Even if you’re a giant retail corporation with enough in the budget to give customers everything they could ever wish for, it’s probably still not enough.
These days, if you want to keep up with – or beat out – the competition, the name of the game is all about surprise and delight.
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The usual perks, like lightning-fast shipping, easy and extended return policies, exclusive perks or bonuses attached to a membership — like access to streaming subscriptions or savings on gas and other goods — and cash back based on loyalty purchases have become commonplace.
That stuff is boring now. Everybody’s got it. Just pick your favorite flavor – are you more of an Amazon (AMZN) browser? Is Walmart (WMT) more your jam? Or perhaps you’re a Target (TGT) girlie, as TikTok calls red circle devotees.
It no longer cuts it to simply give customers everything they want.
Instead, large retailers need to offer customers more than what they want. The name of the game is now about anticipating what customers may want or need before they even know it. It doesn’t require psychic superpowers, but it does require a robust data and logistics team with plenty of know how. These teams must constantly survey the market for trendy brands, new consumer behaviors, and yes, even social media, in order to anticipate a forthcoming demand.
A doorway full of Amazon packages.
Jorge Villalba/Getty Images
Retail giants want beauty
One such growing trend in the retail space is beauty and cosmetics. The notoriously high margin business is captivating for several reasons.
First, it changes quickly, as social media picks up on new trends (and rejects old ones) far faster than other avenues, since makeup is based largely on seasonality.
Second, it doesn’t take much time or resources to produce a new cosmetic, such as a lipstick, pressed powder, or perfume. Especially if you’ve already got a winning product. All it takes is adding a new color, a little fragrance, or limited edition packaging. And the beauty devotees come running.
And since the raw materials aren’t incredibly expensive (powders, waves, alcohols, and pigments), the markups – and returns – can be impressive.
It’s no surprise, then, that some of the largest corporate giants have wanted to get in on the beauty space that was previously confined to more specialty shops, like LVMH’s (LVMHF) Sephora.
Walmart (WMT) has been rapidly adding cosmetics brands to its shelves, even launching investments in several growing cosmetics and hair-care brands as part of its Walmart Start beauty-brand accelerator program.
Target (TGT) , for its part, partnered with Ulta Beauty (ULTA) in 2022 by opening mini shops inside its large brick-and-mortar retail spaces, allowing customers to shop hundreds of cosmetics brands Target might not have carried otherwise.
But the shop-in store model isn’t unique to Target. Kohl’s KSS entered into a similar agreement with Sephora in 2021; the department store touts the partnership as one of its most successful ones to date.
Amazon rapidly adding to the beauty cabinet
And Amazon (AMZN) has been adding premium beauty at a faster clip than perhaps anyone else.
In March, it launched an all-new Clinique brand storefront as a part of its push into the Amazon Premium Beauty store, which features other key brands including Laniege, Innisfree, Sun Bum, Mario Badescu, Clarins, La Roche Posay, and Elemis.
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And on Thursday, Amazon announced it would add Kiehl’s, officially known as Kiehl’s Since 1851, a legacy skincare company with substantial following and several brick and mortar presences in some of the top luxury shopping districts across the world.
The New York apothecary brand also retails at Sephora and other specialty beauty shops. But now Amazon is adding it to its storefront, offering free and fast shipping for Prime members on some of the brand’s top-selling products.
Some of those products include:
Better Screen UV Serum SPF 50Truly Targeted Acne Clearing SolutionClearly Corrective Triple Acid PeelUltra Facial CreamRare Earth Deep Pore Minimizing MaskCalendula Herbal Extract Alcohol-Free TonerFacial Fuel Energizing Face Wash
Part of what makes Kiehl’s so popular is its gender-inclusive lineup. The skincare brand features a line of male-targeted skincare, but its neutral packaging and universal treatments have broad appeal across all ages and demographics.
“We’re excited to welcome Kiehl’s to Amazon Premium Beauty — a heritage brand with a devoted following,” Ali Kole, Head of Amazon Premium Beauty said of the launch. “Working with Kiehl’s to build a best-in-class beauty brand store that showcases the brand’s strong innovative spirit supports our vision to offer Amazon customers unmatched beauty selection with engaging and inspiring shopping experiences.”
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