Drugstore cosmetic brands are losing market share to skincare and digitally-native brands, a signal that classic brands need to scale back instead of trying to compete.

WHAT HAPPENED: Consumer’s shift toward skincare products and the rise in niche digitally-native and celebrity beauty brands are forcing drugstores to reformat their beauty businesses.

WHY IT MATTERS:

  • Drugstore brands should scale back their product assortments instead of trying to mimic digitally native and celebrity-driven brands. As new direct-to-consumer beauty brands continue to surface in the U.S. drugstore brands become less important. L’Oréal posted a 2% loss in North America in 2019 (overall sales increased by 8%) and Coty’s consumer beauty division (brands like Rimmel, CoverGirl and Max Factor) decreased by 11%. The decline is the result of less shelf space in retailers like Walgreens and CVS, in addition to buying preferences shifting online. Consumers are also investing more in skincare (the skincare market will be worth $183 billion by 2025), which drugstore brands are not known for. Instead of trying to reinvent their business model and catch up to emerging beauty brands, classic drugstores brands should tighten their existing assortments and distribution channels.