Battling the Beauty Barrage Merchandising Deck Presented By

Battling the Beauty Barrage Merchandising Deck Presented By: Tiffany Hogan, Analyst Brian Owens, Director April 2015 © Kantar Retail 2015

Beauty at Drug Stores Building baskets and loyalty with beauty 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 Source: Kantar Retail analysis © Kantar Retail 2015 2

Expanded Formats © Kantar Retail 2015

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 © Kantar Retail 2015

Walgreens “LOOK Boutique” More space for exclusive brands and high end fashion accessories Source: Kantar Retail analysis © Kantar Retail 2015

Rite Aid’s Genuine Well-Being Format Improved signage and incremental space for cosmetics Source: Kantar Retail analysis and store visits © Kantar Retail 2015

Rite Aid’s Genuine Well-Being Format More Display Allocated for Beauty & Personal Care Source: Kantar Retail analysis and store visits © Kantar Retail 2015

Personalized Services © Kantar Retail 2015

Walgreens “LOOK Boutique On site beauty ambassadors to help personalize regimens and make selections Source: www. retail-week. com © Kantar Retail 2015 9

CVS Minute. Clinic New healthy beauty personalized consultations Source: Kantar Retail analysis and retailer website © Kantar Retail 2015

CVS Healthy Skincare Center New category signage, products and clinical consultations Source: Kantar Retail analysis and store visits © Kantar Retail 2015

CVS Beauty More category education and product benefits for health beauty conscious shoppers Source: Kantar Retail analysis and store visits © Kantar Retail 2015

CVS Beauty Club 17 million CVS beauty club members enable the retailer to offer personalized discounts to its loyalty members Source: Kantar Retail analysis © Kantar Retail 2015

Exclusive Brands © Kantar Retail 2015

Walgreens New broader assortment and displays for Boots No 7 global store brand Source: Kantar Retail analysis and store visits © Kantar Retail 2015

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 © Kantar Retail 2015

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 © Kantar Retail 2015

Beauty at Department Stores Getting progressive with prestige 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 Source: Kantar Retail analysis © Kantar Retail 2015 18

19 Improving Brand Assortment © Kantar Retail 2015

20 Kohl’s Store-wide campaign to increase national brands takes a strong focus in beauty Source: Kantar Retail analysis and store photos © Kantar Retail 2015

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 © Kantar Retail 2015 21

22 Enhancing the Experience © Kantar Retail 2015

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 © Kantar Retail 2015

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 © Kantar Retail 2015

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 © Kantar Retail 2015

26 Macy’s The open-sell Impulse department encourages new brand exploration and product interaction Source: Kantar Retail analysis and store visits © Kantar Retail 2015

27 Expanding Specialized Services © Kantar Retail 2015

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 © Kantar Retail 2015

29 JCPenney Weekly beauty “happy hours” draw shoppers back to stores regularly Source: Kantar Retail analysis and store visits © Kantar Retail 2015

30 Bluemercury A look inside Macy’s newly-acquired beauty specialist retailer Source: Kantar Retail analysis and store visits © Kantar Retail 2015

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 Floor décor helps create easy/inviting atmosphere Source: Kantar Retail analysis and store visits © Kantar Retail 2015 31

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 © Kantar Retail 2015 32

Bluemercury: A look inside Testers available for high-end products; Branded events and services entice shoppers to interact with both brand retailer. Source: Kantar Retail analysis and store visits © Kantar Retail 2015 33

For further information please refer to www. kantarretail. com Contact: Tiffany Hogan, Analyst Contact: Brian Owens, Director T: +1 614 355 4045 T: +1 617 912 2874 Tiffany. Hogan@kantarretail. com Brian. Owens@kantarretail. com Tiffany. Hogan_KR kantarretail © Kantar Retail 2015