Adore Beauty is moving into a shopping centre near you — and the Tim Tams are coming, too, as the skincare retailer tries to translate its online experience to bricks-and-mortar retail.
New CEO Sacha Laing shared the skincare and cosmetics retailer’s three-year plan with investors on Friday, detailing its goal of opening at least 25 bricks-and-mortar locations in prime shopping districts.
The decision to invest in omnichannel retail is significant for the Smart50 alumnus, which has built a reputation as a leading online source for premium skincare products and advice on how to use them.
In the 25 years since Kate Morris founded the business, Adore Beauty fans have also come to love the rotating roster of free samples included in online orders — along with the single-serve Tim Tams accompanying the facial serums and specialty cleansers.
Adore Beauty customers can expect those freebies and loyalty benefits to continue in-store, Laing told SmartCompany, saying the ASX-listed business will bring what customers like about the digital experience into physical stores.
“Those surprise and delight elements, and those value-add elements are absolutely going to present themselves in the store environment,” said Laing.
“And you know, that is talking to a true omnichannel experience.
“We won’t be providing customers with a different experience online through in-store.
So you will absolutely see customers getting Tim Tams and those goody bags and those [gifts with purchase] in-store as well.
Adore Beauty CEO Sacha Laing
Those add-ons are not just sweet distractions, as successfully translating the online experience to physical stores is essential for Adore Beauty’s corporate strategy.
At Friday’s annual general meeting, Adore Beauty revealed full-year revenues of $195.7 million, a 7.4% increase from 2023.
But reported revenues peaked in 2022 at $199.7 million, as the final round of COVID-19 lockdowns drove consumers online.
Earlier, faith in continued online shopping growth helped Adore Beauty shares hit $7.41 a piece when it was listed on the ASX in October 2020.
Today, Adore Beauty shares are trading at 98 cents each.
Driving the enterprise to greater revenue growth and profitability — it recorded $4.8 million in EBITDA over FY24 — will require a significant shake-up, according to Adore Beauty’s annual report.
“Current strategic initiatives on their own are not providing a sufficient material step change to Adore Beauty’s revenue, profitability and new customer growth,” the report said.
Laing, who took over as CEO in October after leading shopping centre mainstay General Pants, said its stores will reach first-time customers unfamiliar with Adore Beauty, while giving regular online shoppers another opportunity to spend.
“It’s pretty clear to us… where we can attack new customers, where there’s major shopping hubs, and equally, where we have dense areas of concentration of Adore customers, where we can better service their needs on a weekly basis,” he said.
In an industry valued at $13.9 billion, some 87% of sales are conducted offline, Laing added.
“So you can appreciate the opportunity is really significant,” he said.
Beyond simply dropping freebies into shopping bags, Adore Beauty says in-store staff will be trained to provide consultation services, reflecting the high demand for recommendations and advice from its online clientele.
All told, the brand envisions 20+ stores under the Adore Beauty banner, with between eight and 10 iKOU locations, reflecting the luxury wellness brand it acquired in June for $25 million.
Adore Beauty said the new stores will be fully funded from operating cash flow, giving the store rollout some flexibility.
But the plan arrives in a tough moment for retail tenants facing surging rents, and consumers with shrinking discretionary spending budgets.
On the first point, Laing is confident in the unit economics of each store, planned to occupy between 150sq/m and 200sq/m each.
When asked about the ‘lipstick effect‘ — the maxim that says consumers will continue to spend on small indulgences, even in times of economic hardship — Laing was optimistic about further spending in the beauty sector.
“When we look at the category on a forward basis, that growth momentum is forecast to continue,” he said, reflecting particular growth in the fragrance and makeup components of the Adore Beauty business.
“I’ve always maintained, whether it be in the beauty category or others, that if a retailer is doing well, if they’ve got the product that customers want, if they’re giving them service in the right way and meeting their expectations, then the value proposition makes sense,” Laing continued.
“Even in tougher times, good retailers can continue to do well.”
The initial Southland and Watergardens locations are set to open this financial year, with further stores — and free biscuits — to follow.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
