What Beauty Industry Insiders Make Of Recent Retail Partnerships And Acquisitions
In this edition of Beauty Independent’s ongoing series posing questions relevant to indie beauty, we ask 40 beauty brand founders, executives and consultants: There have been a slew of acquisitions and partnerships in the retail and e-tail portion of the beauty business. For example, Sephora has purchased Feelunique and entered Kohl’s with in-store shops; The Hut Group picked up Cult Beauty; and Ulta Beauty has put installations in Target. What impact do you think these developments will have on indie beauty brands?
From all these changes, I think the biggest winner will be the consumer. Historically the discovery of and shopping for new beauty brands all took place inside retail stores, predominantly in department stores or mass retailers. In this old environment, the retailers held control over the power dynamic with consumers as they were able to fully own the experience from brand discovery through the transaction. If a consumer wanted to purchase beauty products from a prestige beauty brand, they would drive to their preferred department store. If they also needed to pick up products for the family or in travel sizes, they would then need to plan a separate trip to their local Walmart or Walgreens store.
Whereas today, the consumer is able to discover and shop on their own terms, whether that be at home on their mobile device, solving an urgent need by having products delivered to their home via Instacart, buying direct from the brand’s website after discovering the brand from a viral Tik Tok video, or even joyfully wandering through the beauty aisles at Target with a Starbucks in hand. The point is, the discovery and the shopping experience has never been more diverse, which in turn has given the consumer much more control when, how, and where they are wanting to discover and buy beauty products.
These retail initiatives will help these retailers be better positioned to be where and how consumers are preferring to shop. Many of these specialty retailers used to be able to rely on the allure of their unique brand offering and elevated specialty store experience to help woo consumers to make an additional trip, however with online shopping growth and overall trip consolidation, that has caused potential risk to their business models.
There are now more distribution options available to brands than ever before, and similar to the power shift that has happened from retail to the consumer, I believe with these more diverse distribution options available, this will only help to further shift the power from big CPG brands to indie brands.
- Misty Reich Founder, 35 Thousand
When it comes to business markets, I’m a firm believer in the aphorism, “A rising tide lifts all boats.” So, at a macro level, the fact that the industry is hot, and money is flying around on deals and partnerships should ultimately be good news for strong smaller brands. Whether it’s an indie brand that is needing some funding or even seeking to sell, more deals equal more competition for deals and, thus, better ability for brands to negotiate terms that suit them and their objectives.
From a consumer standpoint, we will have to wait and see what impact this level of consolidation will have. Many of the brands that are making moves have loyal customer followings linked to their mission, values, purpose or even a particular shopping or loyalty experience, which could be influenced for better or worse by new partnerships or certainly new ownership looking for post-deal efficiencies.
With all that has happened in the global economy in the past 12 months and considering the number of industries that have been ground to a halt, the fact that the beauty industry has remained strong enough to warrant mid-pandemic deal-making like this should, more than anything, be a signal of confidence to indie beauty brands that it is a good time to invest in their own growth and a great time to be in the beauty industry.
- Aggie Burnett Founder, Aggie Burnett Creative
These retail and e-tail partnerships and acquisitions are making it possible for emerging brands to get in front of wider audiences. It also means a two-for-one opportunity. Meaning, if Feelunique is carrying an indie beauty brand, there’s opportunity for crossover with Sephora and vice versa. It also means access to a wider reach, potentially additional guidance from buying and marketing teams, and access to advanced e-commerce technology. The drawback is potentially a harder/longer point of entry into one of these retailers if there are more decision makers involved as a result of a merger.
- Tara Lalvani Founder and CEO, Beautifect
These acquisitions and partnerships can offer indie brands exposure to vast audiences they wouldn’t otherwise have access to. It expands their geographical footprint both digitally and physically while financially allowing them to leverage a plethora of new customers creating a major opportunity for brand expansion.
This accelerated growth can be a pivotal point for indie brands while also sending a positive message that supporting smaller businesses and collaborations within the industry isn’t something to shy away from. Success can be shared, and it’s an opportunity for larger corporations to also give back. On the flip side, this however can create a ripple effect whereby other indie brands not fortunate enough to get this opportunity may find it even harder to compete.
These acquisitions may also pose significant risks to the brands being acquired. If not handled correctly, the personalized appeal of indie brands could easily get lost and affect their cult following and image that created their growth in the first place. For example, if Beautifect were to partner with a large corporation, we would need to ensure that any collaboration would not only accelerate our business, but also elevate the brand whilst not compromising our identity or integrity.
Ultimately, if handled well, these acquisitions can catapult the growth of indie brands to build a leadership position in their niche. However, the larger retailers need to act responsibly towards smaller brands by not just putting profits and sales ahead of everything else. It is an interesting time for the beauty space, and I hope this will lead to more innovations in the industry.
- Tai Adaya Founder and CEO, Habit
I think the consolidation in the space speaks to how tough the environment for physical retail has been, especially during the pandemic and into this new Delta phase. Sephora into Kohl’s and Ulta into Target speaks to meeting the consumer where they’re at––and is an appeal to the mass American consumer. This is so, so important, especially as consumers and especially younger consumers realize that a $42 prestige lipstick and $8 masstige lipstick have the same ingredients, were probably made in the same factory, and the brands making them are owned by the same parent private equity company.
I think there’s a huge opportunity for new indie businesses to disrupt the retail/e-tailer space by 1) creating better customer experiences, and 2) better marrying the digital and physical experience. Today’s customer demands a great experience and an element of service and/or entertainment, no matter the distribution channel and no matter whether the purchase is a service or consumable product.
I’ve been so impressed with the indie fast-casual Botox/filler/facial skin bars that are popping up around the country. The branding has been elevated. The experience has been elevated. I rarely go into Sephora or Ulta with the goal of buying physical products anymore—I do so online—but I go in for blowouts and will probably pick something up while there. If I were managing a big retailer with a physical presence, I would be investing into experiences and services.
Habit has tested into distribution at a couple skin spa partners: Hi Skin in Phoenix and Elemint in Austin. I pick partners based on their ability to create elevated experiences for customers—look, feel and expertise—and this is an area of the business I’m super interested in expanding in 2022.
- David Klar CEO, Trendsformers
To a company like ours that creates indie beauty brands that provide unique solutions at accessible price points and retailers, we see these changes as an indication that value and accessibility are more important than ever in the market.
Not long ago, Sephora wouldn't want to carry a brand that's also available at a more mass focused retailer like Kohl’s or Target, so this is a big move for them, and we've been seeing things move in this direction for several years now perhaps fast-tracked by challenging times like COVID.
This brings lots of opportunity to value- and innovation-focused indie brands, but it also brings interesting challenges. For example, for our company, our new COVID-inspired Fortify+ Germ-Fighting Skincare brand was all set to launch at Kohl’s stores and on Kohls.com, but, at the last minute, the Sephora deal was announced and all new brand deals were put on hold. On the flips ide, Fortify+'s current partnership with Target may help with Ulta distribution and, overall, it's a sign that our company's direction is where even the higher end, prestige-focused retailers are choosing to go in.
- Amy Liu Founder, Tower 28
Personally, as an indie brand, I am thrilled about these partnerships, especially Sephora @ Kohl’s, which we are taking part of. Brand awareness is always an obstacle for small, growing brands, and these types of opportunities offer indie brands the chance to gain more visibility, including wider geographic and socioeconomic exposure. It’s also a win for the customer, offering more access in a very real way.
- Andrew Glass Co-Founder, Wakse
It’s such an interesting time. It’s harder for indie brands because there are so many new brands launching now. Every day, you hear about 10 new brands. In order to make it, you really have to have a point of difference. You either have to be reinventing something that needed innovation or you have to have something totally unique or you’re going to fizzle out.
It’s easier for an indie brand to do Ulta than Ulta within Target, and that is only because of the different terms. If you go into an Ulta store, and you don’t have a custom fixture, you are not paying a massive cost for the displays, but, if you go into a place like Target, there are a lot of fees that come from being on shelf there that can be expensive. It was a little bit of a shock for us when we did the Ulta at Target program. I think it’s hard for a new brand unless they have a lot of money from somewhere.
For this program, they were picking the top-performing brands from each category, and they were extremely upfront at the beginning about what the costs would be to do something like it. Because it’s a shop-in-shop, it has Ulta branding within Target, and custom fixtures that are very expensive.
We did approach Target ourselves, and we were being set up as a vendor as this happened, but we are such a small team that a beast like Target was overwhelming. Target has a lot of acronyms. We need a dictionary just to understand them. There are so many different portals and protocols. Ulta did a good job of holding our hand through the process. The teams at Ulta and Target really worked together to make sure brands got through it.
- Charlie Denton Co-Founder, Isla
With more money and attention going into the e-tail and retail space, there is more opportunity for indie brands to find retail partnerships that can propel them forward, and I think it underscores how important it now is for brands to eventually have an offline presence in an increasingly noisy online environment. This is evidenced by the seemingly daily announcements of new brand partnerships with major retailers.
However, the most important shift we think we've seen in this landscape is how the nature of these partnerships has changed from an incubation dynamic to a traffic-driving dynamic as it seems like stores an increasingly looking to partner with brands that can bring them a new audience with less of an emphasis on small-brand discovery.
- Nichole Powell Founder and CEO, Kinfield
It used to be that the options for retail were luxury stores, big box or local independent boutiques, but there are more retail options for brands today than ever before. Personally, I’m excited by the range of retail options that are available to independent brands today. While more options can make for a more complex landscape to navigate, it does allow brands to better tailor their retail strategy to their unique customer.
- Dianna Cohen Founder and CEO, Crown Affair
These acquisitions and partnerships have the potential to be really impactful and meaningful for emerging beauty brands over time. Discovery through curation and word of mouth via a retailer or partners' recommendation allows for an omnichannel approach to distribution that can be powerful beyond an indie brand's direct channels.
- Ana Armstrong Director of Sales, Orden Beauty
For the customer, it's definitely a win as these new partnerships provide a gateway to new brand discovery and more choice. For brands, it truly depends on what your definition of “independent” is. For those who already have the capital to scale and have a strong social media presence, it's a great opportunity. For true indie brands that are bootstrapping and are still growing their brand awareness, it's a riskier proposition. For these indie brands to compete in my experience, marketing is crucial and will add to their bottom line as much as product development when done correctly.
- Ashley Piszek Founder, Miss Swiss
I believe that these retail and e-tail acquisitions can give indie beauty brands a major opportunity to get picked up by multiple major retailers. All it takes is one major retailer to love your product for it to get seen by millions of potential customers. If you have an amazing beauty product that is sold at say Sephora, and it does well, there is potential for your products to also be available on Feelunique and in Kohl's.
That being said, it’s going to be imperative that indie brands continue to differentiate themselves and promote their competitive advantages because now they will be competing for a spot between current products being sold at Sephora, Feelunique and Kohl’s. The latest retail acquisitions and partnerships provide an exciting opportunity for indie brands who stand out competitively to have even greater retail presence.
- Kim Wellen Founder, Mantra Mask
I believe that, in some cases, these acquisitions can be positive for indie brands as they can help to leverage brand awareness between both big box retailers. Often, these collaborations and acquisitions result in more exposure for the brand. I'm all about growth, whether you're a large or indie beauty brand.
- Kimberly Shenk Founder and CEO, Novi
According to the brands building products on Novi, these acquisitions and partnerships continue to increase the complexity of bringing beauty products to market. It was already difficult to develop a product compliant with Sephora's standards for Clean at Sephora or Target's standards for Target Clean.
Now, brands must account for additional standards set by Ulta, Kohl's, etc. Indie beauty brands are already navigating an ever-changing and increasingly complex landscape of consumer demands when they create products. These acquisitions and partnerships in retail are layering on additional ingredient, packaging and fragrance requirements that leave brands with yet another set of standards they must adjust their product formulations to or, worse yet, go back to source new materials altogether.
- Monica Abramov CEO and Co-Founder, Lunata Beauty
We think there’s a lot of movement going on in the beauty industry, and retailers as well as established brands are really seeing the demand for smaller, indie-type brands that really speak to the younger demographic We think these consolidations of blending high and low beauty together will allow for cult brands to have a space to break into retail in a new and unique way and really reach the end consumer at every price point.
- Carol Christopher CEO, Ellis Day Skin Science
I think these moves are all about consolidation, access to new customer groups and expansion into new territories. These partnerships, particularly those that involve a partner with a significantly larger brick-and-mortar footprint, corroborate that the majority of purchases in this category are still happening in physical stores. This is also a way to get consumers back into brick-and-mortar stores more quickly.
I think the impact on indie beauty brands will be more pressure to get into brick-and-mortar stores to compete and grow their business. But I think indie brands that are focused on specific audiences or life stages like menopausal women or pregnancy can leverage their customer knowledge and relationships to create valuable partnerships.
I think it's also important to note that these category partnerships, which are about expanding one's physical footprint, hint at a shift in the power dynamic back to brick-and-mortar, where larger entities have more clout, and away from e-commerce-only indie beauty brands.
- Amber Rose Johnson Founder, Facial Lounge
The beauty industry is constantly growing, and there is room for everyone big and small. I love seeing Ulta in Target and all the collaborations. The thing I love about small Indie brands is that there is a human behind it, they are real and usually make products in small batches. They also have freedom to say and do what they want. Corporations seem to control a lot of the big brands. Us smaller brands have nothing to worry about. When you do what you love, people will find you.
- Thai-Anh Hoang Founder, EmBeba
We are seeing the future of retail in which e-tailers and retailers continue to build strategic partnerships to grow and expand their customer base together and also in an effort to consolidate their positioning. Retailers are working to stay ahead of the trend and drive this generation of shoppers to physical retailers.
The e-tailers are really great at curating and introducing new, exciting brands to their customers. So, in effect, taking the discovery of "it" brands off the shoulders of the retailers. This is actually good news for indie beauty brands because it's a "side door" to get into physical retail with a smaller footprint if the e-tailers are bringing the indie brand with them. In the case of Sephora x Kohl's and Ulta x Target, it's also another way for indie brands to build retail doors and tap into new customers they might not have considered before.
- Ilan Studinovski CMO, Truffoire
The retail world is constantly changing, especially during the last couple of years. Indie beauty brands have to pivot and adapt to the current world and future, but first I believe the brand has to make sure they know what they are planning on achieving. If the brand wants to dominate, they need to look at the direction the big brands are taking, which is merging both the retail world with the e-tail portion of it. There is no denying that the e-tail portion has been growing outstandingly, but merging it with the retail world can really make a difference for the indie beauty brand.
- Jill Turnbull Founder, Jill Turnbull
Retailers such as Sephora and Target will give indie brands substantial reach and exposure they likely wouldn't receive without significant investment in marketing. Many brands are finding it can be challenging to grow through typical DTC channels and selling through these large retailers is a great way to increase their brand awareness.
- Lenka Tinka Founder, Natura Culina
In my opinion, indie skincare brands are getting stronger independently on what marketing moves and acquisitions these large retailers make. Indie brands are generally driven by making a difference in the industry by educating consumers regarding what's in their products and by taking a personal approach when talking to customers and listening to their needs.
I do believe that large retailers are paying attention to this and, therefore, these new acquisitions and collaborations are based on many of these values. Consumers are getting educated and more aware of what's in their products, what needs to be in them and what doesn't belong there in order to maintain their health and wellness
The impact with all the slew of acquisitions and partnerships for the indie beauty brands will be significant as many of them will have rethink their ultimate strategy and where the see their brand in the next five to 10 years. In order for them to succeed, they really have to have significant marketing budgets to be able to support these retail partners with sampling, GWPs, advertising, etc. It really ultimately falls on the brand founder and team’s strategy.
We're very fortunate in the U.S. to have some of the most incredible independent retailers, who have always been the backbone and bread and butter for all indie brands to be successful before being able to jump in bed with the big boys! The independents are so important as they're the ones who make brands cool and noticed, and that's usually when the bigger e-comm and retailers start to notice.
These days, we still have many options as indie brands, but most of our brand founders ultimately want to be in the bigger box retailers who are really focused on how much engagement a brand has on all channels of social media as well as their own DTC sales. It’s definitely getting harder out there, but definitely very exciting as this business certainly keeps us all on our toes always!
- Sally Mueller CEO and Co-Founder, Womaness
It's great to see these changes at retail, and we feel it will open up new opportunities for emerging brands in the future. The customer has always cross-shopped the beauty category, so it makes complete sense for high and low brands to be merchandised together and to take advantage of the store traffic and large digital audiences retailers like Kohl's, Target and The Hut Group offer.
- Patty Lund Founder, Voloom
Indie beauty brands have thrived in the world of e-commerce because they can fully express their brand values, promote nuanced benefits and are truly able to find their tribes. As the retail industry consolidates, there will only be shelf space for a limited number of brands. But, of course, the retailers will continue to develop their e-tail strategies, presenting indie brands with new online outlets. So, this consolidation can certainly be a win for indie brands. The e-tail environment is still the space where indie brands can emerge and thrive, whether or not they end up on a retail shelf.
- Holly Dear Founder, House of Dear
If they seek out new clean young brands, this could be the opening to draw attention to indie beauty brands and put them in stores and in front of audiences that can traditionally be hard to enter or reach.
- Cathy Kangas Founder and CEO, Prai Beauty
It's extremely exciting to see such huge innovation happening right now in retail. The customer experience from these newly formed partnerships will be one of convenience and harmonious shopping, specifically formed by the shop-in-shop/one-stop shop, which grocers are aiming for. In today's world, the customer is looking for ease, speed and added value, which these acquisitions bring to the beauty business.
These new channels open indie brands up to a wider audience and exciting new opportunities lie ahead. Prai already has partnerships with some of these retailers, and we're confident this opens the door for Prai to expand further into retail.
- Heidi Ackerman COO, Epicuren Discovery
These changes in direct-to-consumer strategy open new doors for indie brands and make what we do very exciting. These COVID times made everyone rethink what they are doing and why. I tell people a lot that the last year and a half have made me more of a “yes girl” at Epicuren and make me think there is no reason we can’t be in front of everyone. The examples above of new acquisitions and partnerships are other examples of saying yes. It allows brands of all types and sizes to be in big stores like Target while expanding reach to new levels and offers a mix of price points as well as opportunities to give consumers a full glance of what is available in beauty.
- Margo Marrone Founder, The Organic Pharmacy
The indie beauty industry is instrumental in innovation and thinking outside of the box, and need platforms like Feelunique, Hut and Sephora to showcase and generate much-needed exposure. I see these acquisitions as a good thing because it continues to allow indie brands to innovate and have partnerships that will allow their success.
- Ann McFerran Co-Founder and CEO, Glamnetic
I think the added distribution is great for indie beauty brands. As an indie brand, retail is more important than ever when building your brand into a household name, and having large additional store counts and distribution is a huge plus for the industry.
- Shannon Britt Co-Founder, Olura
As a new brand, we're leveraging the power of social media to take our message directly to the consumer. As Olura makes plans to diversify our distribution model, it's compelling to see the expanding opportunities to bring serious skincare solutions to places like Target, Kohl's and JC Penney.
- Josh Gordon Founder and CEO, Noyah
We expect the overall impact to be positive insofar as continuing the trend, which we are seeing, of specialty beauty retailers picking up indie brands. Retailers are now seeing the value of including indie brands in their product assortments and, importantly, they're also getting used to working with brands who operate on a smaller scale. This means that certain barriers to entry indies faced at many retailers in the past are lessening, which is great because, with a little flexibility, there's almost always a way to make these partnerships successful.
- Kimberley Ho Co-Founder and CEO, Evereden
It really depends on the purpose of the acquisition or partnership. In the case of Sephora’s expansion into the U.K. by way of the Feelunique acquisition, it will likely be a boost to indie brands as Sephora is a known trendsetter that proactively develops emerging brands, and their scale will provide further opportunity for brands to grow their reach.
For other acquisitions where more traditional retailers may be acquiring nimbler, fast-growing players for the purpose of entering new geographic markets, the verdict is still out, and it is possible that they may trim down niche brands in favor of known performers. All in all, I do think that consumers are looking for newness in the beauty and skincare space and, as such, indie brands will continue to have increasing opportunities regardless of changes in the retail landscape.
- Nick Allen Founder and CEO, Geologie
The line between retailer and brand has been blending for some time. Digitally native brands are opening their own physical locations and traditional retailers are launching their own brands. These are additional examples of that narrative. For indie beauty brands, this means getting more creative about your distribution strategy and nailing the right partnerships by delivering something unique and valuable. In other words, you snooze, you lose.
- Margarita Arriagada Founder, Valdé Beauty
The short answer to the impact on indie beauty brands is that there will be changes and everyone will experience a period of volatility. For some, it could be favorable, and others may be disadvantaged.
For example, Kohl's had an existing brand assortment, which may or may not be part of the Sephora in-store shop. The same could happen with the Feelunique acquisition of Sephora and/or Cult Beauty's acquisition—and the same could be said in reverse. There may be an opportunity for new indie brands to benefit from the acquisitions. Bottom line, there will be change.
- Amy Chou Granger Co-Founder and President, M2Ü NYC
We are seeing a really big shift in the beauty industry overall, and retail is leading the charge. These developments can both negatively and positively impact indie beauty brands. On the one hand for indie brands that are currently in retailers like Sephora, they now have greater exposure of sitting in a Kohl’s and have the opportunity of gaining a new type of customer. However, with acquisitions like these, spaces can also become more crowded.
Something to watch closely is to see if these acquisitions actually bring in more brands to be featured on the combined shelf space, or it’s just the same legacy and established brands being featured in multiple spaces. If it’s the latter, newer indie brands are going to face more competition in gaining retail shelf space.
- Yasmin Maya Founder, Birdy Lashes
I look at these new retail partnerships and acquisitions as a positive for many indie beauty brands. It is known that getting into retailers is no easy feat. With expansive partnerships like Ulta's installation at Target, it gives brands the opportunity for greater exposure. For example, a brand that has gotten into Ulta, but is still looking to get into more of a mass retailer, this serves as another avenue where their products will start to live within Target shelves. Target in specific is an interesting retailer because customers shop there for a variety of reasons. A customer grocery shopping, making a quick "Target run" to restock household items, etc., will now be exposed to new beauty brands they typically have not seen in the past at their local Target stores.
- Jess Hunt Co-Founder, Refy
As a co-founder of a niche beauty brand, it's a really exciting movement to see these beauty industry giants focusing more on their new brand acquisitions and partnerships. Sephora has always been a huge goal for us as a brand at Refy being a niche brand from the U.K. and to see they have recently purchased a U.K.-based brand like Feelunique feels as though they are bringing some of that Sephora sparkle to the U.K., which for me is really exciting and allows big opportunities for niche and indie brands, which is certainly what we feel consumers are now constantly on the search for.
- Kristina Breckon VP of Marketing and Operations, Consonant Skincare
The swell of acquisitions and partnerships in the industry makes it a very interesting time, especially for indie brands! On one hand, it is making the pool of potential wholesale partnerships smaller. This makes it even more challenging for indie brands to break through and land wholesale deals due to fewer opportunities in an already highly competitive market.
On the other hand, if you are able to break through with a unique offering, it may accelerate your brand penetration in a market. A partnership with Sephora leading to placement in Kohl's becomes a two-for-one wholesale deal. It's also beneficial because it means that companies are looking for brands that are ripe for acquisition, which is the end goal for many indie brands. Regardless of your current relationships, there has never been a more important time to have a compelling and differentiated brand proposition!
- Amy Quinto Digital Marketing Strategist, FactorFive
Considering the new partnerships in the beauty industry, indie beauty brands are going to have a challenge ahead. Whether they choose to view it as an opportunity or a threat is up to them. Either way, it will push them to reevaluate their retail strategies in a big way.
If they do take the opportunity to try to enter the big-box market, up-and-coming indie beauty brands will most likely have a harder time competing for shelf space, but they also have a chance of being discovered by a much larger audience. Indie brands will need to get more creative and find ways to stand out from the drugstore brands that people normally see on the shelves.
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