DALLAS — In a post-COVID world, it’s hard to imagine letting a friend borrow your lipstick, much less a stranger. But major beauty retailers Sephora and Ulta Beauty Inc. became favorites of makeup enthusiasts by doing just that — letting all customers test from the same display product.
Now, as stores try to lure shoppers back from a pandemic-induced hibernation, the industry once seen as fun and indulgent suddenly needs to take on new responsibilities typically reserved for health or enforcement workers — like sanitizing and controlling social distancing.
Ulta and Sephora used the two-month forced shutdown to reimagine their stores, which once allowed beauty assistants to touch guests’ faces and use community testing products — something that now seems cringeworthy. And they’re waiting to see how customers respond.
The top 50 beauty merchants make up a $27 billion pie, and a whopping 49% of it is controlled by Ulta and Sephora, according to data provided by market intelligence firm 1010data. Denton-based Sally Beauty Holdings Inc., which claims 5% of the pie, is a different kind of company focused mostly on hair care products and appliances and beauty and nail supplies as both a retailer and distributor.
Ulta, the market leader, started reopening stores May 11 and now has 114 Texas locations open, all of which are also offering hair services again, according to its website. Sephora started reopening stores May 22 and lists 31 open stores in Texas on its website.
The beauty retailers face unique challenges in reopening. First, their stores are significantly smaller than department stores, making it difficult to practice social distancing. Second, the main reason to shop in-store was to test products, but now both stores have thrown out testers altogether — a new safety measure that some Texas shoppers say isn’t being strictly enforced.
As states lift stay-at-home orders, people may be ready to rush to the nearest Ulta or Sephora to freshen up their appearance. But they may have to wait in line. The new capacity limit for Ulta is 40 people, including associates. Sephora also has a limit but didn’t list a specific number.
Inside, both stores look similar. There are the usual changes seen at other stores, like hand sanitizer stations, decals reminding people to stay six feet apart and increased cleaning.
Then there are the arrows guiding you through the store, similar to the decals that some grocery stores have on their floors. But the arrow system isn’t as effective in Ulta and Sephora, where the aisles are shorter and shoppers are more prone to browsing than in grocery stores, where shoppers often look for a specific list of items.
Employees at both stores are being closely monitored. They must wear face coverings (something encouraged but not required for shoppers) and have their temperatures checked before their shifts (also at mid-shift for Sephora).
Ulta will also offer hair services in select stores by appointment only with required face coverings for both hairdressers and customers. Hairdressers will wear gloves, and stations will be six feet from each other.
But the biggest change by far is that the testers at both stores are now display-only.
Testing makeup has long been one of the trademarks of Sephora and Ulta stores. It can be an indulgent, pamper-yourself experience after a long day at work or a fun, let’s all get made up experience with friends. And, practically speaking, it’s the best way to find your right colors.
Now, many customers are horrified at the thought of community test products, said Wendy Liebmann, CEO of consulting firm WSL Strategic Retail.
“It’s something people weren’t totally comfortable with before, and now it’s especially taboo to even suggest using the same products or testing at all,” Liebmann said.
Catherine Wester, Ulta’s district manager in Dallas-Fort Worth, said the extent of customer interaction with employees — other than at the hair counter — will be talking. Shoppers can still get advice and recommendations from six feet away, she said.
But customers who have ventured into Sephoras and Ultas across Texas say even employees are finding it difficult to adjust to the new policy.
Taylor Myers, 27, of Plano, said she went to Ulta in Lewisville and saw people touching and testing products while employees watched.
“I felt like the guidelines for wearing a mask and not touching anything were great, only the employees were not enforcing any of the policies,” she said.
Ulta said in a statement that it has worked to instill the new safety measures in its employees.
“Should any guest notice something that does not align with our measures, they can certainly address (that) with our associates, who can speak to the other guests and will, of course, disinfect the product area immediately,” the statement said.
At Sephora, Kristen Tucker, 34, of Allen, said she was told an employee could help her test a product, which she thought was reasonable.
Another shopper, 29-year-old Ashley Morgan of Dallas, said a Sephora employee tested the colors on his arm for her to see.
While these employees may have been helpful, Sephora said its new policy is that neither customers nor employees can use the samples now.
“Testers are for display only and are not available for client use for the time being. If a client does touch a display item, our employees have been instructed to remove it and disinfect the area,” Sephora said in a statement.
Sephora said it has trained all employees on 48 safety procedures and guidelines around how to “safely and properly demonstrate display testers on themselves while maintaining social distance.”
Liebmann said the companies need to make their employees — who may be caught in an awkward position watching customers test products — get comfortable with explaining the new policies to customers, especially since the policies benefit them.
When the country went into lockdown in mid-March, Ulta was one of the first to close all its stores on March 19 and now offers curbside pickup at more than 800 locations. Meanwhile, Sephora still doesn’t offer a curbside option. On Sephora’s message boards, there are a number of threads from customers asking for this option. Many of the answers suggest going to Ulta.
Ulta’s convenient and safe ordering options could help it gain more market share over Sephora, said Yun Cho, a manager in the consumer practice of Kearney, a global strategy and management consulting firm.
“Customers who prefer this service may shift their purchases to Ulta, despite the store reopening, and for Ulta, such a shift will be an important opportunity to capture new consumer segments,” Cho said.
So what have people been buying while sitting at home?
Nail painting and hair coloring products. These two saw a boom as quarantiners tried to replicate the two popular grooming services at home, Liebmann said. But, she said, there’s no guarantee these DIY products won’t succumb a bit post-quarantine.
“First, we worry about dying (from the virus). Then we worry about our roots,” she said.
Pampering products, such as facial masks, bath salts, and lotion — especially for hands dry from excessive washing — are also booming as some people find more time for self-care, said Erin Schmidt, a beauty industry analyst at Coresight Research.
“Consumers finally have time to take care of their skin and their hair without feeling guilty … essentially doing spas at home,” she said.
One product that isn’t popping right now? Lipstick. With many wearing masks, there’s no need to make up the bottom half of your face, said Neil Saunders, managing director of GlobalData Retail. Instead, eye makeup has seen an uptick as people look to highlight the one feature that pokes out above face coverings.
Now, as the country moves into post-quarantine life, the beauty world can expect another sizable shift. And the winning player will once again be the one that best adapts to it.
More and more, Ulta, Sephora and other beauty retailers will start marketing products that are at the intersection of beauty and health, Liebmann said. This includes more clean beauty options with strict ingredient standards, as well as products you might typically see at a pharmacy like vitamins, she said.
Focusing on new trends geared at keeping customers safe and happy — online sales, virtual try-ons, clean beauty and wellness products — will help Ulta and Sephora recover.
Sephora stores, both standalone and the ones inside J.C. Penney stores like this one at North East Mall in Hurst, are implementing new safety guidelines including limiting the number of customers inside a store at the same time.
Sephora’s parent company, French luxury conglomerate LVMH, reported sales for its perfumes and cosmetics business group fell 18% in the first quarter. Ulta reported a 32.7% drop in sales for the same period, even though e-commerce sales were up over 100%.
The sales decline will hurt in the near term. With nothing to dress up for and store closures in the first quarter, U.S. prestige beauty product sales — as opposed to mass beauty — fell 14% from the same quarter last year, while online sales grew by 24% for the same period, according to NPD Group.
But there are bright spots. Ulta CEO Mary Dillon recently told investors that sales at reopened stores are already stronger than expected.
And the changes the pandemic forced Sephora and Ulta to make should create a better customer experience. Ulta operated as a digital-only business for much of this quarter. That forced it to focus on its curbside pickup operation, showing that this type of minimal contact is leading to faster innovation, Schmidt said.
“I believe the coronavirus pandemic has helped digital transformation evolve much more quickly than anticipated … consumers are just adapting to a new reality of trying beauty products on,” Schmidt said.
