By Jacqueline Flam
The beauty and personal care landscape is experiencing a seismic shift, fueled by digital disruption and evolving consumer expectations. However, while e-commerce continues to surge, the in-store shopping experience remains a critical battleground.
Where does this put drug store retailers? U.S. chains have an opportunity to redefine their role in beauty retail, develop prominent omnichannel experiences and position their organizations as go-to destinations for consumers seeking both convenience and discovery.
Beauty sales swell in-store, online
NielsenIQ (NIQ) data shows the beauty category is thriving and remains one of the most dynamic categories in retail, with growth accelerating across all channels. In fact, NIQ insights demonstrate that beauty sales have increased for five consecutive years, generating nearly $10 billion in annual gains.
And sales are rising both online and in-store, underscoring the necessity for drug chains to implement an omnichannel strategy. According to the data, in 2024, e-commerce beauty and personal care sales grew 11.1%, year over year, reaching $45.7 billion, while in-store sales rose nearly 3% to $61.8 billion.
Amazon continues to outpace all other beauty channels, with an 18% increase in sales in 2024 compared to the previous year. While digital platforms drive accessibility and excitement, drug store retailers have a unique opportunity to bridge the gap between online engagement and a consultative in-store experience, positioning themselves as category, omnichannel leaders.
Social media’s influence
on beauty
At the same time, drug store retailers should not turn a blind eye to the traction of Amazon and TikTok Shop. E-commerce and social commerce are established channels within beauty, and drug chains should closely monitor the sales and consumer trends fueling their success.
Regarding TikTok Shop, the U.S. is one of only 10 countries where consumers can engage and buy items via the application, and NIQ data finds it has grown its share of online sales in the beauty and wellness space by nearly two points. Additional insights from NIQ include:
• More than 45% of beauty consumers said they trust TikTok Shop as a new shopping outlet, and more than 30% of consumers said they trust Shein and Temu.
• 68% of purchases on social selling platforms are made on impulse.
Drug store retailers need to understand what is resonating with beauty shoppers on these platforms and consider implementing those key strategies to enhance both digital and in-store offerings. The chains also need to factor in two major industry shifts impacting beauty and drug stores: baby boomer flight and shrink.
New demographics and retail theft challenge beauty inside drug stores
For decades, baby boomers have been the bedrock of the drug channel, particularly in health and beauty. However, in the past two years, more than 5 million boomers have exited the market. Those who remain are shifting their spending habits, allocating over 26% of their beauty and personal care dollars to Amazon.
To combat this attrition, drug store retailers must take a more personalized and experience-driven approach — leveraging loyalty programs, enhancing buy-online-pick-up-in-store (BOPIS) and delivery capabilities, and curating in-store experiences to help recapture boomer engagement while also appealing to younger demographics.
Additionally, one of the most pressing challenges facing drug retailers is retail shrink, which disproportionately impacts high-value categories like beauty. While theft prevention is essential, overly restrictive security measures can alienate shoppers and drive them toward competitors. According to NIQ’s forthcoming theft prevention study, 60% of shoppers report a negative experience when encountering security measures, and 43% are less likely to return to that store. Even more concerning, 20% of shoppers abandon their carts entirely when faced with theft-prevention barriers, and 15% take their business elsewhere.
U.S. drug store retailers sit in a tough position. Delivering fresh and dynamic beauty experiences in-store can drive traffic, but they also need to combat shrink and maintain a positive customer experience.NIQ’s research suggests that rapid response times — ideally within three minutes when a locked product is requested — can mitigate lost sales. Investing in mobile-enabled self-service solutions, such as shopper-controlled digital lock releases, can enhance convenience without compromising security. Additionally, rethinking in-store messaging is key including signage that conveys empathy and appreciation, rather than restriction, can help preserve brand trust and encourage continued engagement.
Omnichannel growth opportunity emerges in beauty
The beauty category represents an undeniable growth engine for drug store retailers willing to innovate and build dynamic omnichannel experiences. By embracing omnichannel retail, adapting to shifting generational behaviors and implementing thoughtful shrink-prevention tactics, drug chains can position themselves for long-term success.
Jacqueline Flam is senior vice president of beauty, drug and OTC for NielsenIQ.
