On Target Brands
Target is taking on the masstige market in a big way, and I’m here for it.
I went to Target the other day. I love Target.
But I’ve never really thought about why. Or, for that matter, how. How does a massive big box store stay as relevant and trend-forward as Target? How does it manage to consistently stay on pace with niche markets, yet still manage solid mass appeal? What kind of black magic is happening at Target HQ?
The following is my preliminary thinking on Target’s secret sauce in brand selection and retail experience, as concerns skincare.
On target Target brands
Since Target’s 2013 acquisition of the Dermstore Beauty Group (aka dermstore.com), Target has displayed a particular savvy for incubation, acquisition, and curation, fueled in part by its accelerator programs.
Here’s an overview of some personal care brands featured by Target:
Men’s
Oars + Alps participated in the 2018 Target Takeoff Accelerator Program, and was soon after acquired by S.C. Johnson.
Goodfellow & Co launched in Q3 2017 as an in-house men’s line. Most of the collection is elevated men’s fashion basics, but includes a 30 SKU grooming and personal care line.
Haircare
Kristin Ess (at Target) boasts a comprehensive haircare line, including fragrance-free formulations. Side note: Before trying these last week I hadn’t realized just how big a role fragrance plays in my shampooing and conditioning experience. Providing a fragrance-free option in a smell-obsessed market is a BIG deal, and I’m here for it; the formulations are solid. The prices are extremely accessible ($3 for minis, $10-$14 for full size) and fool-proof: all products are effective on their own and are compatible with sister SKUs.
Odele provides all-age, all-gender hair care products. Or, in their words, products meant to be shared. Their packaging simplifies and standardizes salon-quality products, with a color palette akin to Hims.
Shave
Harry’s (at Target) and its feminine off-shoot Flamingo (at Target) provide a modern update to shaving basics. Both brands have a healthy and booming ecommerce presence, and so likely exist in Target primarily as a form of advertisement. Side note: The FTC opened proceedings to preliminarily block Schick parent Edgewell Personal Care from its planned $1.4B acquisition of Harry’s, announced on Monday.
Basics
Smartly provides household and personal care staples for under $3 a pop, including this basic everyday facial cleanser. The IL reads like the textbook definition of what makes a facial cleanser a facial cleanser. It’s a simple answer to all the new over-designed and over-marketed cleansers ~$30/bottle.
Any staple not made by Smartly is generally available from the older in-house generic brand Up&Up.
In each line, Target offers a generic cleansing wipe: an unscented and simplified wipe from Smartly ($0.99 / 30 ct.) and a generic Neutrogena from Up&Up ($2.59 / 25 ct.). The latter is as basic as basic gets; the former is a dupe of a drugstore classic.
Target also stocks beard wash power-house Scotch Porter and nail polish queen Olive & June, among several others.
In their announcement of the Kristen Ess launch, Target spoke of its ability to make discoverable high-quality goods at an “equally incredible value.” This seems to be the common theme with their more recent launches and collaborations. In taking on these smaller lines, Target is showing that Big Box can move fast, and make big moves with small(ish) companies.
In fact, of the major retailers, Target saw the largest percent change in online skincare sales from January-August 2018 to January-August 2019. Target’s Dermstore saw slightly less improvement, but still leads its parent in indexed monthly sales. Neither Target nor Dermstore approach Sephora or Amazon in online sales. However, the Gartner graph illustrates the beginnings of an accelerating masstige market, of which Target seems to be taking full advantage.
Someone at Target pays very close attention to what consumers want, and can mobilize collaboration and distribution quickly enough to satisfy those wants. For the past few years Target has been thinking out of the Big Box box. I don’t think they have any intention of bounding themselves in.
An addictive retail experience
The continual addition of insta-worthy brands undoubtedly makesTarget strolling all the more entrapping. But in the skincare market what’s ultimately more entrapping? Strolling around random Target shelves, or scrolling through curated Instagram content? Who creates a better skincare experience online and IRL, Glossier or Target?
Glossier and Target are two very different brands with two very different retail experiences and product offerings, both in quantity and quality. But I can’t help equating Target fandom with the Glossier cult. Or at least elements of them, particularly when it comes to their addictive retail experiences.
Target doesn’t give you a product-focused immersive and tactile experience, but is guaranteed to stock what you need. Glossier doesn’t have many SKUs, but gives you an immersive experience through scent, touch, and sight. Target has everything I don’t need; Glossier’s limited inventory makes me need everything. Both are successful for different reasons, and exist to serve different consumer behaviors.
I think it boils down to this: Target has something for everyone, but Glossier’s retail experience hinges on creating FOMO. (I think they’re better at creating FOMO than they are at creating high-quality products. But I’m saving my thesis on why/how Glossier sucks for a later date.)
Glossier’s retail spaces are designed with a sense of exclusion. At any one location entrances are limited to a handful of people at a time, like a gallery. Most locations are pop-ups advertised with a close date before they open for business. They’re also designed with a sense of fantasy: the visuals are there, but the actual product is just out of reach, stocked behind the counter. It’s like insta IRL. You can experience the product, but you can’t have it until you add to cart or stand in a checkout queue. They magnify this sense of exclusion by sharing pictures of the spaces on Instagram. Anyone can cultivate the desire to visit, but only a few can. (Of course anyone can kinda get that experience at glossier.com.)
While Glossier rejects the feeling of mass market, Target fully embraces it. Or at least Target is hitting on the mass appeal of niche markets, while also offering mass-market staples. The effect of which is a retail experience that all but guarantees you’ll walk out with items you didn’t even know you needed. When you go to Target for skincare you can also buy toilet paper, a floor lamp, and a dinosaur shaped couch cushion. When you go to Glossier you can also get...stickers (a sense of inclusion!!).
In their respective retail experiences Target is appealing to insta swipers by offering niche brands, but without giving up the Target identity; Glossier is appealing to insta swipers by making Instagram their complete identity.
Ultimately, I think Glossier’s trend-setter status makes them more vulnerable to the impermanence of trends. Target, on the other hand, has proven time and time that it can be on trend and yet immutable to all of them at the same time. I can imagine a near future in which Glossier is no longer all that relevant. I can’t imagine the same for Target.
Big Brand Gaffes
To throw into focus just how deft Target is, one only needs to look at the inaction or missteps of other large brands. In particular I’ve been brooding over the recent Revlon and Environmental Working Group (EWG) collaboration.
The legacy brand and high-trafficked consumer website have teamed up to certify the beauty brand’s first “EWG Verified™ Clean” primer: the PhotoReady Prime Plus Perfecting + Smoothing.
I generally think pay-to-play certifications are a scam. I absolutely think EWG certifications are a scam. It may seem like EWG has good intentions, but they have yet to prove themselves as a legitimate source of credible, scientific data. So when I saw this launch I was immediately skeptical.
For me to believe that the Revlon x EWG primer launch was done with good intentions, I’d have to see verified information about formulation and final product testing. That’s not at all what I saw on EWG’s profile of the primer; It’s just a list of ingredients.
I was curious to see if this list of ingredients provides any more specific information than that which can be cut and paste from EWG’s existing information on each of the primer’s ingredients. In a few quick minutes I made a chart to aggregate each ingredient’s EWG “Score” and “Data Availability” rating, then compared it to EWG’s product chart. Same exact results. (Minor differences in scores between individual ingredient pages and the Revlon primer page may be simply accounted for: when an ingredient’s safety was ranked within a range, the ingredient was automatically given the range’s lowest—the “safest”—score on the product page.) From this overlap I drew a simple hypothesis as to the method of product “testing.” Any product safety “testing” amounted to merely looking up the pre-existing ratings of individual ingredients. The formula as a whole was not tested by EWG, as the campaign implies.
There was one key difference between my 15 min “analysis” and the primer’s EWG results. It’s subtle, but I think very telling: The EWG product profile lists “concerns” for each ingredient, generally involving some mention of toxicity. Some ingredients are listed with “use restrictions” or “contamination concerns.” Each of the 15 incidences of these phrases are crossed out, indicating that the concern was once a concern, but is no longer in the context of this primer. The crossed out phrases and are all followed by the brief explainer: “(meets restrictions and warnings based on EWG review of company data).”
What company data? How did this concern just magically disappear?! What data could they possibly have that allows them to prove a negative? Crossing out a concern implies that the concern is no longer there. You can’t prove the absence of a concern. The best you can do is demonstrate the probable absence of specifications, which serve as proxies to the concern. Of course no details on these specifications or proxies are given.
If this data does exist, Did Revlon sell them this data? Was EWG paid to look at this data? Why can’t we see this data?
In the guise of transparency, EWG points very directly to information kept from the consumer. Of all the “data” points provided in this product profile, this is the information that potentially has the most to offer on matters of consumer safety and potential toxicity. The other “data” points (“Score” and “Data Availability”) are relative numbers that mean something only in the context of an EWG scale, and have very little to do with how cosmetic science and testing in the real world works.
This is not a safety review of the formulation, this is an out of context scoring of each ingredient. Again, that’s not how chemistry works at all. Ingredients do not exist in a vacuum. But it does seem EWG exists in a world of delusion. In claiming to be an advocate of the people, they’re creating language and campaigns that confuse and muddle the direction of our industry: radical transparency of reliable, verified data.
Repeat: this collaboration is NOT an innovation in formulation, safety-testing, or self-imposed regulation. This is one party (Revlon) paying another party (EWG) (likely) for use of an arbitrary and unfortunately popular “data” set. The EWG sticker is a smokescreen. I would not give it any real weight.
All told, the collaboration feels like it was set up for praise, not to push the industry. Revlon offers a range of primers. Three of which are new, but only one of which is now EWG verified. Praise and attention was, of course, immediate upon launch, with coverage (ha, for a primer!) from Byride, WWD, Fast Company, and themselves. Notice the lack of any scientific accreditation or verification.
Honestly, this partnership makes a lot of sense. There’s a lot of overlap in these companies’ target demographics, and loyalty for both can be strengthened by tapping into each others’ reputations. It makes sense. What angers me is that the industry and press are taking this launch seriously. This is not the release of a revolutionary product. This is a press release moment for a collaboration designed to drive profit.
If the EWG-verified Revlon primer still speaks to your fancy, you can buy it at Target.
-- Lizzy Trelstad, Founder + Chemist
lizzy@hellobeaker.com
Originally published on 7 February 2020 in the Swirl the Beaker industry newsletter.
Additional Resources & Notes
Target’s Board of Directors is stacked with P&G and Clorox alumni, among other CPG and retail behemoths. This is no big surprise for a massive retailer, but I do think it points to Target’s clear command of the CPG space.
Fun fact: Target has its own version of Birchbox: each $7 Beauty Box offers 7-9 sample size products, exclusively online.
Kylie and Coty vs. Rihanna and LVMH
Not all beauty money is the same, or of the same value.
In a recent article CNN Business discusses the poor sales performance of mascara in relation to the booming popularity of lash extensions. I think this is too narrow to be a correct analysis of the industry.
I don’t think that mascara is dipping off so lashes can rise from the ashes; this is not direct cause and effect. Instead, I think the rise of false lashes and the slow downtick of mascara are both representative of general consumer behavior: lashes are easy to see on social media, mascara tubes are less easy to see on social media. The inflection of social media-driven ecommerce more than likely accounts for the decrease in sales of mascara, generally a drugstore or beautycounter purchase. But I’ll have to do more specific math on that.
I don’t think it’s fair to pit one product type directly against another, but I was intrigued by the introductory framing of this eyelash trend article: Kylie, Rihanna, and Lady Gaga didn’t originally offer mascara, so it must not be relevant. Which got me thinking: what exactly makes Kylie and Rihanna the representative leader of trends and products?
Are Kylie and Rihanna the real leaders? And if they are, what does that say about the industry? More specifically, what does the relationship of Kylie and Rihanna to each of their parent companies (Coty and LVMH, respectively) say about the longevity and profitability of their brands?
Both Kylie and Rihanna leveraged their celebrity status to maintain ~49% and contribute their name, time, and personal brand. But the amateur analyst in me sees these as significantly different deals.
This isn’t new news, but still very much on my mind: Why did Kylie agree to give up 51% to Coty?
In November 2019 Coty took a majority stake in Kylie Cosmetics for $600M at ~$1B valuation. Coty CFO described the deal as key to understanding digital dominance.
Kylie’s 49% gets her a better network for global distribution and larger sales. 51% Coty gets a brand that knows how to talk to its customers over social media. Coty is very much the cool dad. But something is weird.
In 2017 Coty paid $600M for a partnership with Younique, at a $1B valuation. The deal was essentially dissolved in August 2019 at undisclosed terms. Coty had claimed their partnership was key to Coty’s digital growth strategy.
It’s not the same money, or even the same considerations. But I do wonder about the coincidence in check size for sequential investments whose aim was to supposedly expand the digital relevance of Coty.
In reporting on this termination of their Coty relationship, WSJ also mentions Younique’s positioning with respect to Avon, whose restructuring has been/is notoriously ugly. Point is, the financings aren’t simple; these simplistic linear threads can’t really be drawn. But I’m still curious. Especially because Coty’s past partnership with Younique and the relative fumbling of the 2016 beauty package from P&G don’t make for the prettiest reputation. So why did Kylie take the deal? Why not go to an institution better equipped to handle her pace, size, and strategy?
It’s also difficult for me to justify Coty’s check size. But I have no trouble seeing why Kylie cashed it.
I think Kylie was simply in it for the cash up front, the option of international distribution, and the ability to move on from the brand, should she get bored.
Or she knows her bubble will burst: social media followers purchase once, then never again. Especially if the product is poor quality.
But can a consumer tell if a product is poor quality? Even if they can, do they really care? The Kylie skin is crap, but it’s still a great brand. The Fenty products are great, and it’s a better brand.
Why?/How? Because unlike Kylie, Rihanna gave 51% to a conglomerate with a strong track record* of making, distributing, and marketing high-quality goods in digital marketplaces. It wasn’t a cash-out like Kylie’s deal, it was a strategic cash infusion of $30M.
The lip kit wasn’t anything new. Or at least it doesn’t ultimately matter. But the high-pigmented foundations were. It matters very, very much that Rihanna makes and sells high-pigmented foundation. The matte lip market was not underserved. The diverse shade market very much was.
Both Kylie and Rihanna are celebrities that negotiated 49% of a new, quickly growing beauty brand. But only one did it as a way to make high-quality goods accessible to an underserved market, thanks to a 51% ownership by a strategic partner.
But do high-quality formulas matter when it’s arguably the celebrity that carries the brands? For their brands to live, Kylie just has to be Kylie, Rihanna just has to be Rihanna. It shouldn’t really matter what they make, they can sell it.
But for everyone else, it is starting to matter what they make. If Drunk Elephant loses their formulas, what’s left? Arguably, still a brand: through price point, positioning, and a strategic break out formula and line extensions, they’ve solidified an expectation of good products. They could come out with crap next, and it will likely will be received as anything but. There is a high level of quality expected of them. Nope, a high quality assumed of them.
If Drunk Elephant comes out with a lame product (who says they haven’t already…) then they may eventually fail, despite their reputation and loyalty thus far. It’s their market position to have a defensible formulation thesis, and a progressive one at that.
But if Kylie or Rihanna make crap products, the brands should still carry. There’s a feeling of deniability here: yes, Kylie and Fenty are beauty companies, but Kylie and Rihanna aren’t beauty professionals, so it’s not really their fault if their products suck; they didn’t know any better. I think Kylie relies on that. And I think Rihanna rejected this notion and instead created real value with a strategic partner. Therein lies the difference. Kylie is using crap products to make money off of her celebrity status. Rihanna is using her celebrity status to create an opportunity to make high-quality products.
Kylie Cosmetics and Fenty Beauty are two vastly different companies. They’re both near/at the top, yes. But I think of very different verticals.
P.S. The 51% investment at $600M brings Kylie equivalent to the current evaluation of Glossier. In my mind, Emily Weiss is building something much bigger than Kylie can ever hope to. If anything I think this speaks more to the bloated power of celebrity cultism than it does to the ability of beauty powerhouses. Will the “democratization” of beauty create loyal consumers? Or will masstige positioning—Kylie’s sweet spot—continue to dominate consumers’ attention?
Related Tidebits: WeWork finally sold its minority equity in The Wing, arguably an epicenter of LA/NYC beauty girl bosses. The divestment doesn’t really mean anything to the Beauty Industry. But as a WeWork member, I feel like it significantly diminishes the chance that my space will put in a Beauty Room. But at least there’s The Lieu, which has recently oversubscribed it’s crowdfunding Republic Campaign. (Still time to invest!) (The Lieu did a pilot program in WeWork. I can personally attest to the higher-level of product curation than exists in the The Wing beauty room, or any NYC Equinox.)
Otherwise, strategic partnerships and licensings continue to sharpen competitive advantages in the prestige beauty world, as with L’Oréal’s licensing deal with Prada. Though I may be more excited about the Hermès lipstick launch.
-- Lizzy Trelstad, Founder + Chemist
lizzy@hellobeaker.com
Originally published on 27 January 2020 in the Swirl the Beaker industry newsletter.
*Both Coty and LVMH have very strong track records. In fact, Coty’s market cap is a wee bit bigger than LVMH’s. I imply that LVMH is “better” in many regards because, though a scientist, this response was more the consumer in me reacting than the scientist in me reporting. As a consumer, I respond better to LVMH’s portfolio than to Coty’s. As an entrepreneur, I certainly admire Rihanna more than Kylie. As a chemist, I would not recommend Kylie’s products.
Bluewashed Sustainability
What does sustainability actually mean for beauty?
Sustainable Trends & Sustainability as a Trend
Beauty Matter’s Kelly Kovack points to M&A activity as an indicator of which trends will prove sustainable. Where consumers see trends as missions or marketing initiatives with qualities championed as “good” or “forward-thinking,” investors see trends as validated, smart investment theses. Going into 2020 it seems that the most investable beauty business are adapting, or attempting to adapt, “sustainability” as one of their “good” qualities.
Looking at the Beauty Industry as a niche pool of investments and acquisitions is a perfectly valid way to draw trend lines within the market. But what does “sustainability” mean?
Kovack, like most Beauty thought leaders, uses the terms “green, clean, and sustainable” as if they’re real, specific things. Kovack does recognize that these things are not so much trends as they are “consumer mandate[s].” Ok, but what exactly are consumers mandating? “Green” and “clean” have already been busted for not really meaning anything. Is “sustainable” also fluid and fleeting?
With most 2020 trend reports (including this NDP Group report) referencing, using, or directly discussing “sustainability,” are we looking at a real, viable trend—this one itself sustainable, ha—or are we simply agreeing on a new trend word? I’m not yet convinced that sustainability won’t become as green-washed as “organic,” “clean,” and “natural.” (Or perhaps in 2020 we’ll dub it blue-washed.) Why? For the simple reason that consumers don’t know what sustainability is, or what it looks like. Turns out, neither do most investors.
Sustainability & the Market
Bloomberg’s Matt Levine discusses BlackRock's PR push for sustainability, highlighting the slight silliness at the core of our sustainable efforts: what makes us feel good isn’t always good for the market. (An oversimplification, I know.) And what’s good for the market isn’t always good for or sourced from the community. Sustainability will become a thing because the larger players will make it a profitable thing. But what it is and what its relationship is to the “unsustainable” things currently driving the market aren’t yet defined. So we’re forced to follow a trend that has no clear lines.
I’m not unsympathetic to sustainable efforts. But I am still a bit cynical about the primary role of Indie Beauty in driving a more sustainable Future of Beauty. If the larger companies could produce high-quality low-cost goods with less waste, wouldn’t they have done so already? My guess is that specific sustainable efforts are either too high-cost, or that the immediate switching cost to more sustainable efforts is too high. Because they can rationalize huge startup or switching costs, I do see Indie Beauty as being key to bringing new ideas to market, quickly. But we may have to wait longer for the larger players to bring these sustainable efforts to market widely.
Also, if capitalism and community consumerism got us to a place with sustainability imperatives can we really expect the same system to get us out of it? Is using biodegradable plastic really the answer? Yes, and no. Yes, small steps matter in generating less waste in supply chains, manufacturing, distribution (transportation/shipping), packaging, marketing, etc. No, another biodegradable plastic tube is another biodegradable plastic tube. Creating a new brand won’t solve the problem of creating less waste. (“Less waste” here is my placeholder for a more specific expression of “sustainability.”)
But math says we need a lot of new brand launches: eventually one good and validated idea will win out, and that thing will become the new sustainability standard. Then we’ll tackle the next small sustainability problem.
So I guess I’m not exactly sure if legacy corporations or indie startups will be the primary drivers towards a sustainable future. But I do think it unrealistic to expect lasting shifts towards sustainable efforts, whatever they are, to come from Indie Beauty. Startups are good with coming up with new ideas quickly. But the larger players still dictate what is profitable over a long period of time. Sustainable efforts, whatever they are, have to be long-lasting. So far only legacy corporations have proved equipped to last long enough to bring validated ideas to market, and make them stick.
Perhaps it’s a matter of indie brands coming up with ideas, validating them in the short term, and then larger players adapting them into larger, profitable ideas. Hence, M&A as an indicator of lasting trends...as long as investors know what sustainability is, if only so they know how to make it profitable.
Or we could simply trust that the natural evolution of brand development and consumer behavior should trend towards sustainable initiatives because, as Kovack described, the consumers demand it. And so it shall be.
By this point, however, these initiatives will be less “trend” and more permanent features of consumer goods. Sustainability is not so much a specific trend as a general direction that we would all, ideally, like the market to go towards. For that to happen, “sustainability” has to prove profitable.
For now, I don’t think that the best sustainable choices have been made, or even made an option. I think “sustainability” remains the idea (hope?) that things—campaigns, products, missions, influencers, initiatives—that appear to (or actually do!) somehow benefit humanity and Earth will be more profitable in the near future than the current “unsustainable” things.
Yes, brands should seek to be sustainable. It’s demanded, important, and expected of them. But we can’t move the market forward into sustainability until we move the money into specific, sustainable channels. Maybe just give your money to BlackRock?
Sustainability in the Marketplace
If sustainability really is a thing, what specifically does it mean for a brand to be “sustainable?”
Italian Vouge replaced photo shoots with original artwork for the January issue, citing measures to reduce the carbon footprint of their creative content. EIC Farneti admirrely admits the unsustainability of their sustainable gesture. For now it’s unrealistic to ask for a total abandonment of glitz, but I think we can still rally behind the call for a ban on glitter. (In the same vein but more pressing is public clarification on microplastics, and on 1,4-dioxane.)
CosmeticsDesign gives kudos to Aether Beauty for their sustainable packaging initiatives. But I think this is a case of good intentions setting a bad example. A brand that champions their sustainable non-bioplastic packaging, Aether Beauty is ultimately more holistic than scientific, and suffers for it. Yes, bioplastics aren’t the final answer. Yes, the distinction between virgin plastic, bioplastic, and recycled practice is key to making “sustainability” more specific. But I think the message loses all seriousness when paired with the brand’s claim that their color cosmetics are designed to “[harness] the power of crystals.” Founder Abbitt discusses the utility of her cosmetics with CosmeticDesign, mentioning that “...ruby powder...nurtures and softens lips while protecting against environmental stressors.” That’s not how mineral colorants work...
The real mission of the company isn’t science or sustainability, it’s to sell color cosmetics. If Aether Beauty really wants to be a leader in the sustainable packaging space, why not be a sustainable packaging solution? Why create just another eyeshadow palette? Even if we can’t specifically point to what sustainability looks like, can’t we agree that the creation of yet another vegan eyeshadow palette is decidedly unsustainable, even if in recycled plastic?
Finally, sustainability may be taking on a new definition as single-dose, personalized skincare. L’Oréal’s announcement of Perso speaks to the theory that by delivering custom solutions to every consumer, we ultimately reduce waste in packaging and in mis-used or mis-purchased goods. I don’t think this device is a sustainable solution, but it’s a start. I still think Loop is the closest thing we’ve gotten to sustainable product delivery, literally.
I’m also curious to see what at-home custom skincare will do to the tradition of morning routines, and if it will only widen the Grooming Gap. At the same time, the Gap may be closing from the least likely source: tech bros.
Some men are admitting that they too think that they need artificial, aesthetic help to counter signs of ageing. Maybe the same tech and finance bros that secretly covet the idea of Botox will begin taking more seriously the companies—and the women—that work to make him feel beautiful. (See: American Psycho, jk). I wonder how this will play into the Grooming Gap. Doesn’t tech bros’ desire for Botox follow the same rationale given by professional women: spend money now on your appearance to make more later, with your next promotion won in part because you “look the part”?
Shameless self-promotion: Here’s my take on more specific forces shaping the Beauty Industry.
-- Lizzy Trelstad, Founder + Chemist
Originally published on 20 January 2020 in the Swirl the Beaker industry newsletter.