Will a new beauty concept help CVS pull shoppers from Sephora and Ulta?

Discussion
Photo: CVS
Sep 05, 2018
Matthew Stern

While CVS has long been in competition mainly with Walgreens and Rite Aid, the retail pharmacy chain’s revamp of its beauty department could signal that CVS has another type of competitor in mind.

CVS is upgrading its beauty department into a store-within-a-store called BeautyIRL, a move it is undertaking in conjunction with in-home beauty service Glamsquad, according to InStyle. In addition to the Millennial-and-younger-focused branding (“IRL” is internet slang for “in real life”), the new store-within-a-store allows visitors to get a variety of styling services from Glamsquad’s experts. It also features a “Test-and-Play Hygiene Bar,” which lets customers to try out makeup, a wall highlighting trending beauty products and a section dedicated entirely to miniature beauty products.

The new format is currently available in four test locations. In 2019, CVS plans to expand the new concept to other locations and give it an online presence.

The move, which could make CVS competitive with higher-end beauty-focused chains like Sephora and Ulta, comes at a time when others in the retail pharmacy space appear to be moving in other directions. Its major competitor, Walgreens, for instance, has announced a plan to launch a store format focused entirely on healthcare services. 

CVS is working to cater to healthcare customers, as well, with the introduction just months ago of same-day and next-day delivery of prescription drugs nationwide.

CVS’s efforts to get more serious about Millennial and Gen Z beauty customers could be another example of how the retail pharmacy space is bracing itself for disruption by Amazon.

Speculation about Amazon’s intent to enter the pharmacy space was confirmed earlier this summer when the e-tailer acquired online pharmacy startup PillPack. In response to the announcement of the acquisition, share prices of CVS, Rite Aid and Walgreens all fell significantly.

DISCUSSION QUESTIONS: Will CVS’s BeautyIRL prove successful in helping the chain attract younger consumers?  Is the concept in line with the chain’s brand emphasis on health in recent years?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Every small test like this deserves a huge round of applause, as it’s these little tests that will help the status quo evolve."
"The BeautyIRL section of the new CVS concept store is beautiful, it’s time the store got a makeover of its own. "
"Test and play, along with GlamSquad personal advice and assistance gives shoppers a new reason to go to CVS!"

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24 Comments on "Will a new beauty concept help CVS pull shoppers from Sephora and Ulta?"


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Mark Ryski
BrainTrust

It will take a considerable marketing effort for CVS to create a cosmetics offering that has the resonance that Sephora has with younger customers. That said, CVS stores receive a significant amount of traffic which will provide a new, compelling store-within-a-store concept with a better than even-up probability of success. Whether or not they will be able to attract new customers will remain an open question. As far as the emphasis on health is concerned, I don’t see an issue. While health is obviously the focus, CVS is right to explore other products/services that it can bring to its customers, and beauty/cosmetics is not a stretch at all.

Art Suriano
BrainTrust

This move by CVS is definitely a shift away from healthcare. However, I think it’s a great move. There are many advantages. First, CVS has mostly free-standing stores with easy in and out access that makes stopping in the store very convenient. Second, most of their stores are large enough that they should be able to offer a good size store-within-a-store concept offering what the customer wants and third, this will help CVS with other sales.

Does the customer come in for makeup and while there make other purchases? Absolutely. Moreover, will the customer who came in for other merchandise take notice of the cosmetics area and make purchases there as well? Definitely. I see this as wise just like when c-stores realized the opportunity they had to set up deli and hot food services.

Assuming the program offers what customers want and CVS correctly markets the concept it should do exceptionally well, and I would expect CVS to roll the idea out to other locations.

Anne Howe
BrainTrust

Test and play, along with GlamSquad personal advice and assistance gives shoppers a new reason to go to CVS! I hope the test is scalable and helps shoppers enjoy the category in the typically mundane drugstore trip.

Neil Saunders
BrainTrust

As much as CVS is to be applauded for this move, I cannot see it turning the tide. Both Ulta and Sephora offer a full-store beauty experience, whereas this seems to be a small bar stuck into a CVS. It will certainly generate sales and interest, but I don’t see it as a game-changer for CVS.

Lee Kent
BrainTrust

And let’s not forget that it is also about the products they carry. Ulta and Sephora carry the faddy and trendy products that Millennials and Gen Z are all about. It will take much more in the marketing area to get them into the stores for my 2 cents.

Bob Amster
BrainTrust

I personally find CVS boring and ubiquitous. The notion that CVS Health can attract a meaningful number of customers away from the likes of Sephora and Ulta is a reach.

Richard Layman
Guest
3 months 12 days ago

Ouch. cf. the Walgreens flagship stores, at least the one in Washington, has a floor dedicated to beauty. It’s a great “store within a store.” But I don’t know how successful it is in selling cosmetics or in attracting additional customers. It can be done though. cf./2, Shoppers Drug Mart. Or Boots.

Theoretically it could be used to reboot CVS to be less boring, or really, less of an urban convenience store.

Adrian Weidmann
BrainTrust

Creating an environment designed to attract younger shoppers is certainly worth pursuing. I believe it would be more valuable if CVS worked closely with their brand vendors during the development stage of this program. Each brand has unique insights and it would be in CVS’ best interests to collaborate with these brands to optimize the experience. At the end of the day, those brands will be asked to fund this initiative if it ever scales.

Ken Lonyai
BrainTrust

I see this as a non-starter. There isn’t much of a store-within-a-store concept. Rather than a dedicated space that’s a destination and has an intriguing draw, this seems like an afterthought and a “let’s throw it at the wall and see what sticks” kind of endeavor.

Sephora and Ulta are beauty/fragrance destinations that consumers seek out for the experience as well as the products. CVS may be able to get some play out of shoppers that are in the store for other items or picking up some eyeliner and get them a little more involved in beauty purchases, but it’s hard to believe it will be anything beyond that. It takes more than some chairs, mirrors and fixtures plopped in an aisle to create an experience.

Sephora, Ulta, Macy’s and the like have nothing to worry about.

David Weinand
BrainTrust

I love the innovative efforts we’re seeing from so many retailers, CVS included. However, making a dent into the space Sephora, Ulta and others already have a strong foothold in is not something I see happening. If any of these players were weak or not innovating, then maybe — but they are going against two of the most forward-thinking retailers in the industry that have crazy loyalty figures among their customer base.

Laura Davis-Taylor
BrainTrust
My partner and I just spoke at NACDS and we called this out in our presentation, as it’s a great example of bravely testing new ideas based on trends and customer needs. Will it work? Who knows! But isn’t that the point? In my mind, every small test like this deserves a huge round of applause, as it’s these little tests that will help the status quo evolve. Here’s what I love about this. It’s easy to get to. If they can get a quickie makeover and blowout done with little-to-no complaint, MANY women will flock to it. Myself first! Appointments may actually be available — which is more than I can say for Sephora. Seriously, ask any woman. It’s unintimidating. Again, it can be intimidating to face the huge volume of choices in the beauty bonanza stores. One area, one consultant may help that. The challenges I see are: 1.) the open space may make it feel like you’re on display; 2.) recruiting great people, ensuring that they provide great service and keeping them… Read more »
Dick Seesel
BrainTrust

My impression is that Walgreens has a more dominant assortment of cosmetics with more space and service devoted to the category, at least in comparison to CVS stores that I’ve shopped. Before CVS worries too much about taking share from Ulta or Sephora, it has a chance to take share from its biggest competitor if it devotes more attention to the beauty business.

Ricardo Belmar
BrainTrust

CVS has a location advantage here over beauty competitors given how many stores they have, should they expand the BeautyIRL concept across the chain. However, they have quite a hill to climb to gain mindshare as a beauty destination for the younger target market they’re going after, especially if they are to compete with stores built around a beauty experience like Ulta and Sephora. Just having a beauty bar isn’t enough to attract customers who are not already inclined to walk into a CVS. While this is a bold move, it would be great to see CVS do more of this as a way to refresh their store format and make it more inviting to customers.

Dr. Stephen Needel
BrainTrust

When I think “beauty”, CVS is not what I think. Can it help sales? Sure. Will it be profitable? Maybe not. And the concept has nothing to do with health. If CVS wants to be healthy, dump the junk food.

Michael La Kier
BrainTrust

Health and wellness have multiple dimensions — feeling and looking good is certainly one of them and CVS recognizes that. When any retailer can make shoppers’ lives better and more convenient it’s a good thing. This move by CVS is a step in that direction.

Georganne Bender
BrainTrust

The BeautyIRL section of the new CVS concept store is beautiful, it’s time the store got a makeover of its own. That being said, it’s still a pretty department inside a drug store, selling drug store brands. It’s a rite of passage — every generation of young women has worn CoverGirl while secretly coveting Chanel.

CVS customers might grab a little something while picking up a prescription or health care item, but it’s a stretch to think they will abandon the upscale and luxury brands sold at Ulta, Sephora or even their favorite department store to shop for cosmetics.

Dave Bruno
BrainTrust

Attracting dedicated Sephora and Ulta customers will be a tough task for CVS, but perhaps the key to success here will be how one defines “younger” shoppers. I could see a scenario where young girls that are just beginning to experiment with cosmetics (often under their parents’ careful supervision) could be an interesting long-term opportunity for CVS. I could then see the ubiquity and convenience of CVS presenting opportunities for parents and their daughters to shop the cosmetics counter while doing other CVS errands. Then I suppose there is a reasonable chance that some of the young girls would continue to stay with the GlamSquad brand as they age. The trick will be sticking with the concept long enough to see if this market actually develops.

Gene Detroyer
BrainTrust

I am all for trying new things and the drug chains have certainly succeed over the years in changing from being a pharmacy to being a convenience store.

But the question I cannot answer with this endeavor is, why? Why would a Sephora or Ulta customer go to CVS?

David Naumann
BrainTrust

The drug store segment is in a challenging space. Grocery stores and department stores are expanding and emphasizing their pharmacy and health care offerings, which is creating a lot of competition for drug store customers.

Some drug stores are fighting back by adding more grocery items and now CVS is focusing on beauty products. While this seems like a smart strategy for CVS, I think it will be difficult to attract Sephora or Ulta customers. The beauty products may appeal to customers that normally buy those products at discount department stores like Walmart or Target and it will be more about convenience than a destination purchase. Drug stores are becoming large convenience stores.

Lee Peterson
BrainTrust

Well, it looks good! And certainly a worth test. My fear is; both Sephora and especially Ulta have such a huge lead, it’s going to take tremendous staying power to eventually compete. Does CVS have that? We shall see.

The other challenge is: 7,200 stores. How long does it take to ramp up to the power of the test stores? Right. Turning the Queen Mary comes to mind. Better start turning the ship!

Cathy Hotka
BrainTrust

CVS is doing a lot of things right, and beauty is a growing category for men and women. CVS isn’t taking on Sephora’s personal touch or Ulta’s services; instead, they are acknowledging their competition and stepping up their game. We would expect no less.

Craig Sundstrom
Guest

Isn’t this, or shouldn’t it be all about the product(s offered)? I see little to no mention of what brands will be featured, but if it’s (just) the same ones as offered at present, then I think their sales will be little different … from the present.

Richard Layman
Guest
3 months 12 days ago

This reminds me of a song lyric by Billy Bragg: “a busy girl buys beauty, a pretty girl buys style. But a simple girl, buys what she’s told to buy…”

Anyway, CVS will always have a hard time competing with Ulta and Sephora. Isn’t about more than having planograms and minimally trained staff? It seems unlikely that they can staff such units with “aestheticians” the way that true beauty stores do (remember the quote from the CEO of Ulta, “we’re not selling cosmetics, we’re selling beauty”).

But they can probably sell more cosmetics to more segments that aren’t likely to shop at Ulta and Sephora (and Blue Mercury) but do shop at CVS. The “simple girl” indeed….

Susan Viamari
BrainTrust

Personalized shopping experiences are hugely important to younger Millennial and Gen Z generations, so CVS’s BeautyIRL should certainly help attract younger consumers. However, how many consumers is hard to say, since CVS has a long way to go to catch up to the well-established product trial experiences and loyalty programs of Sephora and ULTA. As far as being in line with the brand’s increased emphasis on health, I would say yes because self-care and self-indulgence play a big role in overall wellness these days.

wpDiscuz
Braintrust
"Every small test like this deserves a huge round of applause, as it’s these little tests that will help the status quo evolve."
"The BeautyIRL section of the new CVS concept store is beautiful, it’s time the store got a makeover of its own. "
"Test and play, along with GlamSquad personal advice and assistance gives shoppers a new reason to go to CVS!"

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