Deep Dive: Channel Shifts in US Beauty Retailing—Sephora, Ulta and Amazon

Executive Summary

• Survey data and company results suggest that growth in the US beauty market has been polarized, with lower-price retailers and beauty specialist stores having won share.
• Millennials’ frugal shopping habits and desire for quality experiences look to be driving this trend.
• Survey data from Prosper Insights & Analytics suggest that Walmart and Target have grown their beauty shopper numbers in recent years. Sephora and Ulta have grown fast, too.
• Surveys show that Amazon is the fifth-most-popular retailer for skincare and cosmetics and the top online destination for beauty.
• A key lesson for beauty retailers is one that applies across a number of sectors in which rivals are competing with Amazon: either cultivate a convincing category specialty or focus on low prices.