While more consumers are trading down in the high-end beauty category, demand within wellness remains steady. Enter KICKS’ new investment focus—accompanied by a new kind of retail experience.
Lundell sees great potential in physical retail, not the least in bigger stores in “strategic locations,” including the reopening of a so-called statement store at Drottninggatan in central Stockholm.
– This type of store is characterised by a very broad beauty offer and assortment, she explains. We also aim to create a more complete and interactive customer experience. Consumers are invited to test the products; be it hair tools, fragrances, or makeup, there will be different stations, or labs as we call them, in the stores where customers can explore. We know that consumers are going to our stores for that specific reason.
– We’ve also created a stronger clarity in terms of the navigation and the categorisation. Partly to make it easier for consumers to find what they’re looking for, but also to establish categories, products, and brands that haven’t typically been found in Kicks before.
Which now includes wellness.
– Exactly. That’s a great example. We’re now introducing wellness products online, in Sweden, Norway, and Finland, and Drottninggatan is the first physical execution with wellness. It’s a new category for KICKS where we will extend the beauty offer. What we see today is a big interest from consumers when it comes to self-care and well-being. The interest and excitement around sleep, relaxation, and recovery have seen strong growth during the last couple of years. Obviously, beauty is very much how you feel from the inside, so it’s a natural extension of our beauty universe.
And how will this develop, this new investment in wellness?
– We will evolve it over time. Now is really only the first step, and we will continue to expand both the assortment and the categories within wellness that we offer. For almost three years now, we’ve been part of the Matas group, and they have a much broader offer within wellness and health. We will probably not end up exactly mirroring that offer, but we will move in that direction over time. So it’s a category that will expand. Not only grow because of consumer interest, but also expand in the sense of what we actually offer within wellness.
What does it say about the times we’re in, this push into wellness?
– Self-care has become part of everyday life, and consumers are taking a more proactive approach to health, Lundell shares. There’s growing interest in prevention, balance, and long-term wellbeing rather than quick fixes. We see that not least with all the longevity solutions. And with that, we see consumers embracing a more holistic view of beauty, where skincare, self-care, and wellbeing are all part of the same conversation.
And the benefit of being part of Matas and their experience with wellness is that they, of course, have had trial and errors with wellness, so you can take and use the best parts of it.
– Exactly. Matas has a much broader offer than KICKS has. Some of it, we will introduce to KICKS. Not all of it, because we are different brands with different positions. But there are a lot of best practices we can take in terms of introducing a new assortment. That also goes very much on the private label side, with Matas Striber, which will be a part of our wellness offer as well. They have quite a strong footprint in wellness with Matas Striber, and we will also work with that over time.
Another thing to look at for you is Matas’ penetration for its customer club.
– Yes, that’s a very valid point. They have around 75% of Danish females in their customer club. We have more than 50% of Swedish women in our club, and we’re pretty proud of that, although it’s obviously a long way to go to 75. Broadening the offer will make us more relevant at more occasions for more consumers, making it one of the fundamentals behind this strategy.
75% of your turnover is high-end beauty, and the cost-of-living crisis makes this challenging for you. What’s your view of it?
– We’ve seen that consumer behaviour has changed. It’s mainly during the last year, I would say, that consumers are trading down, looking for more discounts and value for money. Having said that, already two years back, we started changing our strategy to broaden our assortment – introducing wellness now is a consequence of that. Wellness has not seen any decline despite macroeconomics, and it’s not considered high-end beauty.
– We still want to keep our position as a high-end beauty destination. Drottninggatan will be the first store to introduce Chanel Beauty. Knowing Chanel, they have very high requirements in terms of who they partner up with, so it’s important that we keep that position, but it is no longer about either/or. We know consumers move seamlessly between super exclusive and premium products and everyday care and bargains. It’s not different customers. Many times, it’s the same.
– We will make sure that we are also offering what we call good, better, best in terms of price points. Given the macroeconomics now, that’s the right strategy, but it would have been regardless. If we want to reach 75% penetration, we need to have that variety in our offer, making sure that the customer can grab an accessory and a lip pen for not so much money, while also buying a new Chanel foundation.
With Gen-Z, we’re now seeing the return of the physical store. What’s your view on brick-and-mortar versus online, omni, and the consumer journey?
– I do believe that physical retail has an even stronger role to play going forward. We absolutely see that there is an interest. Shopping for beauty is not a hassle for many people. It’s not something that they want to avoid, but something they enjoy doing. For Gen Z, it’s also a social thing to go to a store. That’s why I think it’s important to offer the exploration possibility. Typically, if we look at younger consumers, or a mother and a daughter, they will go shopping together, and they need to be able to both try out things but also understand what it is that they are looking at. The physical store has all the possibilities to do just that. On top of that, they will meet a person in the store who can actually help and guide them.
– If we thought that the physical store was dead six years ago, I absolutely do not believe that, which is obviously why we are also opening and investing in new ones.
What else have you learned after the acquisition by Matas, working with a different business culture and together with a much bigger company?
– If we look at the positive aspects and the strengths of now being part of the Matas group, we can leverage our size, but also learn best practices. Matas has 16% share of in-house brands and KICKS have 6%. So, it’s clear that there are things that we can learn and best practices that we can take from Matas and implement in KICKS in order to become more relevant for our consumers.
For Lyko, a clear strategy has been to acquire indie brands, including a fully operating factory on the Swedish West Coast, which secured control of vast parts of the value chain. Could that also be a way to go for you?
– A part of our strategy is to evaluate M&A for specific opportunities, so that could absolutely be an option. Either we greenfield and grow it organically, or we buy something. That said, for KICKS, we have started with Matas Striber and then followed with Nilens Jord, in September, which has been a huge success, and there is still more potential in these brands alongside Beauty Act.
Yes, Nilens Jord proved to be the best launch in KICKS history.
– Yes. And there is still a lot more potential! Lundell concludes.
