This week, I examine Walmart's latest moves to own the beauty category. – Priya
Rao Since 2020, a flurry of beauty accelerator and growth programs, like Clean Beauty Summer School and Credo for Change, have come to market. Many were initially focused on advocating for and supporting diverse founders, as brands could no longer ignore the acts of racial injustice and discrimination happening in the U.S. Even Sephora's longstanding Accelerate Program retooled its focus with an eye on diversity in 2021.
But the nation's largest retailer, Walmart, had not joined the fray — until now. In spring, Walmart announced Walmart Start, an accelerator program for hair, skin, cosmetics, nails, fragrance and beauty accessory brands. Prospective beauty brands were not only promised mentorship from Walmart merchants and connections with Walmart supplier services, but they also had the potential to launch in 1,000-3,500 Walmart stores. Walmart has approximately 4,700 stores in its fleet. Across Walmart's robust and varied departments, this is the first growth accelerator of its kind at the retailer, said Creighton Kiper, Walmart beauty merchandising vice president.
"We want to get to these new beauty brands and develop these relationships faster," said Kiper, who was named Walmart's head of beauty, replacing Musab Balbale, in February.
Upon opening the Start application floodgates, Kiper said the retailer received over 500 applications. Applicants had to show they had a winning brand, value and product proposition, had high potential for growth, were ready to scale at retail, and met a set of Walmart supplier criteria. On Tuesday, the retailer announced the first five brands selected for the Start accelerator: customized hair brand The Hair Lab by Strands, Black female-founded and -owned hair-care line Pardon My Fro, press-on nail brand Paintlab, clean skin-care and wellness line Undefined Beauty, and fragrance brand Dossier.
The selected brands are at various points in their life cycles, and that was intentional. Kiper stressed that, as this program continues into 2023, included brands can be at any stage of business. Undefined Beauty launched in 2018, for example. Meanwhile, The Hair Lab by Strands was not a fully formed brand prior to an Instagram DM that founder Eric Delapenha received from the Walmart merchant team in March 2021. Delapenha, also the founder of prestige hair company Strands Hair Care, spun out The Hair Lab exclusively for Walmart. Though The Hair Lab by Strands did not apply via the Start application, the brand is considered the first graduate of the Walmart Start accelerator, given its 1-1 partnership with Walmart. It launches in 2,500 Walmart locations on September 1.
Walmart was initially interested in selling Strands Hair Care's test kits, a 23andMe-esque offering that analyzes cuticle strength, protein levels, texture and scalp health. However, the company and Delapenha collaborated on a new concept in May 2021 upon realizing that a customer journey inclusive of a take-home test was inconvenient for Walmart shoppers.
"A consumer doesn't want to go into a Walmart store today and say, 'OK, I need to go get a test kit, go home, take a test, and go back and get products at Walmart or have it shipped to [my] home,'" said Delapenha. Instead, The Hair Lab by Strands developed in-store testing sites, which Delapenha said were a million-dollar investment. Shoppers can now get personalized recommendations in-store and then buy products on the spot.
Walmart has become more strategic with its beauty proposition since 2017. What began with an in-store experience update across its store fleet segued to Walmart exclusive beauty brands like Mindy McKnight's Hairitage, developed with by OG hair influencer McKnight and incubator Maesa. 2021 was a particularly important year for Walmart beauty with the launches of Gen-Z skin-care brand Bubble and makeup line Uoma by Sharon C., developed by Sharon Chuter, founder of Uoma Beauty. Like Delapenha, Chuter was also approached by the Walmart team via DM. And last week, Walmart proved it had not slowed down its cornerstone strategy of incubating buzzy talent. McKnight's teen daughters, Brooklyn and Bailey, announced they too had partnered exclusively with Walmart for their Itk skin-care debut.
Walmart delivered positive news in its second-quarter fiscal year 2023 results: Total revenue was up by 8.4% year-over-year, to $152.9 billion; comp sales grew 6.5% and e-commerce sales increased by 12%. But the beauty landscape is increasingly cutthroat, even with the deluge of brands launching daily. Competition for beauty has never been more fierce among retailers, whether it's beauty-centric players like Sephora and Ulta Beauty or mass retailers that sell beauty like Target and Amazon. While many of the above accelerator programs were targeted at BIPOC-founded brands at the outset, they were also vehicles to capture better, newer and different indie brands before they popped.
Kiper said the close relationship Walmart's merchant team has with emerging brands allows lines to scale quickly. He noted that Halsey's recent diffusion line for Walmart, AF94, took less than a year to ideate, create and launch. For their part, Start brands have one-on-one merchant mentors that they meet with at least twice a month; meetings become more frequent as a line prepares for its in-store debut. Fragrance brand Dossier will be the next Start brand to launch at retail this fall. Founders also meet with cross-functional partners like retail media platform Walmart Connect to develop their brand's digital marketing strategy and merchandising operations to ensure supply chain success. In addition, Start brand founders engage in various sessions with existing Walmart brand founders like Mabel Frias from makeup line Luna Magic and Jordan Jones from Packed Party, an offering of confetti-embellished products.
It remains to be seen which of Walmart's indie brands will become the next big thing in beauty, but with the retailer's massive reach of stores and e-commerce, it is likely that Start brands will catch on. Still, execution will be key to ensuring brands have staying power.
"This isn't 'Shark Tank,'" said Kiper. "What we are doing is all about mentorship and partnership. We're not starting these brands at 4,700 doors, and we don't expect brands to be ready for that out of the gate."