Pure-play online retailer Adore Beauty is ‘exploring’ bringing its brand “to life in a physical format”

It has already become a household name in Australian e-commerce, but listed retailer Adore Beauty may soon take inspiration from the late Olivia Newton-John and get physical.

In a statement accompanying its half-yearly results, released on Monday, CEO Tamalin Morton said the pure-play online beauty retailer is working with design agency AKQA to “explore how the Adore Beauty brand can be brought to life in a physical format”.

The statement did not specifically mention bricks-and-mortar retail stores, however, and it appears Adore Beauty is considering what a physical retail store could look like from a brand awareness perspective.

At the same time, the retailer is working on in-person brand activations and events to also drive awareness, loyalty and sales from customers.

Adore Beauty wouldn’t be the first e-commerce operator to bring its brand to life in a physical retail setting, with dominant players like Amazon and Shein even venturing down this path in recent years. Luggage startup July has unlocked serious growth with its ‘experiential’ retail stores both here and abroad, while digital bank Up has shown its marketing prowess with successful pop-ups.

And building brand awareness is one of the key pillars of Adore Beauty’s growth strategy, alongside “customer centricity” and “operational optimisation”.

“We have reduced our marketing cost as a percentage of sales, even as we have re-invested in an above-the-line brand campaign to support brand awareness,” Morton said in the statement.

“Brand awareness has increased in both our core and broader target demographics,” she added.

Adore Beauty, which was founded by Kate Morris and James Height and listed on the Australian Securities Exchange in October 2020, has had an impressive first half of the year, recording a 7% increase in revenue, to $110.7 million, for the six months compared to the previous corresponding period.

Sales momentum has continued into the second half of the financial year too, with revenue up 8.1% for the first six weeks of this period.

The growth was led by both higher average order values and annual spending per customer.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $2.4 million for the half-year, with a margin of 2.3%, which was in line with guidance.

The retailer increased its number of returning customers by 5%, to 507,000, alongside a 0.5% increase in active customers, to 804,000.

While Morton acknowledged the “challenging retail environment”, she said the company is seeing positive results from a number of strategy initiatives, including its mobile app and new subscription service, as well as adding new brands and products to its range and expanding its portfolio of owned beauty brands.