Sephora and Ulta help customers discover beauty products they come to love. Keeping those purchases in-store becomes harder once customers know exactly what they want and can find it elsewhere for less. Costco’s growing prestige beauty assortment gives shoppers another place to look, with the added convenience of buying skincare and haircare during a trip they already make.
Costco is also investing in discovery itself. Beauty Independent reported that its new beauty tables feature improved lighting, product information, and brands including Kiehl’s, Tula, Dyson, and Living Proof. The presentation gives shoppers more help evaluating products within the warehouse environment.
I think this creates a challenge for specialty beauty retailers. Customers can appreciate the savings at Costco while still valuing what makes shopping at Sephora or Ulta enjoyable. Competition involves everything around the product: how much someone wants to buy, whether they can try it first, the advice available, and the experience of spending time in the store.
Quantity is a good place to start. Costco’s larger formats and value sets can be appealing for products someone uses consistently. The Rejuran set highlighted by Beauty Independent, for example, includes a 50-milliliter ampoule plus an extra 10-milliliter bottle. That offers both replenishment and a smaller size in one purchase.
And then there are the travel sizes, which so many of us love, whether we have a trip booked or want an excuse to try something new. For those of us who enjoy switching things up, buying several months’ worth of one product is less appealing than having a few smaller options.
Sometimes we care more about how a mini looks on our vanity than about a practical, value-size container. Sephora and Ulta’s miniature and travel-size assortments serve these needs perfectly. For retailers, the range of sizes can be as relevant as the range of brands; a customer replacing a moisturizer and a customer packing for a weekend away may buy the same formula for completely different reasons.
Samples add another reason to return. Beauty retailers offer samples both in-store and online. A customer replacing a product can try something new at the same time, keeping discovery part of a purchase that otherwise requires little thought. That is interesting because familiarity with one product does not remove curiosity about others. Someone may be settled on their cleanser and still be looking for a fragrance they love. Sampling gives the retailer another opportunity to introduce a product, even when the customer originally came back for something they already knew.
The store experience also matters. Trying fragrances, comparing shades and talking through a concern with an adviser can be part of the pleasure of beauty shopping. For some customers, browsing is an enjoyable way to spend their time. Convenience means something different when they’re looking forward to the visit.
Research backs up the idea that pleasure should be taken seriously. A Journal of Retailing meta-analysis of 66 studies found that music and scent can enhance shoppers’ enjoyment, satisfaction, and behavioral intentions, though effects vary across settings.
Costco’s attention to lighting and presentation suggests it recognizes the opportunity here too. Its beauty displays could make an unfamiliar product easier to approach and encourage shoppers to spend more time exploring. Specialty retailers will need to keep improving the combination of atmosphere, service, and assortment that makes their own stores appealing.
Rewards give customers a further reason to stay. Ulta members can earn and redeem points on products and beauty services, connecting their shopping with appointments they may already be booking. For someone with a points balance to use, the financial comparison extends beyond the shelf price.
For brands, this means examining how Costco sales fit into the wider business, whether a value set introduces the brand to a new customer, encourages an existing customer to buy more, or shifts a purchase from another retailer.
For Sephora and Ulta, the challenge is keeping that customer once they know exactly what they want by using samples, miniature formats, knowledgeable service, and rewards to make returning worthwhile. Ultimately, while Costco offers a convincing mix of value and convenience, specialty beauty retailers have plenty to work with.
Dania Khalife
