June 15, 2024


Define Beauty Yourself

There’s fierce competition for beauty care share


  • Drugstores capture more than a third of the $110 billion HBC market
  • Hy-Vee actually gained market share in this category during the pandemic
  • Online retailer Thrive Market recently launched its beauty brand f.a.e. and the company has already begun to see results

Beauty care has long been one of the most challenging categories for the supermarket segment, given the strong competition from other channels, including not only drug and mass, but also beauty specialists such as Ulta and Sephora.

Although many food retailers enjoyed a surge in beauty and personal care sales during the peak of the pandemic as consumers consolidated their shopping trips, traditional spending patterns have since returned.

Sales of beauty and personal care were down 6% in food outlets in 2021, significantly underperforming the 10% growth for the total U.S. beauty market, according to the Beauty Retailing USA report from research and consulting firm Kline. The report predicted a further decline of 1% in the grocery channel for 2022.

“Competing against so many strong retailers, including online sellers, the ability to step outside their traditional format and offer shoppers something novel will be key for the success of grocers moving forward,” said Dana Kreutzer, project lead at Kline’s consumer products practice. 

“Mass retailers like Target and beauty specialty stores like Ulta and Sephora have done a great job at catering to new and emerging beauty brands,” Kreutzer said. “This has helped these retailers evolve with the changing competitive landscape and consumer desire for newness in beauty.”

Data from NielsenIQ shows that drugstores capture more than a third of the $110 billion HBC market. That channel saw HBC sales increase 12.5% for the 52 weeks through Aug. 27, compared to the previous 52-week span—an overall increase of about $33.35 billion. 

Drugstores outperformed the market overall in cosmetics and nail grooming categories, as well as in hair care, although drugstore sales of hand and body lotion categories were flat in the last year.

Some supermarket operators have devoted considerable effort to beauty and personal care, however, seeking to capitalize on the traffic and margins that the category can add, if merchandised correctly.

Hy-Vee, for example, has created beauty departments in its stores that stand out and have become known as destinations for local shoppers.

“We gained market share during the pandemic, with consumers wanting to shop at fewer locations,” said Shelby Stritzke, vice president of fashion, beauty and innovation at the West Des Moines, Iowa-based retailer. “In turn, we are focused on a broader assortment bringing newness to the shelf and driving value.”

After launching a major partnership with upscale bath and beauty brand Basin in 2018, and launching in-store boutiques and displays, Hy-Vee has continued to evolve its approach to those categories, she said.

“We have expanded our footprint and product offerings, creating a one-stop shopping experience,” Stritzke said.

Hy-Vee’s expanded product selection, along with a rebranded beauty department called Bellissima, includes elevated offerings in cosmetics, with brands such as bareMinerals, W3LL People, Pacifica and others. The retailer has also expanded its professional hair care sets and facial sets with additional solution-based products, Stritzke said.

Going forward, Stritzke said Hy-Vee plans to expand its beauty care strategy to more large-format stores focused on solutions and value for customers.

“We are focused on following trends and expanding in cosmetics, hair care and facial categories in 2023,” she said, adding that the retailer plans to add more products in clean beauty, ethnic hair care and exclusive private label products.

Thrive Market steps up online competition

In addition to competing with mass-market retailers and beauty specialists, traditional supermarket retailers also face increasing pressure from online beauty care sellers.

Thrive Market, for example, recently unveiled f.a.e. (which stands for “for all, everywhere”), a skin- and body-care brand that represents Thrive’s first foray into beauty and skin care. The 26-item line features clean ingredient labels and sharp pricing, said Christine McNerney, senior director of merchandising for home, health and beauty at the online grocery company, which charges members an annual or monthly fee in exchange for home delivery of items at reduced prices.

“As a trusted destination for healthy living, f.a.e. is an accessible and affordable line built for all, everywhere, with affordable price points and is an approachable clean beauty buy for our members,” she said.

Although the expansion into beauty care just began in August, McNerney said the company has already begun to see some results, citing Nourishing Body Wash and Nourishing Body Lotion with Coconut Vanilla scent as two of its early successes.

“This is in our ‘For Everyday’ vertical in f.a.e., so it appears that our members are gravitating to the everyday basics for their routine,” she said.

Thrive is marketing the f.a.e. line to its 1.2 million members via an omnichannel approach which includes email, SMS, in-app, social media, influencer marketing, as well as other communications channels.

The f.a.e. brand fits in with Thrive Market’s focus on natural, organic, and healthy product offerings, McNerney said.

“Our brand quality and ingredient requirements follow overall Thrive Market standards and in some cases are even more stringent for our own f.a.e. brand,” she said. “We aim to provide our members with a combination of affordable, clean, high-quality versions of core necessity products as well as innovative items they cannot get anywhere else.”

McNerney said the company has plans to expand the line this fall with Beauty Collagen Lattes, a quick-dissolving collagen supplement that helps support healthy skin, hair, and nails. Flavors at launch will include Spiced Chai, Matcha, and Golden Milk.