An analysis of brands’ own stores

BW Confidential – Standalone stores such as those from Dior enable brands to offer better services than traditional retail.

How the rise in branded standalone stores is impacting the market

The recent spate of beauty standalone openings is likely to stretch into a longterm trend, marking an important movement of brands taking on the role of retailers. Whether they be well-established luxury fashion houses or up-and-coming cosmetics brands from Korea, beauty players across the spectrum have been ratcheting up their own stores to sell directly to the consumer. Now, even mass and masstige companies are looking more closely at this retail model— L’Oréal Paris, for example, opened its first French standalone store in 2016, while Maybelline unveiled its second French store earlier this year. And when it comes to acquisitions, multinationals are pinpointing targets with a direct-to-consumer retail presence.

A key factor fueling this change is the number of new brands and the need to stand out. The Estée Edit and Dior make-up stores, for instance, are using their digital-prominent boutiques to target millennials. Meanwhile, luxury brands like Chanel and Burberry have set up beauty stores in high profile locations to capture new segments of shoppers, notably wealthy travelers. Ray Gaul, vp research and analytics, market insights at Kantar Retail comments: “It is not enough to open these stores in locations where there are lots of people—it has to be places with the right types of people,” he says, adding: “It’s more about engaging and making the international connection than about making sales in that location. Nearly every [standalone] location has add-on services that you would not find at a standard location. These are things like gifting, shipping, salon and advisory services, and so on. Fans of brands actively plan their travel to include the chance to visit these stores and play with new products and services. This allows the brand designers to get ‘focus group’ type feedback on new ideas and new designs.”

Brand experience

“The standalone store reinforces the brand. It allows brands to do services so consumers can really experience it,” says Strategic Mindshare founder and president Cynthia Cohen. Indeed, brand followers are often buying into the concepts of these stores almost more than the products themselves, and as such, the store’s success depends on the level of innovation and on keeping engagement high, says Kline & Company consumer products analyst Kelly Alexandre.

Laura Sossong, manager, professional services at Boston Retail Partners, comments: “Reinforcement of brand identity and resonating with the consumer is vital for survival in the retail space. By isolating themselves from the offerings of their competitors, branded stores encourage loyalty by compelling the consumer to think of a single location as a one-stop-shop for all their beauty needs.”

Having so much choice in beauty products and brands is becoming rather confusing to many consumers who want to buy not just a beauty product, but something unique with a story behind how it was made, says Kline & Company project manager Ewa Grigar. “Fierce competition in beauty has seen many marketers look for alternative distribution models to sell their products. It is difficult to cultivate loyalty in stores selling a broad range of different brands,” she comments.

Also driving the trend is brands’ frustration with retailers. Brands often criticize retailers for how products are presented in-store, the service they offer and the margins they demand. They also regret that retailers are pushing their own private-label or exclusive brands. In addition, many of today’s retailers, whether department stores or perfumeries, are having a hard time getting consumers into stores. Crucially, a branded standalone store enables companies to have more direct relationships with consumers. This relationship and the data they collect from their stores enables brands to run targeted marketing campaigns, invite VIP clients to events and find out what consumers want.

And the multi-brand retailer?

So where does this leave the multi-brand retailer? Some say these retailers will put even more focus on their private-label offers (which are already taking on more space and prominence at key perfumery chains). Others say that these stores will, like branded standalones, need to offer more services. “I would expect that multi-brand retailers will focus more on redesigning their existing stores to include more unique areas for consumers to play around with products, particularly with employing digital technology. […] At the same time, these retailers will also be more selective in choosing brands to work with by opting for those with high buzz, yet limited-availability to become more of a niche multi-brand retailer,” Kline’s Grigar adds.

“These labels are likely to adopt the Sephora experiential service-based model, then find ways to make it their own and distinct to the customer. Highly customized interactions with customers will be important to keep customers engaged and coming back for more,” says Sossong.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *