The mass and premium beauty worlds continue to collide

July 27, 2021 Mary

This week, I look at the boom of upstart personal care brands, and talk with Target’s Christina Hennington and Ulta Beauty’s Kecia Steelman about the two retailers’ partnership, launching in August.

One could argue that there is never a good time to launch an indie brand, given the category’s lower barriers to entry and cut-throat competition, but January 2020 certainly wasn’t ideal. But just two months before Covid-19 changed the state of life in the U.S. was exactly when former Target executives Lindsay Holden and Britta Chatterjee launched their new clean hair brand, Odele. Though Odele was set up for success its launch on January 31, 2020 was exclusively at Target, an essential retailer that was open throughout the pandemic, its sales forecasts certainly went out the window.

“It was great to be at Target, but I remember telling my husband that it was at week five or six that we were going to get a good read on our velocity,” said Chatterjee, who previously worked at Target in corporate strategy. “I had all this complex, dynamic modeling to understand the impact [of different situations] on cash flow and recalculated everything based on certain velocities of every product. I wanted to know whether [our brand was] a dog, something mediocre or something successful. And then the pandemic hit, and we had no idea what was going to happen.”

In the end, Chatterjee said that, net-net, the brand only saw about a month of volatility in sales. “We didn’t know what was going to happen to stores or our velocity or our cash, but it made us stop and figure out what the minimum viable business model was that we could make work,” she said.

The brand exceeded expectations for the year, bringing in $10 million in retail sales to date. Though its individual shampoo, conditioner and styling product SKUs have seen double- or triple-digit growth in the last year, the team said the entire line is resonating. And that’s with Odele’s higher than average price point at Target, of $11.99 per product. Suave shampoo products at Target start at just $2.59, while Dove’s and Garnier’s opening shampoo price point is $3.49.

The hair category certainly has room to “premiumize,” like makeup and skin care have, said Emily Gerstell, associate partner at McKinsey & Company. “If you look at color, the split of premium color cosmetics to mass is around 60-40, which is the ceiling. In skin care, we are at about 50-50 now, but a few years ago, it was 40% premium and 60% mass. Hair is 30% premium to 70% mass. As the hair category matures, like skin care has, a masstige effect is going to come into play,” she said. Odele appears to be just one example of that.

Holden, a former Target merchant, said Odele’s target consumers of millennial moms have seen the brand “democratize the clean movement,” first propelled by the Tata Harper and Drunk Elephants of the world. Households of three or more over-index with Odele, but so do younger Gen Zs, a newer cohort for the brand, thanks to social media. The Air Dry Styler continues to be a best-seller, since it’s a “one-step process to get out of the house and feel good,” she said.

Hair was a big winner in beauty last year, prompting brands into expansion mode. On the prestige side, clean hair brand Briogeo expanded its distribution with Ulta Beauty. Industry experts said Briogeo closed out 2020 with $40 million in review. And in mass, Walmart’s first influencer brand Hairitage from Mindy McKnight grew from a 16 product assortment in 2020 to 65 this year. It hit $30 million in retail sales in 2020 and is expected to hit $60 million in 2021. Beyond Odele, Target is also betting on hair with the recent launches of DTC brand Function of Beauty and Priyanka Chopra Jonas’ line with Maesa, Anomaly. Of changing consumer preferences, Cassandra Jones, Target vp and gm of beauty and cosmetics, told me, “We’ve seen an increase in demand for direct-to-consumer and personalized products; calls for more clean ingredients, more transparent ingredient information and [more] sustainable packaging; and a desire to shop for products from diverse brands.”

While more brands spell more competition for an upstart like Odele, Chatterjee said the brand is staying the course with its “straightforward, clean and premium” messaging that has registered with busy women. “We can’t compete with a Function of Beauty, which has a million followers, and a celebrity like Priyanka [Chopra Jonas]. So we’re staying true to the approachable and relatable nature of our brand,” she said. To that end, Odele has not paid influencers or engaged in performance marketing, largely using Target as its main advertising lever.

But that’s not to say the brand doesn’t have ambitious growth plans. In early August, it is launching its foray into body with four body washes, in an effort to “take over the shower” for young women and families. While many beauty brands are trying to flex their own personal care muscles — think of Biossance and Kosas, to name a few — Holden and Chatterjee said Odele has no plans to get into makeup or even skincare. “Brands still have to have authority where they play and launches have to make sense for the consumer. We’re not trying to confuse her,” said Chatterjee.

More details on Ulta Beauty’s shop-in-shops at Target

Last Wednesday, Target and Ulta Beauty revealed the list of brand partners for their much-anticipated beauty link-up that debuts in August. More than 50 premium brands including Anastasia Beverly Hills, Benefit Cosmetics, MAC Cosmetics, Urban Decay, Clinique, Florence by Mills and Pattern will debut in 100 Target locations later this year. The lineup, which is clearly a prestige assortment, will focus on best-selling products versus a complete brand presence, said Kecia Steelman, Ulta Beauty chief operating officer.

“We wanted to not only bring prestige beauty to a wider market, but it was [also] about making that sure we had the right assortment that Target guests would have the ability to purchase and buy,” she said.

Between the two retailers, 100 million active loyalty members are at play, and Ulta Beauty rewards will be able to be accrued at both outposts. While much has been made about Ulta’s 1,000-square-feet shop-in-shops that will be located next to Target’s beauty sections, Christina Hennington, Target evp and chief growth officer, said this will be a true omnichannel experience for beauty shoppers. “We will launch with 100 stores and we’ll launch digitally nationally, which will [offer] great access to consumers from day one. Come August, it’s going to be a full e-commerce experience,” she said. For now, a splash page exists on Target.com detailing the brands to watch out for.