,” Foulkes told financial analysts.
These efforts coalesce in what Perez-Tenessa believes is an experience encouraging a rediscovery of drugstores. “When we look at where we are growing, it is with Millennials and beauty enthusiasts, and we have brands that appeal to them like NYX and Skin Fix. They are discovering how much fun it is to shop our channel.”
CVS is also a leader in omnichannel efforts and offers curbside delivery from front end categories including beauty in 4,000 doors and is piloting a delivery program.