While influencer partnerships and digital made Morphe an exception to the color cosmetics decline before the pandemic, the company is now joining a wave of makeup brands getting into the skin-care game.
On Tuesday, Morphe expanded its multi-brand product selection in-store to 11 new brands in new categories; some of them had hit Morphe.com earlier this month. The retailer is dividing the new products into three categories it’s calling “Edits”: “Skin” includes products by Banila, BYBI Beauty, Frank Body, Lano and Sweet Chef; “Haircare” includes Invisibobble and Playa Beauty products; and “Self-Care” has Hum Nutrition, Grande, Such Good Everything and Patchology products. The brand joins other buzzy young color cosmetics labels that have made the foray into skin care recently, including Fenty Beauty and Kylie Cosmetics. The expansion could help Morphe not only weather the pandemic’s effect on the makeup category, but also adapt to the younger generation’s interest in skin care and a more natural look.
“We really want to keep the brand very fresh and relevant,” said Eden Palmer, Morphe’s vp of merchandising. “We want to continuously evolve. We know that preferences are shifting in this pandemic world, with skin care especially; things are really changing as we’re all staying at home more frequently.”
Morphe’s sole focus until now, the color cosmetics category has been hit hard by the pandemic after softening for several years. According to The NPD Group, U.S. makeup sales saw a 52% year-over-year decline in the second quarter, to $869.0 million, making it the worst-performing beauty category. Ulta Beauty, which stocks Morphe products, noted similar trends in its Q2 2020 financial report. CEO Mary Dillon said on the earnings call that makeup “continues to be challenged” and that Ulta had seen the category decline by 400 basis points year-over-year.
According to Palmer, “Morphe really had bucked the trends in color” prior to the pandemic. “Color was declining starting in 2016, and Morphe has been growing at this huge pace since 2016,” with 300% growth over the past three years. But “come 2020, we started to meet those trends a little bit.” She noted that the planning for the category expansion began in early 2020, before the pandemic started. “We’re at a place where we are ready to expand into the next chapter, with the new categories to help make a more well-rounded beauty assortment.”
According to The NPD Group, some skin-care and hair-care subset categories have been more pandemic-proof than others. Hair treatments, for example, saw 30% sales growth in the second quarter. And Ulta’s earnings call revealed that skin care rose by 600 basis points year-over-year as color cosmetics declined. Skin care is still seeing an overall decline in the U.S., with NPD Group reporting an 18% drop in sales, but it’s less dramatic than makeup. Meanwhile, hair-care had the smallest decrease, at 10%. These numbers generally reflect sales through traditional retailers, and do not account for startup disruptors that are taking market share.
“Our e-commerce launch beat our forecast by triple digits on a partial launch week,” said Sarah Lee, the co-founder and co-CEO of Sweet Chef parent brand Glow Recipe. “This showed us that the beauty community at Morphe is hungry for skin care.”
Morphe had a 50-50 split between physical store sales and e-commerce sales when the pandemic hit, and Palmer said the brand’s digital-first mindset allowed it to pivot quickly to a focus on e-commerce when stores were shut down. The new category launches will feature special in-store sections, but for now, sales are still concentrated online. “We are trading more heavily online right now as our stores are just the baby-step processes of reopening,” said Palmer.
Apart from the pandemic, Gen Z’s preferences for skin care are also driving Morphe’s expansion decisions. The company’s average customer is 24 years old and spends more than $700 a year on beauty, said Palmer. This age group has been increasingly interested in the natural, “no-makeup makeup” look and “skin care-adjacent” cosmetics that have been especially popularized by Glossier and other startups. According to Palmer, the brand chose a range of labels that reflected the rise of skin-focused natural beauty, as well as related trends including the “wash-and-go” hair look, DIY beauty and the concept of “beauty from the inside out,” the latter of which drove the launch of supplement brands like Hum Nutrition. These trends can also be seen in the new Gen Z-focused Morphe 2 sub-brand launched with TikTok influencers Charli and Dixie D’Amelio, with products such as a lip oil offering a natural look with beneficial ingredients.
“They don’t think of beauty as just makeup,” said Palmer of younger beauty shoppers. “Skin care has surpassed color cosmetics in terms of penetration in beauty.”
“Morphe’s target is heavily Gen Z, with a strong millennial halo — our target is millennial, with a strong Gen-Z halo,” said Tara Morrill, the general manager and brand director for Patchology. “We think the match makes a ton of sense for both of us.”
The brand has relied heavily on influencer collaborations to reach this younger demographic. In addition to the D’Amelios, other major recent collaborators have included Maddie Ziegler, Jaclyn Hill and James Charles, while the brand announced in July that it would no longer collaborate with Jeffree Starr.
“We know the Morphe consumer is a loyal one who religiously follows their influencers,” said Lano founder Kirsten Carriol. “Lano’s target consumer is that true millennial, so it aligns perfectly with Morphe’s target of Gen-Z and millennial consumers looking for high-quality, affordable makeup and skin care from rising artists often discovered on Instagram.”
Morphe Holdings changed into FORMA Holdings on August 21, and functions as a brand incubator, accelerator and curator of third-party brands. It also announced the acquisition of Playa Beauty on that date.
And in-house brands in new categories could be on the horizon. Palmer noted that they’re being considered, saying that Morphe is “looking at continuing to open the aperture on our categories, within both the Morphe brand and the third-party brands that we bring in to sell in our ecosystem.”