Credo Beauty is a retailer for the modern age — a place where product assortments are carefully curated to meet strict criteria for safety, health and sustainability, and where online and in-store sales meld together seamlessly.
The nine-store retailer, based in San Francisco, carries about 120 different brands of “clean” beauty products, mostly from niche, independent suppliers that shun the use of chemical additives. It generates about 60% of its sales volume in-store and 40% from e-commerce.
“We have an industry that has looked at conventional beauty and said, ‘There’s a better way, and there’s a safer way, and there’s a healthier way to get the same results,’” Dawn Dobras, Credo’s CEO, told CO—. “Credo really capitalizes on that.”
Unlike packaged food and pharmaceutical products, beauty care products are not tightly regulated by the Food and Drug Administration, and manufacturers have a lot of latitude with the ingredients they use. It’s up to consumers to determine what ingredients they want and don’t want in their beauty products.
The ‘clean’ market opportunity
Increasingly, consumers are seeking products that are “clean” or natural, with fewer added chemicals. A survey by Euromonitor last year found that nearly 12% of consumers said the use of all-natural ingredients played a factor in their most recent purchase of color cosmetics. That ratio increased to just over 20% of consumers seeking all-natural ingredients in skin care products and to nearly 17% for hair care products.
Demand for such products is expected to continue to expand. London-based research firm Future Market Insights projected that the global natural cosmetics market would grow at a compound annual rate of 5.2% through 2027, reaching about $54.4 billion, versus $34.5 billion in 2018.
In addition, more and more consumers are demanding eco-friendly personal care products, which has encouraged manufacturers to enter the herbal and natural cosmetics products market and to develop new, more sustainable products, the report explained.
Credo is capitalizing on the ongoing growth in the category by positioning itself as a leader in the space and establishing its own stringent criteria for the products it puts on its shelves. The company carefully scrutinizes how its suppliers source their ingredients, and also requires brands to be transparent with consumers about their sourcing, Dobras said.
“We’re disrupting the industry in the way that we’re asking for things that I think everybody would like,” she said.
We’re disrupting the industry in the way that we’re asking for things that I think everybody would like.
Dawn Dobras, CEO, Credo Beauty
Millennials spread the word
The retailer’s core demographic is millennials in their late 20s to shoppers through their early 40s, who are seeking out clean beauty items for themselves or perhaps introducing others to the clean beauty market.
“We’ve got a passionate group of customers that are younger, and they’re talking about clean beauty and it’s spreading out from there,” said Dobras.
The efficacy of clean products in the beauty industry has improved significantly in recent years, she said, particularly in skin care, where new, clean products are in some cases superior in their effectiveness to their conventional counterparts. More recently, suppliers are introducing clean color and makeup products, driven in part by demand from the growing number of retailers expanding their natural beauty assortments, Dobras said.
“We’re seeing an innovation explosion right now,” she said. “And the new brands that are coming through are so cool and awesome. The market is developing very, very quickly.”
Mainstream retailers such as Sephora, Target, CVS and others have been expanding into the clean beauty space by growing their assortments of “free-from” products, loosely defined as items sans ingredients perceived as potentially harmful, such as certain allergens, chemicals and preservatives. Cosmetics giant Sephora, for example, last year launched its “Clean at Sephora” initiative, through which it highlights certain products that do not contain parabens, formaldehyde and other ingredients many consumers are seeking to avoid.
Dobras sees such initiatives as validation of Credo’s approach. In some ways, beauty care retailing is similar to food retailing, she said, and in fact Credo is sometimes referred to as the “Whole Foods of beauty.” While other retailers might offer some clean beauty products, just as Walmart sells some organic groceries, Dobras believes shoppers will gravitate to the retailers that have established themselves as leaders in the niche through their knowledgeable staff and their sophisticated curation of product.
“We spend a lot of time thinking about clean beauty leadership,” said Dobras. “How can we lead these big guys to do better?”
Tapping tech to connect in-store experts to online shoppers
Dobras sees Credo’s highly educated sales force as a significant point of differentiation in the industry, and the company leverages this both in-store and online. Credo invests a lot of time and effort into finding and training estheticians and makeup artists who are passionate about the industry, so that they in turn can educate consumers about the benefits of clean beauty products and help them make the right choices for their specific needs.
One of the tools the company is using to leverage its employees’ expertise is technology from Hero, which allows its in-store aestheticians and makeup to help online shoppers make product selections through a service it calls CredoLive.
Online customers can connect in real time with in-store beauty experts at the Credo store closest to them. The experts can chat, recommend products, send photos and videos, and can even livestream from the store.
Hero also facilitates clienteling, which allows sales associates to tailor their interactions with customers based on those individuals’ shopping histories, both online and in-store.
Dobras said the impact of using Hero has been significant — driving what she described as the equivalent of “a small store’s worth” of sales volume.
Credo is able to respond to about 80% of the customer chats that are generated by online customers in real time, while the rest — requests that come in overnight, for example —are answered as soon as possible.
Overall, “Our differentiation is really about [our] customer interaction,” Dobras said. “Whether it be digital or in stores, we think a lot about how we serve the customer.”
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Published October 07, 2019