Why Coty Is Doubling Down on Dollar Stores and E-commerce

Why Coty Is Doubling Down on Dollar Stores and E-commerce
Why Coty Is Doubling Down on Dollar Stores and E-commerce

Coty’s new marketing efforts are driving strong e-commerce growth as it evolves to better meet shifting consumer behaviors.

Increased use of both influencer marketing and retail media are helping drive “astronomical growth” in its consumer beauty division, said CEO Sue Nabi in an earnings call last week.

The division’s e-commerce sales grew 30% year-over-year in the fiscal third quarter, while revenue increased 6%. E-commerce, meanwhile, represents about one-fifth of Coty’s total business and accounted for about half the growth in consumer beauty — which includes such brands as Covergirl, Sally Hansen, and Max Factor — and just under half the growth in prestige beauty.

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“As you can imagine, the bigger visibility of the brand online translates instantly into bigger sales online — as simple as this,” Nabi noted.

Meeting New Consumer Behavior

Mass color cosmetic sales softened in the United States as a result of pricing, economic pressure on lower-income consumers, and slowing consumption thanks to saturation, said Nabi.

What’s more, younger consumers are shifting to new channels like Amazon and dollar stores, and they’re increasingly favoring products like highlighters, concealers, and primers vs. traditional items like foundations and mascaras.

“These consumers are even trading up, and we see them trading up to masstige brands and to masstige channels because they are looking for what we call ‘cool beauty,’ ‘trending beauty,’ etc.,” said Nabi, “and this has been seen, in fact, that prestige color cosmetics is benefiting from this.”

As a result, in addition to doubling down on e-comm, Coty is increasing distribution in dollar stores and reallocating media to drive penetration with younger consumers. (This doesn’t mean eschewing the over-30 consumer, the exec noted, who remain a big part of the market.)

They’ve also increased product innovation meant to go viral on social media.

Coty is bringing the strategy to its prestige beauty category while exploring how to leverage it with key retail partners, said Nabi. They’re in good company here, as fellow beauty manufacturers Estee Lauder and L’Oreal have also recently expanded their presence on Amazon.



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