Why E.l.f. Is Moving Into Dollar General
E.l.f. Beauty will enter Dollar General stores this month as the cosmetics company seeks to grow both prestige and value beauty segments.
Dollar General is seeking a bigger presence in beauty, according to E.l.f. CEO Tarang Amin on an earnings call yesterday, and conversations have been more than a year in the making. E.l.f. views itself as an elastic brand that can play in both ends of the market, and they’ll begin with a subset of Dollar General stores before determining whether to expand.
Products will be displayed on end caps, and E.l.f. said it will not modify the assortment for the retailer.
“We're bringing our best products, our holy grails, to the dollar channel,” said Mandy Fields, senior VP and CFO. “And we feel great about the assortment, about the presentation, the merchandising that we'll have as we enter the Dollar General stores.”
Reaching Value-Seeking Consumers
While E.l.f. reported 40% net sales growth in the second quarter, U.S. consumers are being more choiceful with their spending, said Amin, and demand in the region was softer for the quarter than anticipated.
Dollar General will provide new and complementary consumers, and the channel is expected to be highly incremental for the CPG. Indeed, the move aligns with the trend of prestige brands like Estée Lauder and L’Oreal setting up storefronts on Amazon.
See also: Learn how Kraft Heinz is collaborating with Dollar General
“The most important thing though for us is to make sure that we're serving our community and there's a whole set of consumers that have been underserved, particularly in those smaller rural areas, that now will have access to E.l.f.,” said Amin.
E.l.f.’s larger growth has been fueled in part by the sustained expansion of its Beauty Squad loyalty program. The program now has 5.3 million members, up 30% year over year. Members have higher average order values and purchase frequency, as well as stronger retention rates, according to the company.
They also deliver a wealth of first-party data that E.l.f. uses, along with insights from its DTC site, to swap out one-fifth of its retail assortment annually and inform its content creation.
ERP Update
E.l.f. is preparing to transition its ERP to SAP in the spring of 2025, though they may delay going live if deemed necessary, according to Fields.
“We're doing a lot of testing, a lot of preparation and a lot of training of the team here before we go live, and so trying to learn from mistakes of others that have gone through these types of transitions,” she said. “[We] want to make sure we have it 100% right before we flip the switch there.”
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