As the world emerges from several years of “pandemic living,” there are profound changes in customer preferences and purchasing behaviors on the horizon. These trends will have transformative, lasting impacts on the drug store beauty market. While some pandemic-induced trends, like buy online pick up in store (BOPIS) and ultra-fast delivery, appear to be here to stay, we see other behaviors shifting closer to a pre-pandemic normal, such as the desire to shop in-store and the value of customer service and consultative selling.
In the annual A&M Consumer and Retail Group Beauty Survey launched in March 2022 to around 1,000 female beauty consumers in the U.S., the majority of respondents indicated that, while the number of shopping trips has remained roughly flat, the number of products purchased and used has increased. As one would expect in a world that is emerging from a pandemic and increasingly in-person, beauty categories are becoming more important than ever — for example:
- 47% of respondents shopped for the same or more makeup last year.
- Only 5% discontinued their makeup purchases.
- 69% of respondents maintained or increased their skin care spend.
Additionally, most consumers are once again becoming comfortable with brick-and-mortar shopping, as shown by 93% of our respondents stating that retailers having a physical presence is important to them. The survey shed additional insight into how consumers value in-person convenience and that the physical drug channel has a distinct competitive advantage, to the detriment of some direct-to-consumer digital competitors — for example:
- Drug stores were the most shopped channel with significant year-on-year increases, with 47% of respondents shopping the channel for makeup (up 11% from 2020), and 42% shopping for skin care (up 5% from 2020).
- Consumers are decreasing the amount of online makeup spend, with 42% of their spend done online in 2021 (5% lower than reported in 2020).
As customers return to stores, brands will face continued intense competition in the makeup and skin care aisles. Surveyed customers demonstrated a real openness to try new products — suggesting that much of the erosion in brand loyalty observed during the pandemic might be here to stay. Customers indicated that pricing, promotions and novelty are top motivators to try new products — as shown here:
- 44% of consumers tried new makeup due to a promotional activity.
- 27% of respondents tried a new product during its launch phase.
Another important consumer trend highlighted in the survey was the strong customer preference around the environmental impacts of their beauty products — people want to make more sustainable choices in their daily behavior. This preference was especially strong among younger beauty consumers, highlighting its long-term importance for the drug store channel. Consider that:
- 69% of respondents stated that they would have no issue spending more on products that have a corporate responsibility component such as ESG or CSR.
- Clean and organic ingredients continue to be the main driver for 61% of respondents.
- Cruelty free was second in line with 24% of respondents naming it the most important factor.
- Sustainable packaging, whether recyclable, biodegradable or even refillable, has also gained momentum, with 15% stating it is the most important purchasing factor.
One frequently discussed trend that the survey did not highlight was “skinimalism” — the consumer practice of streamlining a skin care routine by using more multi-use products. Perhaps motivated by a return to in-person interactions, consumers are actually showing signs of expanding their beauty routines — for example:
- 82% of consumers maintained or added steps/products to their skin care routine in 2021.
- Younger consumers (18 to 44) are more likely to be adding steps to their skin care routine, with 35% stating they’ll include an additional product in 2022.
With the vast majority of consumers surveyed (90%-plus) indicating that they will be shopping for products across multiple channels, drug stores can expect to face stiff competition for the consumer’s beauty spend. Understanding evolving consumer preferences and leveraging the drug store channel’s greatest strength — convenience — will be critical to compete and win.
We suggest the following actions:
- Reembrace world-class physical retail. The pandemic and associated operational challenges have given drug stores an excuse for sub-par in-store execution. As consumers reembrace physical retail, pre-pandemic expectations for customer experience will return and will require operational excellence.
- Double down on omnichannel. While consumers expect to spend less on online beauty than in 2020, their spend is still expected to be well above pre-COVID levels. Providing customers a convenient and seamless experience is the new expectation.
- Feature clean and sustainable products. Fundamentally rethink product placement and visual merchandising strategies — place as much (or more) weight on consumer preferences and trends as on vendor funding. Make the drug channel more interesting for younger shoppers.
- Dial up newness. With less brand loyalty and consumers looking to increase beauty spend, create an experience that allows shoppers to easily find new products that they may consider adding to their beauty regimen.
Drug stores need to celebrate and embrace their health and wellness heritage through beauty. Consumers are paying close attention to trends in beauty — and the data suggests that the drug channel is in a strong position to meet those consumer needs.
David Ritter is a managing director, David Schneidman is a director, and Cassie Ryding is a manager at Alvarez & Marsal Consumer Retail Group, a global professional services firm specializing in business transformation. They can be reached, respectively, at [email protected], [email protected], and [email protected]