Why beauty brands are latching on to the boutique retail segment

By Simon Pitman

- Last updated on GMT

Why beauty brands are latching on to the boutique retail segment

Related tags Retailing

The boutique beauty segment has gone from strength to strength, as more and more consumers choose to shop in a more curated and personalized environment that meets their expectations of a brand experience.

The growth of the segment has run in parallel to the growth of online beauty shopping, but the stark differences between how these two segments operate underlines the fact that consumers are also looking for a more personalized and intimate retail experience that they cannot get online. 

To find out more, we spoke to Ewa Grigar, project leader of the Consumer Products division of market researcher Kline Group, who is also behind the recently published report: Boutique Beauty Retailers: Channel Analysis and Opportunities​.

“We are positive about this channel’s bright future. It is not surprising why many marketers are investing into opening their own beauty boutiques,​” said Grigar.

Why is this happening?

So what is causing this phenomenon and what are these stores providing that other bricks and mortar stores cannot?

The boutique beauty retailer trend stems from consumers’ interest in unique products and different experiences that are often well-marketed by such standalone stores,” ​said Grigar.

 “These stores provide shoppers with a fun and more personalized shopping experience that consumers can’t get elsewhere, so there is an exclusivity factor involved.”

NYX growth on the back of boutique beauty

In the report, Kline highlights the fact that color cosmetics brand NYX is one of the brands that has most benefited from the boutique beauty retail model, which, together with the fact that it was bought up by L’Oréal, helped drive a sales increase of 400% in 2016.

“NYX is a fun brand, sold in an entertaining retail environment equipped with digital screens and item scanners for product-engaging activities. This is very important for young consumers who are surrounded and very much influenced by the world of selfies and instant fame,” ​said Grigar.

“NYX provides a space for these individuals where they can feel good about themselves. At the same time, affordable prices make the products even more attractive to a wider range of consumers. Feel good/look good is today’s Ying and Yang of the world of beauty​.”

Grigar adds that millennial consumers are very discerning, and invariably want their retail brand to go beyond just buying a brand, but also turning it into an experience.

L’Oréal and Korean brands are on to it

Clearly seeing the advantages of this model, L’Oréal also went ahead and opened its first boutique beauty retail outlet in Paris last year, under the mass-market brand name L’Oréal Paris.

“Other good examples include Kiko Milano and Innisfree, which show continuous growth in sales and new store openings,”​ said Grigar.

“Particularly interesting is that many South Korean brands focus mainly on distribution through these vertically integrated stores, including Skin Food, Innisfree, and The Face Shop. “

What the consumer wants

So just what are consumers looking for in this retail space? Grigar stresses that there are a number of key elements to ensure the right level of engagement for boutique beauty shoppers.

“Anything that is fun in its use, feels good on the skin, and promises many benefits for the soul and body,”​ he said.

“We see many boutique beauty retailers focused on diverse products that have been successful, including Kiko Milano and NYX in makeup, LUSH Handmade Cosmetics and Neal’s Yard Remedies in natural skin care, and Penhaligon’s and Jo Malone in fragrances.”

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