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Target’s Indie Beauty Push

The retailer is adding 40 new brands to its lineup, across all categories of business.

For the last five years, Target has been working hard to create a spot-on, trend-driven differentiated mass market beauty proposition.

It was the first to go after indie beauty at scale, and the first to really crack the code of prestige beauty in a big-box environment when it inked a deal with Ulta Beauty in 2020.

Now, as other big-box retailers, namely Walmart, are upping their game in the beauty space, Target is doubling down on its core proposition, adding 40 new brands — more than half of them exclusives, many with items costing $10 or less — to what is already one of the most robustly curated lineups in retail.

“Overall, Target has been a trendsetter in mass beauty. There is no doubt about it,” said Jefferies analyst Steph Wissink. “They do an excellent job at visual merchandising and an increasingly good job of curation. They have done a really good job of providing space and opportunity for some of the smaller brands to showcase the breadth of their offer. We look at them as a trend leader.”

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Target doesn’t break out beauty sales on their own, but combines the category with personal care, baby gear, cleaning, paper products and pet supplies. In total, the category, called Beauty & Household Essentials, accounted for 26 percent of the retailer’s total 2020 sales, or about $24.5 billion. Wissink estimates beauty accounts for between 5 and 10 percent of overall sales; at Walmart, beauty represents about 2 percent of the retailer’s total turnover of about $523 billion globally.

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While Target executives declined to break out beauty-only sales, a spokesperson reported that in third-quarter 2021, beauty saw double-digit comp store growth on top of double-digit comp store increases from the year before. Full-year figures for 2021 have not yet been released.

Still, it’s clear that Target is in it to win it when it comes to beauty. “Beauty is one of the fastest-growing categories at Target,” said Cassandra Jones, vice president, general manager of beauty. “It’s integral in driving frequency and preference.”

Jones attributes the growth to the unique matrix of brands, which she describes as a “curated assortment focused on a universal lens.”

“That makes us a go-to destination, not just for replenishment, but as a constant source of inspiration and discovery for our guest,” she said. “We are constantly looking at what is new and next and pushing to raise the bar and unlock new potential in the beauty landscape. We set that goal every day — to insure we can offer guests even more to love when they come to Target.”

Shoppers (or “guests” in Target speak) will certainly find a lot to pique their interest. The 40 new brands fall under three key buckets: BIPOC-founded, clean and exclusive. New Black-owned and -founded brands include GlowRx, Thread, Kyutee and Pink Lipps, while LoveSeen, Pure Culture and Skinsei are some of the brands being added to Target Clean. The group also includes recent “graduates” from the Target Takeoff accelerator program, including Frederick Benjamin, Sassy Hair, Undefined Beauty and more.

That mix sets it apart from competitors in the mass space. “Target has been investing in beauty with an inclusive lens to create welcoming, enjoyable destinations to explore beauty, a critical priority and differentiator within such a personal and emotional category,” said Dave Kimbell, chief executive officer of Ulta Beauty.

Whether exclusive to the retailer or not, Jones and her team applied a Target lens to every brand they selected. “We start with the guest — what are they interested in and how does that intersect with our strategy to be the leading beauty destination while maintaining our position leading on trend and value. How do we best serve as a source for newness and innovation?” Jones said. “Then what is the guest looking for and how do we make sure it is innovative?”

Wissink describes the Target consumer as “a hip urban/suburban mom who is trying to live a good-for-you lifestyle, make better decisions for herself and her family, while at the same time being somewhat design forward.”

Convenience and time are priorities, versus a beauty enthusiast shopper, for example, who shops specifically to see what is new. “The Target shopper is still time constrained,” Wissink said. “She’s got a lot happening — she’s shopping for diapers and lip gloss. It can’t be so progressive that it’s overwhelming. Her biggest limitation is time.”

A diverse brand lineup, one that better reflects the racial composition of the U.S., is also critical. “We are industry leading in our Black-owned brand assortment,” said Jones, noting that 20 of the 40 new brands are Black-owned or -founded, bringing the retailer to more than 70, a 65 percent increase since 2020. “It’s real progress toward Target’s commitment to spend $2 billion with Black-owned businesses by 2025.”

The third piece is adding products and brands that meet the Target Clean standard, which bans chemicals including phthalates, propyl-parabens, butyl-parabens and sodium laureth sulfate. Jones said more than 8,000 products in the new set will meet the standards. “We’re seeing a shift,” she said. “Naturals are important, but clean has become an industry standard.”

Many of the 40 brands that are being added cross between the three pillars of exclusivity, BIPOC-founded and clean. But while it is one thing to identify trending brands and concepts, it is quite another to make a small company viable in a retail juggernaut the size of Target. The company’s ability to emulate that aspect of specialty retailing is part of the secret sauce of its success.

Hairstylist Kristin Ess and her partner Maesa launched her namesake brand at Target in 2017 with 15 stock keeping units. Since then, the brand has grown exponentially. Industry sources estimate retail sales this year will reach $230 million. Ess declined to comment on the figures, but did attribute the brand’s growth to the Target buying team.

“They hear me as a founder and they hear my customer, as well,” Ess said. “They listen and they try. Our buyer knows everything about the business that I do not. She reads all of the data, but she also cruises the internet listening to people’s commentary more than anyone I’ve ever met.”

Ess said the Target team provides essential feedback regarding what its guests are looking for — whether it’s insights into what categories are trending or data points to back up a certain area. Since launch, the brand has expanded into seven different categories. “I don’t think I could have done this without the exposure they created for the brand,” Ess said. “I can have a base of people who follow me on the internet, but the way Target exposes you to people who would never see the brand is unbelievable.”

Melissa Butler, founder and CEO of The Lip Bar, has had a similar trajectory. Her color cosmetics brand launched in 44 doors in 2018 “before it was ‘cool’ to make investments in Black and brown businesses,” said Butler, who said the brand grew to 450 doors in its first year there and has since expanded to 1,000 doors.

The Lip Bar has also expanded beyond its core namesake products into facial makeup; today, its bestselling product is tinted moisturizer. “That vote of confidence is great coming from a big company like Target,” Butler said. “Being known for lip, but having the shelf space to expand has been invaluable.”

Butler, too, has candid conversations with the buying team, which have led to her company’s exponential growth. “As a small business, we don’t have access to a lot of data, so we rely on our retailer partners,” she said.

One such conversation led Butler to realize there was a gap for a Gen Z-oriented makeup line in the mass market — and the idea for Thread was born. (“The name is to remind people that even though we’re all individuals, we’re also connected by a common thread,” Butler said.) The brand, launching in 515 doors, features complexion sticks that can be used as concealer and contour, multiuse sticks for the eyes and cheeks and lip crayons that double as lipliners, all priced at $8.

Thread
Thread’s multitasking sticks are $8 each.

“There’s a level of transparency we’ve been able to achieve with our buying team,” Butler said. “It’s benefited us to be able to say, ‘What do you think? What’s your honest opinion? Do you think this is a good idea?’

“All retailers are trying to figure out if they have the capacity for small business,” Butler continued. “The big risk in working with smaller businesses is similar to hiring someone who doesn’t have a lot of work experience — they’re cheaper, but you’re going to have to train them. Target has come to understand that smaller vendors don’t necessarily know how it works and they leave room for education.”

Indies are so important to Target that the retailer has developed different business development programs for brands of different sizes. One is called Building Blocks for Better Products, geared toward giving young businesses the tools necessary to meet the Target Clean standards. Target Takeoff is for “slightly more mature product companies looking to enter the next stage of growth,” said Jones, and pairs brands with mentors and buyers in the company to create a collaborative environment to make sure “the products meet the guests’ needs.”

That being said, Butler said that what has really unlocked growth for her brand is proactively anticipating Target’s needs, too. She cited a Black History Month end cap as an example. “My face is at the top of the shelf, which is really cool to see,” she said, “but we know that Black History Month is every February, Women’s History Month is every March, Mother’s Day every May. So getting in front of the opportunities you want to be part of is really effective.

“They have thousands of vendors — making sure you stand out has been a tactic that has worked well for us, and making sure our buying team knows we’re not waiting on them to give us opportunity but also asking for it,” she continued.

To source newness and stay abreast of trends and meet founders. Jones and her team travel around the world to trade shows and prowl online, constantly on the lookout for “new cool founders, interesting brands and a different point of view,” said Ess, who added with a laugh, “Every time I go to a beauty trade show, I run into the Target team.”

For Jones, it all goes back to the guest. “We have to be out in the world, looking for things guests don’t even know they want, whether ingredient, product or brand,” she said. “Embracing the agility and flexibility allows us to be a part of the beauty community and curating that down, so that the guest knows, when they come to us, we will have something they didn’t even know they loved while shopping for something they always knew they wanted.”

It was at one such event, just before COVID-19 lockdowns three years ago, that pediatrician and founder of GlowRx skin care Lorraine Beraho first met buyers from Target. That chance meeting started a dialogue that will culminate in the brand’s nationwide launch this month with five skus.

GlowRx
GlowRx is launching nationwide.

“It was more of a journey in terms of our relationship, both of us figuring out if we are a good fit,” Beraho said. “They also ensured that I had the tools — the resources and knowledge — to successfully onboard. They have a lot of resources and people who reach out on a weekly and sometimes even daily basis. They’re always willing to hop on a Zoom and break things down to help you understand how they operate. The support is intimate and surprising for how hands-on I thought a big box retailer would be.”

 

Ulta Beauty at Target: An Update

Ulta Beauty and Target kicked off the great retail shakeup of last year when they announced a strategic partnership In November 2020 to bring 50 top prestige brands to the mass retailer. Shortly thereafter, Sephora revealed its own deal with Kohl’s, and the market-share wars commenced.

Ulta Beauty at Target opened in 52 doors last August, and while there were early reports of some hiccups — faulty merchandising fixtures, sparse product selection — the partners seem to be hitting their stride.

“We heard our guests say they wanted prestige beauty and we’re excited to unlock that with Ulta,” Jones said.

Ulta executives are equally as enthusiastic about results thus far. “We are incredibly pleased with the strong engagement to date,” Kimbell said. “Our guests really enjoy the welcoming design, expert trained associates, amazing assortment and opportunity to link their Ultamate Rewards and Target Circle rewards accounts.

“[The partnership] creates opportunities for our guests, brand partners and both of us as retailers,“ he continued. “Looking forward, we’re excited about the promise of even more members signing up for Ultamate Rewards as we further our reach and awareness with new locations.”

Wissink considers the partnership to be in phase two. “Phase one was get the stores up and running, work out the kinks, don’t overexpose on inventory you’re not certain on and at the same time, manage the inventory crisis,” she said. “Now it feels that we’re in the real consumer test period — how does the consumer engage, what is the feedback loop, what can be improved?”

She observed that the merchandise selection has added depth to breadth, noting that where there were one or two hair care brands before, now there are 12, or brands that had small subsets of products now have much fuller presentations, citing Clinique as an example. “The inventory proposition has evolved,” Wissink said. “It feels more fulsome now in terms of continuing of depth of inventory and full robust presentations by category. It’s definitely in a better position – I was really impressed.”