The year 2014 will be remembered as one of discovery about the power of niche and exclusive beauty brands at retailers in the United States, and that momentum will increase well into the future.

Global retailers long ago recognized the potential for creating differentiation and loyalty with consumers through their own brands. The potential for higher margins while offering their consumers better value creates a win-win situation. In beauty, many consumers view the national brand equivalent as a valuable option. However, there are many beauty consumers who also want the latest innovation at an affordable price, and this is the white space that niche and exclusive beauty brands fill.

Walgreens launched Boots’ No7 brand at all of its flagship stores in 2014 and then expanded it into additional store formats.

As retailers increase their exclusive beauty brand development, they use a number of strategies globally, including utilization of an internationally proven performer, line extension or restage of a beauty brand into current categories, extension of a beauty brand into new categories, building an exclusive beauty brand on an ingredient trend, mainstreaming prestige beauty brands as a portfolio to reach diversified beauty consumers, and support with influencer marketing.

Using an internationally proven performer

Walgreens began 2014 by launching the Boots No7 brand in all its flagship stores and extended the Boots brands throughout the year into additional formats.

Taking best-practice examples from the Alliance Boots playbook, the Boots No7 brand was launched with full merchandising and beauty adviser support. While Boots brands are not exclusive to Walgreens, the brands will be executed in-store with exclusive marketing support.

Line extension into current categories

CVS continues to support its Nuance proprietary brand with 23 innovative line extensions in its current categories of hair care and skin care. These new products provide an opportunity for new beauty consumers to discover the brand and for current users to try new formulations. Each new item has a natural ingredient that drives the reason to believe. In addition, there is a marketing communication focus on the overall natural ingredients story. Permanent displays have been seen in-store, as well as placement on the shelf by category.

Essence of Beauty, another CVS proprietary beauty brand, was restaged in late 2013 with new packaging, on-trend complex fragrances and a new marketing campaign. This beauty brand has been a successful, affordable bath and body brand that originally offered consumers an alternative to the more expensive Bath and Body Works type of products. In the fall, the brand was further extended to a full aromatherapy line. Like the aromatherapy line in Bath and Body Works, the Essence of Beauty line extension comes in three scent collections (Lemon Verbena, Lavender and Eucalyptus), with seven SKUs in each collection.

Extension into new categories

Target has been an innovator in the beauty space, willing to try new beauty brands and concepts. Target’s first and longest-standing designer/collaborator, Sonia Kashuk, who joined Target in 1999, has formed a successful makeup artist brand and expanded the line in November 2013, with full launch support in 2014. The 24-SKU bath and body collection features body butter, hand creme, shower gel and perfume and comes in four scents: Red Promisia, Purple Seductia, Pink Innocencia and Yellow Alluriana. The line ranges in price from $4.99 to $19.99 for an eau de toilette.

Drew Barrymore’s Walmart-exclusive Flower brand continued to expand in 2014 with line extensions in fragrance and cosmetics bags. In October 2014 the Flower collection expanded in-store and online with three fragrances. The selected scents — Cherished, Radiant and Sultry — are described as a combination of “scents that capture the joy of life and love, in all of its meanings,” which coincides with Barrymore’s positive approach to beauty. Beautiful fragrance gift sets were specially curated for the holiday season and included matching cosmetics bags for shoppers seeking gifts.

Building on ingredient trends

Argan oil is one of the hottest ingredient trends in beauty. A global trend that started in the prestige beauty class of trade with the Moroccan Oil salon brand has exploded into brands, line extensions and new products.

Launched exclusively at Rite Aid in June, the Oil Essentials brand from Emilia Personal Care is a total solution product line of six luxurious multipurpose beauty oils for hair, face and body. Made with natural and sustainable blends of eco-certified essential oils and fortified with an advanced antiaging Luxmeadow E Complex, the line is also free from parabens, sulfates, phthalates and synthetic colors. This line appeals to women of all ages.

Reaching diversified beauty consumers

In March 2014 Target once again broke traditional barriers by executing a new beauty strategy in hopes of appealing to its diversified guest population. The retailer started bringing in prestige beauty brands that offered built-in awareness and a loyal following of brand fans, and then made them available at Target at a more affordable price point. One brand example with an established, cult-like following is Carol’s Daughter.

This natural beauty brand is more than 20 years old, and launched in stores and online with 21 hair care SKUs ranging in price from $9 to $15. Target will be the exclusive retailer to carry the Carol’s Daughter Sacred Tiare Collection, which is designed to stop breakage and smooth frizz. The collection features sulfate-free shampoo, fortifying conditioner, hair mask, leave-in conditioner, styling cream and smoothing serum. Products range from $12 to $15.

Marketing support

Ongoing marketing is pivotal for exclusive beauty brands to drive awareness and trial to new and current users.

Originally launched in 2012, the b-leve beauty brand is found in such fine grocery retailers as Giant Eagle, Spartan, Stater Bros., Big Y, Hy-Vee and Coborn. In 2014 the beauty advisers at Giant Eagle, who are true brand advocates for the b-leve brand, executed a successful sampling and gift-with-purchase promotion, and with its range of hair care items, facial care items, bath and body products, beauty tools and bath accessories, there is a lot to talk about. Beauty mavens are believers of this multi-benefit beauty brand and continue to try new products in the 100-SKU collection.

What’s next for retailers’ beauty offerings

What’s next for retailer beauty offerings in 2015 and beyond? Creating convincing, differentiated choices for beauty consumers that go beyond being just national-brand-equivalent products by offering more innovative, premium product attributes and technology at a more affordable price is key to future exclusive beauty brand success. Significant opportunities exist for exclusive brands that emotionally connect with different consumer groups, whether they are Millennials, baby boomers or even age 70-plus beauty consumers.

Many retailers in the United States have started this brand development with different strategies. The white space for beauty is very individual and expands beyond a basic essential or even one specific brand. The key for U.S. drug retailers in particular will be to create a destination or offer collections of exclusive beauty brands that meet the needs of a broad range of women while remaining meaningful and true to their distinctive retail positioning in the marketplace. Retailers dedicated to owning and supporting their exclusive beauty brands with continuous innovation and marketing support are poised for long-term success.

Laureen Schroeder ([email protected]) is the global director of health, beauty and baby at Daymon Worldwide.