Battling the Beauty Barrage

1. Battling the Beauty Barrage Merchandising Deck Presented By: Tiffany Hogan, Analyst Brian Owens, Director April 2015

2. Beauty at Drug Stores Building baskets and loyalty with beauty Source: Kantar Retail analysis • Drug stores will always have an edge when it comes to convenience, but with elevated brands and experiences, they continue to attract prestige shoppers as they rationalize their store sets • CVS, Walgreens Boots Alliance, and Rite Aid each attract these shoppers by focusing on three core areas. • Expanding Formats • Personalized Services • Adding Exclusive Brands

3. Expanded Formats

4. Walgreens “LOOK Boutique” New, engaging, high-end beauty shopper experience and approximately 4,500 sq. feet allocated in its flag ship stores Source: Kantar Retail analysis and store visits

5. Walgreens “LOOK Boutique” More space for exclusive brands and high end fashion accessories Source: Kantar Retail analysis

6. Rite Aid’s Genuine Well-Being Format Improved signage and incremental space for cosmetics Source: Kantar Retail analysis and store visits

7. Rite Aid’s Genuine Well-Being Format More Display Allocated for Beauty & Personal Care Source: Kantar Retail analysis and store visits

8. Personalized Services

9. Walgreens “LOOK Boutique On site beauty ambassadors to help personalize regimens and make selections Source: www.retail-week.com

10. CVS MinuteClinic New healthy beauty personalized consultations Source: Kantar Retail analysis and retailer website

11. CVS Healthy Skincare Center New category signage, products and clinical consultations Source: Kantar Retail analysis and store visits

12. CVS Beauty More category education and product benefits for health beauty conscious shoppers Source: Kantar Retail analysis and store visits

13. CVS Beauty Club 17 million CVS beauty club members enable the retailer to offer personalized discounts to its loyalty members Source: Kantar Retail analysis

14. Exclusive Brands

15. Walgreens New broader assortment and displays for Boots No 7 global store brand Source: Kantar Retail analysis and store visits

16. Rite Aid Exclusive brands enable Rite Aid to delight the shopper with a quality beauty solution at an affordable price Source: Kantar Retail analysis and store visits

17. CVS Health CVS’ exclusive store brand, Nuance Salma Hayek, promotes the retailer’s prestige category and appeals to Hispanic shoppers Source: Kantar Retail analysis and store visits

18. Beauty at Department Stores Getting progressive with prestige Source: Kantar Retail analysis • Prestige beauty has its roots in department stores, a channel facing steep competition from beauty specialists that offer a wider variety of prestigious brands, and drug and discounters who are starting to play in the prestige branding game. • To keep up and get ahead with shoppers in this trending category, department stores are chaning their game with three core strategies: • Improving Brand Assortment • Enhancing the Shopping Experience • Expanding Specialized Services

19. Improving Brand Assortment

20. Kohl’s Store-wide campaign to increase national brands takes a strong focus in beauty Source: Kantar Retail analysis and store photos

21. Sephora Inside JCPenney The shop-in-shop concept imports brand equity from both Sephora and its assortment of prestige beauty brands into the JCPenney assortment Source: Kantar Retail analysis and store visits

22. Enhancing the Experience

23. Kohl’s A revamped and expanded beauty department highlights key brands and products with more prominent lighting and displays Source: Kantar Retail analysis and store visits

24. Kohl’s A revamped and expanded beauty department highlights key brands and products with more prominent lighting and displays Source: Kantar Retail analysis and store visits

25. Kohl’s A revamped and expanded beauty department highlights key brands and products with more prominent lighting and displays Source: Kantar Retail analysis and store visits

26. Macy’s The open-sell Impulse department encourages new brand exploration and product interaction Source: Kantar Retail analysis and store visits

27. Expanding Specialized Services

28. Macy’s Adding branded interaction with “experts” draws shoppers in for an experience, not just a purchase Source: Kantar Retail analysis and store visits

29. JCPenney Weekly beauty “happy hours” draw shoppers back to stores regularly Source: Kantar Retail analysis and store visits

30. Bluemercury A look inside Macy’s newly-acquired beauty specialist retailer Source: Kantar Retail analysis and store visits

31. Bluemercury: A look inside Wood floors, marble counters elevate the experience and blur the line between retailer and spa; Easy access displays allow for maximum exposure to product interaction Source: Kantar Retail analysis and store visits Floor décor helps create easy/inviting atmosphere

32. Bluemercury: A look inside Strong brand messaging draws shoppers in; Once inside, packaging takes a focus over signage, encouraging interaction. Source: Kantar Retail analysis and store visits

33. Bluemercury: A look inside Testers available for high-end products; Branded events and services entice shoppers to interact with both brand and retailer. Source: Kantar Retail analysis and store visits

34. For further information please refer to www.kantarretail.com Contact: Tiffany Hogan, Analyst T: +1 614 355 4045 Tiffany.Hogan@kantarretail.com TiffanyHogan_KR Contact: Brian Owens, Director T: +1 617 912 2874 Brian.Owens@kantarretail.com kantarretail