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Great products become a part of shoppers’ lives.
They find their way into routines, and they can be there in a pinch when needed.
Brands set out to create goods that reach this status with their customers. If they are serving a unique function, they could help to shape new categories along the way.
Yet getting to that point requires not just developing unique and effective products. It also requires showing shoppers where those products fit into their days, and even how to use them.
Stryx is on that journey in the area of men’s cosmetics.
The brand was launched in 2019 by Jon Shanahan and Devir Kahan. They both had breakouts on their wedding days, and soon found there was a market for products that could offer a way for men to cover up pimples. They could also apply to blemishes, razor scratches, scars and dark circles.
After completing the XRC Labs accelerator in New York, raising pre-seed and seed funding from investors, and building traction through DTC channels, the company is on a growth trajectory. From a start with concealer and tinted moisturizer, it has added a number of SKUs from lip balm to bronze gel. The most recent is a Deep Java shade of concealer. Stryx is also making a higher volume of products as it gains retail partnerships to appear in stores like Target, which it recently added.
At the same time, Shanahan said in a recent interview that attracting new users to these products is ultimately about tapping into something more fundamental: Showing men that cosmetics are for them.
“I don’t think it goes through most men’s minds that you can put makeup on, or that you can have that instant cover of skin,” Shanahan, the New York-based brand’s CMO, told The Current on the floor of Shoptalk in Las Vegas.
Yet when they have a wedding, first date, presentation or even a Zoom call, many men that Shanahan talks to allow that there’s a moment when they want to enhance their appearance. They just don’t have a product for it, or know how to use cosmetics.
So Stryx’s work is also about building a brand of cosmetics that are made specifically for men "from the ground up," Shanahan said. This includes not just how the products are made and packaged, but also how the brand presents them in education and marketing.
When it comes to formulation, the brand developed products that take into account the differences between how beauty products would perform on men’s and women’s skin. At the same time, Stryx worked with makeup artists to develop products that were easy to apply. Most beauty products have a place in a person’s routine, but men often don’t have that established. So Stryx leaned toward quick application and multiple uses in a single product that men tend to favor.
In the area of packaging, Stryx aimed to make a product that looks cool. Considering what James Bond’s concealer would look like led to a sleek, pen-shaped tool that fits in a pocket.
Stryx concealer. (Courtesy photo)
But having the product that's a match for the audience is just one step. In a market where men aren't necessarily familiar with cosmetics, Stryx must break down preconceived notions about who wears makeup.
“We have to overcome a stigma about these products that guys can’t wear a cosmetic, and the fact that guys don’t know how to use, wear or apply it,” Shanahan said.
One way to do that is to show it to them. For Stryx, TikTok proved to be a great place to do so.
Having previous video experience with YouTube, Shanahan started experimenting with the short-form video platform in 2019, and quickly found it was a great format to show how to use Stryx products. With the brand’s tinted moisturizer, the ability to demonstrate it helped catapult the product.
“It took our worst selling product… to our best selling product,” Shanahan said. “Still to this day, it does very well because it’s a very visual product.”
Now TikTok is a primary driver of the company’s DTC business, both through paid and organic approaches.
Given how the rise of #beautytok has been driven by demos, it makes sense that similar content would bring traction for these types of cosmetics, as well. Shanahan said the platform prioritizes trust that products are what they say they are, and the fact that he is a founder talking about a product only adds to the authenticity.
@stryx_official Reply to @average.coke.enjoyer ♬ original sound - worldofdance
Just as important is how Shanahan talks about them. Rather than a hyper-masculine approach taken by some brands, he is observant of walking a “fine line” of speaking directly to men, but doing so in an inclusive way.
This comes back to building a connection with a shopper, and showing where makeup fits in. While there might not be a routine for men’s cosmetics, Shanahan sees a path that customers follow: Guys start to work out, then they dress better. Then, they might start using skincare products.
“This is the next step of that, which is instantly changing and instantly augmenting your appearance,” he said.
Taking an omnichannel approach also helped the brand become a part of the landscape for men. It launched into 2,000 CVS stores in 2020. Nordstrom.com followed in 2021.
@stryx_official Reply to @cam.ciaga ♬ original sound - Men’s Skincare & Cosmetics
Recently, it partnered with Target, and is set to appear in all 950 of the retailer’s stores. That put Stryx on shelves right alongside the other products that men seek out.
“The fact that we’re saying you can go to Target, and you can buy your grooming essentials, which is your razors, your deodorant and a concealer – that’s a huge validator,” Shanahan said.
The brand optimized production for wholesale from the start, so it had the operations in place to move into big, in-person stores. When it came to getting buy-in from retailers, Shanahan said a pitch resonated that pointed out how men’s cosmetics could bring not just an audience, but also grow a category.
“The shave category is only so big. How do you grow the personal care category? You bring in cosmetics – a product that has never been sold before,” Shanahan said.
More validation has come from spokespeople. The brand partnered with Tom Sandoval, a star of “Vanderpump Rules” on Bravo. ESPN host Gary Striewski is familiar with makeup given his on-camera role, and became known for talking sports while wearing a mask on Snapchat. Now he’s speaking for Stryx, as well.
Seeing prominent personalities on TV use and talk about makeup only helps to normalize makeup for men everywhere.
“Having those more masculine spokespeople is really important," Shanahan said.
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Unlock Incremental Growth
e.l.f. beauty Poreless Putty Primer. (Courtesy photo)
- Net sales increased 49% to $146.5 million year-over-year, driven by retail and ecommerce.
- Adjusted EBITDA was up 69% year-over-year, accounting for 25% of net sales.
- The outlook for the fiscal year was lifted. Net sales are now expected to be $541-545 million, up from $478-486 million.
The brand is also outperforming category trends. The cosmetics category grew 8% over 2021, while e.l.f. grew 36%.
“We grew our market share by 150 basis points and increased our rank to the #4 brand as compared to #5 a year ago,” CEO Tarang Amin told analysts. “We continue to be the fastest-growing top five brand by a wide margin.”
The strong results proved validating for a brand that prides itself on offering affordable cosmetics, and digital-forward marketing. They were also another sign of the resurgence of beauty as people return to in-person experiences post-pandemic and seek affordable luxuries that can provide joy despite tougher economic conditions.
Here’s a breakdown of the digital drivers of growth for e.l.f., and how it is showing strong results in a tough economic environment:
Marketing: Viral brands and sustained investment
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The brand prides itself on marketing that is both bold and pioneering on emerging channels.
One example came in the form of a holiday kickoff with the singer Meghan Trainor delivering a Weather Channel-informed report on social channels to celebrate the restock of the brand’s Halo Glow Liquid Filter, which was a viral sensation.
“The trifecta of e.l.f., The Weather Channel and Meghan Trainor helped us reach new audiences and entertain our community,” Amin said. “The campaign generated over five billion press impressions, exceeding last year's holiday campaign by a wide margin.”
The combination of innovation on product and virality in marketing helps attract a new audience for the brand.
“They see the viral buzz,” Amin said. “They see other people talking about this prestige quality, these great prices and particularly these days with platforms like TikTok, we get consumers doing their own demonstrations and comparisons.”
When it comes to metrics, Amin said the brand explores, “What percent behind each product are we pulling in new users?”
It's often up more than 50%, and attracts the core consumer in Gen Z as well as millennials and Gen X.
“I think the quality of these products at the prices we have and our ability to engage them really are attracting even more consumers to our franchise,” Amin said.
e.l.f. also deepened its marketing investment. The overall share of marketing is now 16%, as compared to 7% three years ago. It will increase to 17-19% this fiscal year.
“We recently completed our annual Nielsen marketing mix analysis and again saw exceptional ROI results, giving us further confidence that our marketing and digital initiatives are driving brand demand and delivering profitable growth,” Amin said.
Strong ROIs were observed across digital advertising and influencer marketing, while PR was “off the charts,” Amin said. Experimentation also plays a key role in developing these channels.
“The other thing about us is, we're not afraid to test and learn our new platforms. So we were one of the first beauty brands on TikTok. In the early days, it was hard to get attribution on TikTok. We now can see almost immediately when something goes viral on TikTok, the impact it has on our business and our ability to be able to attract that,” Amin said.
Ecommerce: Growing the squad
When it comes to ecommerce, Q3 digital consumption trends were up over 75% year-over-year, said CFO Mandy Fields. Digital channels drove 17% of total consumption in Q3, up from 14% a year ago. In the quarter that includes the holidays, digital channels were particularly strong through Black Friday and Cyber Monday.
A big point of emphasis for digital growth is the company’s Beauty Squad loyalty program, which provides early access, exclusives, free gifts and bonus points. The program grew enrollment 25% year-over-year to 3.5 million members. The loyalty program helps to boost the value of individual customers.
“Our loyalty members drive almost 70% of our sales on elfcosmetics.com have higher average order values, purchase more frequently, have stronger retention rates and are a rich source of first-party data,” CFO Mandy Fields said.
No slowdown in sight
Plenty of brands and retailers reporting earnings over this week are speaking of a slowdown in demand as a result of inflation and cooling demand in the economy. They also talk of consumers trading down to more affordable and smaller products that challenge margins. Amin batted away that kind of talk.
“No, we've not seen any slowdown in demand,” Amin said.
The response spoke to the unique place that beauty sits in this moment.
“What I'd tell you is, historically, mass color cosmetics, mass skin care has fared really well in…recessionary environments,” he said, referring to the Lipstick Index that posits beauty sales rise during economic downturns as people seek the small joys when they have less to spend on bigger items.
But there’s also a timing factor coming out of the pandemic.
“This is a category that really did suffer during the pandemic when people were restricted from their normal behavior,” Amin said. “So I've long felt there's a lot of pent-up consumer demand for the categories in which we compete, and we very much are seeing that.”
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