Brief:

• Sally Beauty launched an app to highlight its customer-loyalty program, letting mobile users track reward points and redeem certificates through the app or in stores. Mobile users also can buy products directly through the app, which offers free shipping on orders of $25 or more, per a press release.
• Customers can use the app to see their purchase history to make repeat orders on their favorite products. The app is available for a free download for iOS and Android devices, the company said.
• Users have already downloaded the app nearly 90,000 times during a soft launch, while it was still being developed in stealth mode.

Insight:

Sally Beauty is among the companies facing new competition from Amazon, which this week announced plans to enter the market for professional beauty supplies. Sally Beauty will need to foster loyalty among salon stylists and everyday consumers with its mobile app. Sally Beauty's stock fell 17% the day that Amazon announced its plans, while Ulta Beauty fell 3% because the chain has shown a greater resiliency to the ecommerce giant, Reuters reported. However, the nearly 90,000 downloads of its loyalty app, even before its official launch, is a promising sign for the beauty retailer.

Amazon's entry into the market for professional beauty supplies allows stylists to order various products all in one place. After uploading their state-issued licenses to Amazon to create a business account, stylists can start ordering products from suppliers such as Wella Professionals and OPI Professional, Reuters reported. Before Amazon announced its plans to target professionals in the beauty industry, the company had introduced a badge on its site to mark items classified as "professional beauty" amid the growing consumer demand for high-end products. Amazon last year also introduced an "Indie Beauty Shop" to showcase direct-to-consumer (DTC) brands, which the company restricted from selling at major retailers such as Target, Walmart or Ulta Beauty.

The Sally Beauty app launch is part of the retailer's mobile-first strategy that was initiated in March. The company revamped its website and started letting customers shop from its Instagram feed and use Apple Pay to buy products. Its new site has exclusive educational content and specialized offers for salon and beauty counter professionals. Thirty-six percent of makeup shoppers and 30% of facial skin care shoppers use online and social channels to evaluate products before buying, a Facebook IQ study found, making them an indispensable marketing channel for beauty retailers.

With mobile commerce forecast to make up 54% of total U.S. ecommerce sales by 2021, up from 45% this year, Sally Beauty needs to carve out a space on the mobile screens of its customers. The U.S. prestige beauty industry, which is distinct from the mass-market segment at drugstores, grew 6% last year to $18.8 billion as haircare sales rose 25%, per researcher NPD Group. The company, part of the prestige beauty segment, has more than 5,000 stores worldwide and yearly revenue of $3.8 billion.