Skin care and makeup brands are looking for new paths to growth — and they’re going pro.
As aesthetics treatments boom and specialty retail becomes even more competitive, a growing number of skin care and makeup brands are looking to spas, med spas and doctors’ offices as a means to broaden their businesses.
Professional skin care product sales enjoyed a compound annual growth rate of 10.4 percent from 2018 to 2023, Kline reports, as multilocation facial studios and medical spas gain market share and beauty spend, thanks to a rate of growth still exceeding pre-pandemic levels.
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Executives attribute the growth to a few factors, including the rise of less invasive treatments like microneedling and injectibles and consumers searching for products to go hand in hand with their services routine.
“Botox didn’t even exist until the late ’90s, early 2000s,” said Chris Payne, chief executive officer of Jane Iredale. “If you walked into a dermatologist’s office, there was no facial being done, everything required a week or more of downtime. This wasn’t on anyone’s radar, but today, it’s taking share out of shoppers’ wallets. And what’s only getting better is the connection between products and services.”
Christina Fair, president of L’Oréal Dermatological Beauty, North America, added: “We’re seeing that aesthetics are not going away, and it’s about how skin care is so important to it, and that our doctors absolutely regard the right treatment with aesthetics and skin care as a total package.”
Those dynamics have led to climbing sales for brands that can crack the channel. “It’s a stickier relationship with consumers as you’re working alongside a skin health professional,” said Echo Sandburg, chief brand officer, CP Skin Health Group, which encompasses brands such as EltaMD, Filorga and PCA Skin. “There are so many products in the industry and when people have skin conditions, they go to a skin professional to help decode it for them. It’s stickier because these are consumers who have tried everything.”
Another reason for brands looking to the pro channel is that for some, the costs to scale beauty businesses in specialty retail have soared.
“For every brand, you have to look at customer acquisition. It can be a celebrity or an influencer, or it can be a great relationship with a retailer. You can’t just lean on social media advertising anymore. It’s prohibitively expensive and it’s a tough way to scale,” said Tina Bou-Saba, cofounder and managing partner of Verity Ventures.
“You have brands that are thinking there might be other opportunities out there,” Bou-Saba continued. “Given the rise of aesthetics, whether it’s med spas or dermatologists or a wellness spa, there’s a ton of opportunity there.”
Nevertheless, executives agreed that the pro channel is as rife with opportunities as it is with challenges.
“Brands go there because they think it might be an easier play. It’s actually tougher,” Fair said. “There isn’t as many brands as when you walk into Sephora or Ulta because you have to have the sales force to drive it.”
For Fair, who oversees SkinCeuticals and SkinBetter Science, the strategy — largely focused on the more medicalized ends of the channel, such as doctors’ and surgeons’ practices — also relies on bundling products in with services.
“We position a lot of our products that if you’re doing a certain procedure, this product is the best thing to take home.”
Though consumer beauty spend is increasingly going towards treatments, Fair said that was a plus for her business. “That actually benefits us. Doctors are bundling products into the cost so a lot of the time, you might not even see that you’re buying it. Most people are going in and making an investment in a treatment, and they’re not shying away from protecting that investment afterward.”
To win in the channel, brands need to be prepared to demonstrate their expertise in skin care. “The channel is growing and it’s healthy, especially for brands that have good skin treatment expertise,” said Aurelian Lis, CEO of Dermalogica. “We had a wonderful last year, and it all comes down to knowing how to do treatments. There’s a real desire for advanced results.”
Though the channel doesn’t share the same inventory demand or marketing costs as traditional retail, Lis said the fragmented landscape and required infrastructure still keep the barriers to entry high.
“Sometimes, brands go into the professional channel because the other sides of the business are so tough,” he said. “People are looking for brands in other places, and what we’ve seen is a lot of these brands don’t know how difficult it is.”
Dermalogica, for example, trains 100,000 skin therapists annually and has completely separate operations for the professional channel.
“Our professional business is run completely separately from our [direct-to-consumer] or retail business in every country,” Lis said. “We have different senior managers, we have different sales forces and we use different technology. And the regulatory landscape is different because we work with the FDA. It’s far more complicated.”
Given the professional channel’s segmentation, building businesses in the channel tends to happen door by door.
“Who wouldn’t want a dermatologist or esthetician recommending your product,” Payne said. “It’s a no-brainer, but there’s no central buying office, you have to have a field team, it’s incredibly manual to do the pro channel and you need feet on the ground.”
Laura Gerchik, the Biologique Recherche alumna who founded the distribution platform Wellness Curated, said a lot of that growth begins with a tailored approach to each provider.
“The professional channel is a very relationship-driven business, it takes a lot to develop it and that’s why people don’t necessarily go there first,” Gerchik said. “You have to have strong education, you have to go to trade shows and see a lot of people in person.”
But that’s not all — channel conflict can also damage one’s foothold.
“If you are relying on professionals to encourage people to love your brand and to sell it to their clients, they can get frustrated when that revenue stream is compromised because clients can buy the product anywhere,” Bou-Saba said. “You have to be very careful as a brand, and if you are going to look to the professional channel to be a big sales driver, you need to respect the professionals as your number-one customer.”
That can take several forms, from giving professionals a head start on new launches to minimizing the retail footprint in department stores and specialty retailers.
“We now ship new products early to our professionals. We might lose a month of sales online, but we gain money overall because it helps manage channel conflict,” Payne said. “It’s a fragmented world, and these are small businesses, and we try to make sure we don’t ever advantage our website over a professional.”
Fair is also intentional about keeping distribution tight, saying the more dedicated a brand is, the more likely it is to win.
“You have to contain your distribution. Some of the brands that have gone to Amazon are the ones that are going down in sales,” she said. “The less committed you are to the channel, the more impact it has on the relationship. But brands that have websites that can also drive back to the doctor, and the doctor is never off the journey of replenishment.”