CVS to freshen up beauty offering this spring

Dive Brief:

CVS Health is upping its beauty game with a series of premium products, following the exclusive Stateside offering of U.K. makeup company Wunder2’s Wunderbrow product, which it’s been offering in some 500 U.S. stores as of late last year, Drugstore News reports. The drugstore retailer this month will add to its line of Wunder2 products.
In April, the drugstore retailer is also bringing in beauty products from the likes of Tigi Cosmetics and Vinylux, some of which were previously only available in salons, according to the report.
Responding to increased consumer demand for more natural products, the company is also offering Mineral Fusion’s new products. Mineral Fusion’s skin care, hair care, nail care and cosmetics are free of gluten, parabens, phthalates, artificial colors, synthetic fragrances and SLS and are 100% vegetarian.

Dive Insight:

At CVS's investor conference at the end of last year, executives often sounded more like they were talking about a healthcare business than a retail one — and that’s proving to be a weakness. Bolstering its beauty offering could help move the needle on that.

During that December conference, CVS President and CEO Larry Merlo said retail presents one of the company’s biggest advantages, considering its healthcare operations are under pressure in a volatile market environment. But GlobalData Retail managing director Neil Saunders maintains that CVS isn’t following through on that realization, saying that his firm's analysts were “surprised at the complete lack of evolution in the format and the paucity of innovation” in some CVS stores.

“An attempt to dial back on front of store promotions and difficulties in driving traffic to shops diluted sales on the pure retail side,” Saunders said in a note emailed to Retail Dive. “However, in our view, these factors are simply part of the wider malaise in CVS’s store-based business. We have, for a long while, been critical of CVS’s lack of thinking in retail — an opinion that remains largely unchanged.”

As retailers struggle, beauty is emerging as a dependable category, with the global demand for organic personal care products in particular expected to reach $13.2 billion by 2018, up 9.6% from the $7.6 billion in sales in 2012, according to Transparency Market Research. Department stores have been particularly hit as retailers increasingly add beauty to their offerings, and drugstores are another dependable source for personal care and beauty items that are vulnerable to the increased competition.

Fast fashion retailer H&M is devoting more space to cosmetics, low-cost e.l.f. is planning more brick-and-mortar stores after its $114 million initial public offering last year, beauty retailer Ulta continues to rack up sales in stores and online and J.C. Penney’s Sephora concessions are offsetting tepid sales in other areas of their respective retail operations. Drugstores aren’t leaving the challenge unanswered, though: Walgreens has also worked to keep its beauty customers close with a new club within its Balance Rewards loyalty program. CVS has a similar beauty loyalty setup.