A study by consulting firm AlixPartners indicates a shift in consumer behavior, with shoppers increasingly viewing beauty, health, and wellness as a single retail category. In response to this trend, major retailers including Walmart, Ulta Beauty, and Target are adjusting their product assortments and store layouts to reflect a more holistic approach to personal care.
The survey, conducted by AlixPartners and CEW between May and June, found that nearly all of the 1,000 consumers polled now consider these previously separate categories as one budget item.
“What we found in the data is a consumer is just as likely to trade off a night cream for another night cream as a night cream for a personal trainer,” Lindy Firstenberg, co-lead of AlixPartners’ beauty, health, and wellness practice, told CNBC. “Anything in beauty, health and wellness is within the consideration set.”
The study also highlighted a divergence between consumer expectations and corporate strategy. While 40% of consumers surveyed said they want traditional beauty companies to expand their product offerings, 42% of the 127 industry executives polled stated they preferred their companies to focus on their core areas. Firstenberg described this as a “fundamental disconnect,” suggesting executives may be hesitant to undertake long-term research and development for new product areas.
In response to the consumer trend, several retailers have altered their strategies. Silvia Kawas, who leads the consumables business for Walmart U.S., told CNBC the company is seeing more “blurring of the lines” and is focusing on varied product assortments that include both entry-level and premium brands. Kawas said Walmart is remodeling stores to place beauty products in high-traffic areas and using knowledgeable associates and pharmacists to assist customers.
Other retailers have made similar adjustments. Ulta Beauty has introduced in-store wellness boutiques featuring products such as supplements and serums. Target launched its Target Beauty Studio concept on Sept. 10, and Sephora has added a dedicated wellness and skincare section to its website.
The convergence is also influencing brand-level activity. In 2022, luxury brand Gucci partnered with wearable fitness tracker company Oura. More recently, Procter & Gamble agreed to acquire supplements brand Thorne as part of an effort to grow its health business.
Pierre Dupreelle, the global leader for beauty at Boston Consulting Group, said the shift is leading to a “complete reshape” of the industry. He noted that consumers are favoring “extremely efficacious brands that are very focused on science, derm-backed, doctor-backed type of products.”
Despite wider economic pressures, consumer spending in this combined category has remained strong. A report from market research firm Circana found that unit demand in the beauty industry was positive through the first half of the year. The same report stated that skincare sales revenue grew by 8% during that period, attributing the growth to consumer interest in whole-body wellness.
Kawas stated that Walmart has observed customers building bigger shopping baskets as a result of its strategy to offer a wider range of products at different price points. “The more we do that, the more repeat and loyalty we will get out of them because we’re consistent in our offering,” she said.
