The boutique retailing model, also known as freestanding stores or vertically integrated retailers, has long been a key distribution channel, and despite the rise of e-commerce, remains a dominant platform for sales growth and brand presence.
Lush and L’Occitane are singled out as two at the forefront of the market, with the research firm noting that their success is due to the distinctive retail experience both offer.
“Both have consistently registered growth above the industry average and been busy opening new doors each year,” Kline observes.
Distinctive brand identity
Kline explains that both skin care companies have tapped into the key consumer demand of a retail experience that is set apart from standard stores, offering an engaging shopping environment: Lush achieves this through its colourful counters and packageless products, while L’Occitane stores set a scene of the natural and idyllic Provence region of France.
“Both retailers have a unique premise—something that is essential to win in this channel,” Kline’s report observes.
The report suggests that some brands can pin their expansion success largely on their successful use of the free-standing store model, such is the power of the retail channel, and pulls out MAC as a prime example.
“The use of freestanding stores has been a core element of MAC’s rise to global powerhouse status, a strategy it continues to employ as it enters new markets, especially those that lack a developed prestige channel like Brazil.”
With the rise of digital marketing and retail, standalone stores are increasingly being used to promote brands with fusions of physical and digital elements.
Korea is a leading market in this regard, with the Kline report noting that, along with France, the UK and the US, it is one of the countries where the most boutique retailer chains are headquartered.
“Seeking to offer more interactive and tailored services to consumers, cosmetic brands in Korea are increasingly utilizing high technology and smart gadgets to satisfy diverse consumer needs,” a report from the Korea Herald noted earlier this year.