More beauty online retailers opening stores

NEW YORK — E-commerce has been the fastest-growing retail channel in the U.S. beauty market, with a compound annual growth rate of 24% since 2009, the Kline Group reported on Tuesday. And more of these online retailers are opening physical stores.

“The flurry of online retailers entering the physical world signifies yet another paradigm shift in beauty retailing,” Karen Doskow, director of Kline’s Consumer Products practice, said. “While everyone else has been flocking online, online pure-plays are becoming physical. Omnichannel retailing strengthens both ways as retailers and marketers strive to offer channel agnostic consumers the convenience of shopping in physical stores and online.”

Birchbox, an online subscription service, opened its first store in New York City in 2014, in addition to its first holiday pop-up shop for men later that year. It expects to open seven new pop-up stores in the United States, in collaboration with Gap.

Violet Grey, an online beauty curator, also opened a store in Los Angeles, while Credo Beauty, an online natural beauty retailer, opened its first physical shop in San Francisco on June 5.

Technology has also entered physical retail environments, according to the Kline Group. Beauty retailers are increasingly using diagnostics tools like Sephora Color IQ, augmented reality mirrors, and online tutorials in their stores, which also use Beacon technology to inform consumers about special offers.

Former infomercial brands, like Guthy-Renker’s Meaningful Beauty and WEN, are now available in Sephora and Ulta, the Kline Group said. Other infomercial brands, such as Miracle Skin Transformer and Hydroxatone, are on sale in Kohl’s beauty departments.

But this trend isn’t limited to beauty retailers. After experimenting with pop-up shops, Amazon introduced an on-campus pick-up and drop-off service at Purdue University in February, according to the Kline Group. The retail giant has also leased space in New York City, according to the Wall Street Journal, which might host its first retail store.

Despite this growth, virtual channels — compared to physical stores — account for only 8% of total U.S. beauty and personal care sales.

“This movement underscores the continued relevance of bricks and mortar in an increasingly digital world,” Doskow said.