Nearly every month we hear of new beauty retailers popping up, with many designed to provide walk-in consumers with digital makeup and skin care experiences. In sync with this trend, Kline’s just-published “Beauty Retailing USA: Channel Analysis and Opportunities report,” says that “with hundreds of new doors opening in various formats, the expanding cosmetics specialty and vertically integrated stores, such as Ulta, Sephora, Bluemercury, NYX, Kiko Milano, and e.l.f., which have grown at a compound annual growth rate of nearly 19% over the past five years, now account for an estimated 20% of total beauty market sales.”
 
Naira Aslanian, the study’s project manager, says, “While traditional department stores experience declining traffic and store closures, brick-and-mortar is not a dying breed, but a rising phenomenon of specialty retailers and vertically integrated stores that set trends, provide open-sell environments, offer solution-based approaches in digital formats, and enhance the overall consumer experience.”
 
The Kline report cites Bluemercury, for instance, as making headlines in recent weeks, opening its digitally-enhanced flagship location in New York City, with plans to open 40 more stores by the end of the year. In 2017, Sephora opens its largest store in North America in New York, and a few days ago its smallest 2,000 square foot freestanding concept store, Sephora Studio, opens in Boston. This concept is one step towards creating more curated and digital experiences for consumers in the real world. Alongside digital tools, increasingly demanding younger generations require one-on-one services, including 15-minute facials and 45-minute makeovers that drive consumers seeking a spa-like experience into stores.
 
Vertically-oriented boutique beauty stores, such as NYX, e.l.f., and Kiko Milano, are conquering local malls as these fast-growing newcomers offer unique concepts targeted to younger consumers at lower price points. These brands are increasingly offering digital enhancements, such as NYX’s iPads that help create different looks with beauty influencers/vloggers walking consumers through the process while in store. Enhancing a customer’s experience with a brand is one of the key reasons for the incredible growth of these free-standing beauty stores, finds Kline’s Boutique Beauty Retailers: Channel Analysis and Opportunities.
 
Department stores, however, are not giving up, according to the Kline report. They’re mimicking tactics applied by successful multi-brands specialty stores to draw more traction. In early 2017, Bloomingdale’s launches the first Knockout Beauty boutique composed of prestige brands with a natural/organic slant.  Nordstrom’s beauty area continues to evolve, bringing in brands with limited distribution. Nordstrom also adds beauty concierges in remodeled locations to help guide consumers across brands, showcasing the top products in each beauty category. Neiman Marcus launches its Memory Mirrors to help consumers remember the steps and products used during the in-store makeover.
 
The Kline research also covers direct selling, and says a different type of revival is evident in this person-to-person segment. Previously characterized by powerhouses like Avon and Mary Kay, this segment has seen the rise of new stars that offer targeted, results-driven products, as well as the utilization of social media platforms and millennial sales associates. Players such as Rodan + Fields, Younique, Beautycounter, Ever Skincare, and Monat are the new generation of social selling brands that will have a high impact on the segment. The proof of this growing trend is Coty’s acquisition of a 60% stake in Younique in early 2017, desiring to tap into this new genre of social media-oriented person-to-person sales.