How Walmart Is Reinventing Its Beauty Model

·11 min read

What a difference 12 months makes.

Next week marks one year since Musab Balbale took the reins as vice president of beauty at Walmart.

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His mandate: to reinvent beauty at the world’s largest retailer best known for its focus on quality, value and accessibility rather than an innovative approach to the category.

And despite the challenges of achieving that during the pandemic, Balbale and his team are well on their way to achieving the goal.

Of course, price, scale and replenishment are still the core elements of the business. But to them, Balbale is adding speed, storytelling and brand selection, as he looks to transform Walmart into a true beauty destination for a customer base that is primed for the opportunity.

“Walmart has long held consumer trust on delivering convenience and access and value, especially on replenishment products,” Balbale said. “We see an opportunity to deepen the relationship with our customers by delighting her with the unexpected. If we can evoke a curiosity of what’s new, we can make Walmart a destination for beauty.”

Prior to the pandemic, Walmart had collectively about 165 million customers walking into its stores on a weekly basis, buying everything from groceries to electronic gadgets (or “organic apples to Apple iPads,” as Balbale says). But in terms of beauty, Walmart has historically been more of a convenience play, where shoppers could stock up on essentials while in the store buying something else.

Now, as beauty and retail are both transforming at lightning speed, Walmart is looking to become a bigger player in the segment. “There is a renewed focus at Walmart overall for beauty — similar to home and fashion,” Balbale said. “It can deepen the overall connection with the consumer for the total brand. As an enterprise, we are more focused intentionally on beauty than we have been in the past.”

The goal is to create a proposition that entices the consumer to the beauty aisle on each shopping trip, “to take her from one visit a month, to two to three to four,” said Balbale, noting that data shows Walmart’s customers are interested in beauty — and willing to spend.

“When I look at our share of wallet, I see customers splitting their spend between Walmart and legacy department store and specialty retailers,” he said. “We know there is a current customer we can serve in a way that is better and more convenient….Bringing the customer from 100 feet away from our grocery or general merchandise department is a much easier challenge than trying to convince her to come into the box in the first place.”

To attract customers to the beauty aisles, Balbale and his team have been adding new brands at a blistering pace — 40 thus far this year. “There is excitement and energy in the beauty category,” he said, “and by showcasing what is new and unique, we can bring the frequency that is coming into our total box into the beauty aisle and change the sentiments that consumers have about what they expect — not just convenience, value and access, but also newness, excitement and trend.”

Key areas of focus include brands targeted to Gen Z and a more diverse consumer base. New names added this year include Uoma by Sharon C, Lottie London and Crayon Case in makeup; Bubble Skin Care and SkinProud in skin care, and Kim Kimble, TPH by Taraji and Rita Hazan in hair care.

Still — it is one thing for Walmart to launch emerging brands. But it is quite another for smaller brands to survive — let alone thrive — in a business with the scale of Walmart. Balbale said he and his team are laser focused on easing the path of entry into the retail behemoth, enumerating three ways in which they’re doing so.

First, Walmart is helping brands secure financing and reducing payment terms to make it easier for them to generate the networking capital they need to scale and grow. Walmart has also implemented more formal training programs for smaller brands and is connecting smaller brands together so that they can learn from each other. Finally, Walmart’s marketing team is working closely with the marketing teams of the brands extend their support and reach.

“We are more engaged and intentional when it comes to showcasing our smaller brands,” Balbale said. “We’re building out marketing programs together to amplify each other’s voices to extend the marketing spend and reach.”

To do this, Balbale has significantly reorganized the Walmart beauty team, integrating different areas of the business in an entirely new way. Previously, for example, the e-commerce merchants worked separately from the store team. Balbale brought them all together — joining them with marketing, store and commerce operations, supply chain and replenishment, Walmart media, and legal and finance.

He also hired outsiders into the fold, including Paula Ryan from Sally Beauty Supply as senior director of beauty; Elizabeth Naramore from Revlon and Puig as senior merchant, beauty accessories, and Monica Sheldon, previously a senior buyer at Net-a-porter, as merchant, prestige beauty.

Balbale, whose parents immigrated to the U.S. from India in the ‘60s, has emphasized diversity in the team as well — “Black, white, brown, Latinx, Asian, straight, LGBTQ+, those who are humble, those who grew up in more comfort — the combination of this really diverse team with a cross-functional team has created real excitement in the category and an approach that is certainly new in how we come to beauty.”

In terms of what the brands need to have to catch the eyes of the team? First and foremost, a “crisp proposition, in terms of product and personality,” Balbale said. “Is this a brand that stands on its own? Can you imagine it on a T-shirt?”

Marketing is the second key criteria. “What is the brand’s ability to drive awareness and conversion? Sometimes this is about promise — not actualization,” Balbale said.

And finally — business know-how. Do the people in the organization know how to grow and scale a business, and will they be able to leverage the support provided by Walmart.

“We think if those three things come together we have the underpinnings of success,” he said.

Balbale said he thinks about the brand matrix as a content play — collectively, how do the brands — large and small— tell a cohesive and compelling story.

As much as he is focused on energizing the category with emerging brands, Walmart is also looking to solidify and make its core business more nimble as well.

“The goal for us is balance. Great heritage brands like Maybelline, L’Oréal and CeraVe have market share and significance, because they continue to innovate and meet consumer expectations,” he said. “The challenge is to build a balanced offering for consumers that houses the trusted heritage brands in a way that is increasingly simple for consumers to find, while also creating space for newness.”

Walmart is combining legacy brands with emerging names to create a more compelling assortment.
Walmart is combining legacy brands with emerging names to create a more compelling assortment.

And therein lies the rub.

For Balbale, the answer goes back to the story metaphor. The heritage brands form the “core plot” of what Walmart sells. Seasonal, holiday and limited-edition products provide the “punctuation,” which Balbale thinks of as “moments of delight.”

As for the lead of the story — “these need to be captivating,” he said. It could be a new brand like Uoma or Bubble or Kim Kimble or an exclusive launch, like L’Oréal Paris Midnight Serum. “These are powerful hooks,” said Balbale, “and as they mature, they evolve into the core plot of what we sell in our aisles.”

The “leads” are often trend-based and usually live on end-caps when they are first brought into the store. If a brand resonates, it is moved into the central aisle, which is also being rethought.

“As we think about the modular structure in our aisles, we are exploring how to create discovery zones — essentially boxes that show what is trending or what is new or what is different in a way that is much faster.

“We are changing our own expectations, let alone those of the industry and the brands,” Balbale said, of injecting speed into the equation, noting that Uoma took nine months from start to finish and Bubble only seven. Online, brands can now launch in a matter of “weeks,” he said.

The in-store changes are designed to simplify the shopping experience for consumers — and that includes paring down on underperforming stock keeping units and moving some products to online only. “If we don’t create the space for the consumer to quickly find what’s on her shopping list so she can then take a moment to have fun, we won’t create the mental or emotional space for discovery,” Balbale said. “How do we create simplicity? How do we reduce friction in our physical experience? How do we take out false choice for the customer?”

Balbale insists that the response from legacy brands has been positive, noting, “when we do this right, with intention, using customer data, brands see growth. Reducing false choice makes it easier for the customer to find the product she is looking for.”

Walmart’s evolving approach comes at a moment of great change for the beauty industry overall. The competitive landscape has shifted dramatically as a result of the pandemic, with e-commerce expected to continue its acceleration, distribution and price points becoming increasingly democratized and overall category expanding into areas like sexual health and feminine care as consumer clamor for self care.

Arch-competitor Target has been at the forefront of this, and the ante will be upped this fall, when its partnership with Ulta Beauty kicks off in 100 doors, bring prestige products into the store.

Balbale, too, is focused on prestige beauty, noting the category is one of the fastest-growing areas on walmart.com. “Our customers are spending up — they are spending on beauty at Walmart and they have to go somewhere else for prestige,” he said.

Noting that many prestige brands are open to having the dialogue about launching in Walmart (“We are having deeper conversations with brands that otherwise you’d be surprised are talking to us”), Balbale said it is incumbent on the retailer to be conscious of the space that prestige requires.

“As you go into higher price points, you need to create more space for the value proposition to be clear,” he said. “There are two parts of the prestige experience — one is discovery, innovation and trial and the second is creating awareness that Walmart has a prestige offering.”

Balbale, an e-commerce veteran who joined Walmart when it acquired Jet.com, where he was vice president and general manager, thinks digital will be able to fulfill the first piece of the equation.

“Whether augmented reality or beauty boxes or user generated content and reviews personalized for consumers like you, we think there are digital tools that approximate the high service environment of a department store, so we are exploring how to scale that,” he said.

The piece around awareness can capitalize on Walmart’s scale, too. “We can find a way to uniquely offer prestige beauty to consumers that balances service and discovery with the efficiency and productivity that our traffic requires in stores,” he said.

In terms of a brand balance, he envisions it as a mix of heritage names and emerging Indie — much like in the core offering. Brands working directly with Walmart include Obagi, Dr. Brandt, Derma E, Mario Badescu and ColorWow. Upcoming launches include Butter London, Mio Skincare, Six Gldn and Sparti Scents.

While it’s early days, the results overall are promising. Consumer sentiment and brand sentiment are rising, and while Walmart doesn’t break out sales by category, growth in beauty has been “stronger this year than we expected,” Balbale said.

As for the future — the team will continue to focus on speed and storytelling in the year ahead. “You’ll see us become even more present on social platforms. We had a TikTok selling event earlier this year and we are increasingly present on Clubhouse, having honest conversations with brand partners talking about issues ranging from entrepreneurship to the role of beauty brands in really personal articulations of race or mental health.

“We are evolving,” Balbale continued. “This is not the Walmart you may have imagined if you haven’t been to a store in years. We’re changing to meet not just the customer’s needs, but to meet the brands where they are.”

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