Dollar General's new beauty brand goes viral

Believe Beauty products are under $5

By Nathaniel Meyersohn, CNN Business
Justin Sullivan/Getty Images

(CNN) - The makeup world is filled with celebrities endorsing big brands in expensive advertisements. But Dollar General's humble, $5-and-under cosmetics line has gone viral, thanks to social media beauty bloggers.

In the spring, Dollar General debuted Believe Beauty, an exclusive, private-label line of lipsticks, eye shadows, foundations, nail polishes and skin care accessories at the chain's more than 15,500 US stores. Dollar General partnered with a beauty manufacturer on the brand and is giving it prime real estate at stores: It's displaying the 150-product collection in dedicated sections at the end of store aisles, making it easy for customers to find.

The aspirational brand is "an important part of our strategy," chief executive Todd Vasos said in March.

Dollar General executives say they developed the brand to bolster the company's hold on existing customers and improve its thin profit margins. Dollar General also hopes to draw Millennials with the brand. Millennials probably won't post online about snacks or a new mop they bought at Dollar General, but they have showing off their new makeup online.

The line has attracted attention from personalities with large social media followings reviewing the beauty products on YouTube and Instagram.

Beauty video bloggers, or vloggers, hold a lot of sway over makeup brands. Vloggers have long used YouTube and Instagram to review makeup and skincare products and to give tutorials to their followers, which for some can be up in the millions. Experts and beginners alike tune in to learn techniques, tips and to see if new products on the market are worth buying.

Dozens of Believe reviews on YouTube have already racked up hundreds of thousands of page views. One 16-minute YouTube review from a beauty vlogger has 125,000 views. Instagram is flooded with more than 3,000 posts using "#believebeauty."

"We're seeing really good results," Dollar General CFO John Garratt said at a presentation in June. He pointed to "a lot of buzz on social media" about the brand. Dollar General declined to provide the brand's sales figures for this article.

All that social media attention means free advertising for Dollar General. It boosts the company's image with younger shoppers and is helping lift the dollar store empire.

"People like those kind of videos because it's something different," Taylor Horn, a blogger who reviewed Believe on her YouTube channel, told CNN Business. Her channel has more than 750,000 followers.

"It's cool when lines like Believe Beauty launch, where it's accessible," she said. "I think it's more achievable and the things that your everyday consumer can afford."

 

$17 billion US cosmetics market

Believe may help Dollar General gain market share against drug and grocery stores, said Stephanie Wissink, who covers the beauty industry at Jefferies.

The majority of Dollar General's stores are in rural communities, so offering the brand might save small-town shoppers a longer drive out to Target or Walgreens, she said.

Dollar General added its own beauty brand to an industry that is surging. Sales of cosmetics, which includes makeup, lipsticks, nail polish and eye shadow, have grown 31% in the United States since 2013 to more than $17 billion last year, according to Euromonitor.

But the industry is changing rapidly. Social media and the rise of vloggers have democratized the market, opening it to new shoppers.

"If you're a beauty enthusiast in a small community, you can access the same content to inspire you as the metropolitan fashonista," said Wissink. "Historically, you would have had to subscribe to a magazine or wait until a trend reached you."

Social media has also allowed small, low-priced brands to gain loyal followings online. Brands such as ELF cosmetics, which sells for under $10, have appealed to bargain hunters and paved the way for mainstream retailers to offer their own affordable lines.

"People know that now they can get really good makeup for cheap," said Horn. "There's not as much of a stigma behind it."

Dollar General is following a similar strategy to Walgreens, Target, Zara, Forever 21 and even 7-Eleven. These companies have all added their own in-house cosmetics lines in recent years.

"The barriers to building a brand are not as stringent as they were in the past," said Wissink from Jefferies. "That's why you're seeing almost every retailer launching some level of beauty."

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