Dive Brief:

• Drugstore retailer Walgreens introduced Beauty Enthusiast, a new club within its Balance Rewards loyalty program.

• Beauty Enthusiast members will receive 5,000 Balance Rewards points for every $50 spent on cosmetics, skin care, hair care, oral care, grooming, sun care, fragrance and bath product purchases, as well as opportunities to receive free samples, exclusive promotions and coupons, new product information and expert tips.

• Walgreens' 85 million active Balance Rewards members earn points on retail and pharmacy purchases that can be redeemed for rewards at stores or through the retailer's website.

Dive Insight:

Drugstore retail has long been about “health and beauty.” Alongside significant moves into actual medical care in addition to pharmacy sales, Walgreens and its rivals have a lot of opportunity in the beauty side of things, thanks to booming sales of cosmetics, perfume and personal care products. 

"Walgreens is continually looking for ways to enhance our customers’ beauty shopping experience and to provide greater value for our Balance Rewards members,"  Linda Filler, Walgreens marketing officer and president of retail products and chief merchandising, said in a statement. As well it should, considering how much competition there is in the space, especially in the segment aimed at budget-minded customers.

For example, Ulta Salon Cosmetics & Fragrance recently reported its seventh straight quarter of double digit sales growth: Second quarter same-store sales rose 14.4% compared to a 10.1% spike in the year-ago quarter, with e-commerce sales increasing 54.9%. In addition, J.C. Penney's shop-in-shop collaboration with cosmetics chain Sephora is credited as a key factor in Penney's ongoing revitalization.

And last month, 12-year-old e.l.f. (an acronym for "eyes, lips, face”), which has made a name for itself selling trendy yet low-priced beauty goods at department stores and specialty retailers as well as drugstores, hosted one of the most lucrative initial public offerings of the year. The company sells through its own site and at 19,000 U.S. stores, and plans to use its $114 million IPO proceeds to expand its brick-and-mortar footprint to include more high-traffic locations across the country. 

Among drugstore retailers, Walgreens may be well positioned to compete in the space, considering its merger with the U.K. Boots drugstore company in 2014. Boots has long had strong-selling lines of skincare and beauty products, and last year purchased the Liz Earle skincare brand from Avon Products.