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Wal-Mart Ups Beauty Game, Doubles Down on Trends and Innovation

The megaretailer is unleashing a slew of newness that places it in better competition with beauty specialty stores.

The Sephorification of Wal-Mart is under way.

On Wednesday, at its Secaucus, N.J. store — one of the retailer’s most heavily trafficked and high-volume locations — company officials offered a rare peek behind the Wal-Mart curtain, touting a slew of initiatives designed to attract consumers to its beauty departments in the increasingly competitive brick-and-mortar beauty space. Industry reports suggest Wal-Mart’s acceleration in beauty expands beyond the store — including talk that Wal-Mart is interested in buying Birchbox. Birchbox declined WWD’s request for comment.

Wal-Mart’s acceleration of beauty is two-pronged — modernization of the shopping experience and enriching the product assortment with trend-driven and exclusive items.

At the Secaucus store — which serves as one of several key test locations around the country — the heightened experience includes a new, illuminated, white-fixtured cosmetics department enhanced with digital components. IPads have been installed in the makeup section to highlight key trends — think sculpted brows and contouring — and interactive “get the look” content. There is a heavy emphasis on trend, with endcaps dedicated to high-growth, social-media-driven categories such as masks.

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Wal-Mart is aggressively going after new brands, items and categories that consumers are likely more accustomed to finding in beauty-specific retailers like Sephora and Ulta Beauty. From now through the end of 2017, Wal-Mart plans to add 700 new products to its beauty assortment, and many of them will be first-to-market, exclusive to Wal-Mart or from a niche line.

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The retailer is paying serious attention to what is trending in beauty. Naturals, Korean beauty and textured hair are three areas Wal-Mart is doubling down on. In the past year alone, Wal-Mart launched K-beauty in its skin-care category and added 100 new items to the assortment, along with adding more than 30 new brands for textured hair.

But natural and naturally positioned products are where the retailer is placing its biggest bets. In September, Wal-Mart is set to launch Found, its own brand of natural color cosmetics and skin care. The 130-item lineup is set to enter 650 of the retailer’s doors and

For Wal-Mart, beauty is a category where industry experts believe the chain contributes as much as $4 billion, making it the largest purveyor in the mass-market universe. But beauty is an ever-changing sector, where consumer demands can shift simply by scrolling through Instagram. And retailers both prestige and mass — from Sephora to NYX Cosmetics and Walgreens — are installing interactive digital components inside their stores in an effort to keep in-store shoppers engaged.

“The customer is constantly changing, and we are trying to change and evolve with her,” said Jody Pinson, head of beauty at Wal-Mart, who assumed the role from Carmen Bauza in 2013. Pinson is steering the beauty direction at Wal-Mart, and built a team that prowls Cosmoprof events in Bologna and Las Vegas and travels to beauty meccas like South Korea for items to satiate shoppers’ social media-fueled demands. “We know when a Wal-Mart customer comes in, she typically has a list for her whole family. This category is the one category this is just for her — we want to draw her in and highlight the latest trends.”

Pinson said the store format and assortment has been dictated by a consumer who no longer needs to wait for a magazine or commercial to introduce her to a product or trend. Though Wal-Mart may conjure up visions of middle America, its shoppers still require instant gratification based on what they see on social media.

That’s spurred the retailer to seek out the smaller, niche brands that are putting pressure on the major beauty players’ turf. “You look for those little gems that bring customers in,” Pinson explained.

The chain is proving that it is listening to its customer by switching up its shelves to highlight products and categories consumers are gravitating toward the most. Over the past year, naturally positioned products have been fueling growth in the mass market. Wal-Mart has seen it most prominently in hair, where it is moving its brands such as OGX and Garnier Whole Blends — the chain calls labels like these “kitchen-derived” because they tout superfood-based ingredients — to the beginning of the aisle, replacing space once held by stalwarts such as Suave and TREsseme.

But one of the biggest moves has nothing to do with store format, and will push it leaps and bounds ahead of other mass-market players. In September, the retailer is charging ahead with its own, exclusive better-for-you color cosmetics and skin-care label. Wal-Mart worked for a year and a half on Found and its 130 items, which include four skin-care ranges and makeup across all categories. Prices range from $2.50 to $15. Wal-Mart is also betting big on Burt’s Bees’ expanded color line, which includes face and eye makeup. Fifty new stockkeeping units will enter some 1,800 doors in September.

Makeup is a category where the chain is reacting quickly to trends with exclusive products — there’s Flower’s Shimmer and Strobe palette, artificial lashes by an up-and-coming brand called Eyelene, color correctors and a lip plumping serum gloss from Hard Candy, and nail dip from Color Club. Nail dips were one of the hottest trends at Cosmoprof North America in July and Wal-Mart quickly nabbed the item as a first-to-market exclusive — one of the “gems” Pinson referred to. Pinson also previewed a few prestige-inspired Christmas specials, including exclusive bath bombs and makeup brushes offered at value prices.

Shade extensions in makeup are another area Wal-Mart is looking to dominate and it has already invested in new shades from Milani and Hard Candy. Though the retailer is expanding shelf space for niche beauty lines like E.l.f — the brand said on its earnings call yesterday that it is getting a 20 percent space increase — Pinson noted big beauty players’ efforts to step it up, especially in regard to offering broader shade assortments. Wal-Mart, for example, exclusively debuted eight shades in the medium to darker area from Maybelline’s Fit Me.

Also new in the makeup aisle are iPads — at the Secaucus store, Wal-Mart has two fixtures dedicated to the devices, which are designed to educate customers on trends and achieving trend-driven looks. “We don’t have someone in the aisle teaching and training how to get trends like contour and highlighting,” said Pinson. “We want the customer to engage.” Pinson noted that this is the beauty department’s first step into technology. “You’ll see more and more things rolling out, not only to more stores but in terms of content as well.”

In-store digital experiences will extend to hair care as well, said Shawn Townzen, Wal-Mart’s head of hair and personal care. In the next few weeks, Wal-Mart in Secaucus will roll out iPads in its hair color aisle, designed to help consumers choose their next hair shade.

Hair is another area where Wal-Mart is keeping a sharp eye on trend. Consumer buying patterns have changed, said Kirk Robbins, one of Wal-Mart’s hair buyers. He ticked off the stats — 75 percent of women don’t wash their hair every day, and 25 percent of women don’t use a full bottle of conditioner within a 12-month time frame. With the usual suspects — shampoo and conditioner — not driving the usual growth, Wal-Mart has pivoted, focusing instead on hot categories like dry shampoo and hair treatments. “Our customers need to be able to find these items in our stores,” said Townzen, after detailing the brand’s aggressive dry shampoo strategy — it aims to carry the most selection of any mass retailer. This, coupled with an increased focus on textured hair, has led to a flood of niche brands to enter Wal-Mart’s hair-care aisles, such as The Mane Choice. The brand is introducing an exclusive Pink Lemonade collection just for Wal-Mart. “We sell the heritage brands you expect to see at Wal-Mart, but some brands you never knew we sold,” said Townzen.

Pinson and Townzen both noted that Wal-Mart will continue to test and learn in beauty departments across its test stores like Secaucus, but that the plan for Wal-Mart is to ultimately have all of its beauty departments follow this upgraded model.

Wal-Mart’s efforts come as many of its competitors are also sprucing up stores to court shoppers back who have migrated to specialty doors, or to build baskets of those shopping for other needs.

One industry source who spoke anonymously noted that Wal-Mart is doing everything it can to stave off losing customers to online retailers and beauty specialty stores.

For Stu Dolleck, president of Nu-World Beauty, which produces Hard Candy, Wal-Mart’s modernization is working. “There’s no retailer that has transformed beauty as effectively as Wal-Mart. No one that has come from where they were to where they are…this is a game-changer.”