PARSIPPANY, N.J., Dec. 1, 2016 /PRNewswire/ -- With hundreds of new door openings during 2015-2016, boutique beauty stores remain on a high growth trajectory. These vertically-integrated specialty stores offering an immersive, single brand experience and supported by obsession of younger generations, including millennials, are seeing expansion across all the countries analyzed in Kline's upcoming Boutique Beauty Retailers: Channel Analysis and Opportunities report series.
These freestanding stores offer unique concepts, a fun environment, and highly knowledgeable staff. Unlike e-commerce, which is another strong channel, customers have the advantage of trying products and having in-store guidance. There is also no other direct brand competition like in department stores. "Boutique retailers offer a fun and interactive environment that isn't found in other channels, which is appealing to younger, digital consumers," notes Ewa Grigar, the study's manager.
"It is almost like a cult, the followership is often buying into the exciting concepts of these stores virtually more than the products themselves. The success of such stores depends on whether brands can keep up with the pace of younger consumers' digital needs, as well as keep a store's levels of innovation and engagement high," comments Kelly Alexandre, key analyst for the report.
Realizing this new, engaging way of diversifying where their products are sold, many brands are opening their first doors or dramatically expanding their existing number of openings, particularly in Europe and the United States.
We now see several large, multinational brands opening their first boutiques. British designer Burberry opened a high-tech beauty boutique in Covent Garden. L'Oréal's recently acquired NYX brand has grown from one store to 20 in a single year, while its long-established L'Oréal Paris brand opened its first branded cosmetics store in Paris in September. In November, Estée Lauder debuted its first store with its millennial-focused collection, Estée Edit, in London's Carnaby Street.
Even Bath & Body Works, which is already extremely well penetrated, added about 16 locations in 2015 and plans on opening 23 in 2016. There is also fast expansion of retailers from abroad. Players, such as Israeli Sabon or Dutch Rituals, which is among the fastest growing retailers in terms of sales and door counts, have recently focused on international expansion.
Located in interesting, fun destinations, these fresh, innovative stores enhance customers' shopping experience. For instance, in South Korea, where double-digit sales growth has been witnessed over the last few years, almost all boutiques are located along the street, which is highly convenient and attracts frequent traffic from local consumers, as well as increasing the purchasing power of tourists.
Beauty brands use this as part of an omni-channel strategy, as it offers numerous brand-building opportunities. It is a way to boost brand awareness, strengthen consumer loyalty, and drive brand sales across all channels of distribution. "However, opening such a store is not the ticket to immediate success," warns Ewa Grigar. "Companies that cannot maintain a high level of innovation, keep up with the essential amount of interactivity and overall exciting experience are doomed to lower engagement and sales."
While the boutique retailing market shows some similarities across countries, such as the popularity of local brands or uniqueness of store concepts, each country offers different dynamics in which brands are present in the country and which the market leaders are. Sales by product class also vary dramatically, with makeup growing the fastest in the United Kingdom and France and the slowest in the United States. Growth rates are also different, ranging from 2% to 10%, affected by various political and economic conditions.
To learn more, REGISTER for our December 7, 2016 webinar, Behind the Remarkable Success of Freestanding Beauty Stores.
Boutique Beauty Retailers: Channel Analysis and Opportunities assesses the size and evolution of the boutique retailer channel, offering a deep look at the competitive strengths and focus of dozens of specialty retailers in each country. A database reveals the door count, level of customer associates, and productivity per retailer.
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