For over two decades, Melbourne-based Adore Beauty has operated online only, but now the beauty retailer is investing in physical concept stores.On Monday, alongside its full-year results for FY24, the business announced that it has signed two leases and that more concept stores are on the horizon.“The strategy behind the brick-and-mortar retail is really about building brand awareness,” Tamalin Morton, Adore Beauty’s outgoing CEO, told Inside Retail on a call for investors and analysts on Monday.“It’s one of three pillars in our growth strategy and we want to bring the Adore Beauty brand to life in a physical form,” she added.Bricks-and-mortar retail is an offering that Morton feels will excite customers based on the “insights we have on our customer base,” Morton said.“We’re looking to bring that to life in half two,” she added.In April, Adore Beauty announced that Morton would be stepping down in September for personal reasons. Last month, it revealed that Sacha Laing, previously group CEO of Alquemie Group, a retail and consumer brands investment and growth platform would be taking over as Adore Beauty’s CEO, effective October 1.The appointment suddenly makes a lot more sense. Laing may not have a background in running beauty businesses, but he is an experienced executive in bricks-and-mortar and omnichannel retail, having previously led General Pants Co and Colette by Colette Hayman, and held senior roles at Country Road Group and David Jones.Emotional experienceWhile an online presence may have served Adore Beauty well for the past two decades, retail expert Nick Gray pointed out that most purchases still occur offline. “Although 60 per cent of Australians discovered a new brand through social media and online, 56 per cent are uncomfortable making purchases through these platforms and trust in social media is ranked lower than other industries,” Gray, the founder of I Got You consultancy, told Inside Retail. During sales periods the conversion rates in brick-and-mortar stores “are substantially higher than online,” he said.Gray emphasised that pureplay online retailers are limited in terms of the number of senses they can use to drive emotional purchases, trust and decision-making, which may cap their conversion rate.“I think if they [Adore Beauty] execute well and lean into the emotional default to connect with their target market they will win against the likes of Mecca,” Gray said.“We buy with emotion and justify with logic later. It’s about who does that best,” he added.The great mergeThe focus on bricks-and-mortar stores comes as Adore Beauty integrates New South Wales-based premium beauty and wellness brand Ikou, which it acquired on July 31, into the business. Ikou has three physical stores in Australia.The acquisition was made based on a strong strategic fit and the untapped growth potential of Ikou’s private-label revenue, which has a profit margin of 73 per cent in comparison to the Adore Beauty overall profit margin of 33 per cent.“We continue to be open-minded, but we certainly want to now focus on Ikou and how we integrate Ikou effectively in achieving our targets, but we do continue to keep an open mind,” Morton said.“At this point in time we would like to retain the Ikou stores as Ikou stores. They’re strong flagships for the brand and they’re performing really well. We will continue to evaluate any incremental opportunities that the stores provide,” Morton said.The aim of investing in bricks-and-mortar retail stores is to drive and generate brand awareness, and “bring the Adore Beauty brand to life in physical form,” Morton detailed in the FY24 investor call.Adore Beauty confirmed that it has signed leases for two locations at Southland and Watergardens shopping centres, in Victoria, and that customers can expect openings in the second half of FY25.The stores and a new marketing campaign are positioned to further drive Adore Beauty’s record 71 per cent brand awareness with its core demographic of Australian women aged 25-45, up from 62 per cent the prior year, according to the retailer.The concept stores will be multi-branded and have a footprint of 150-160sqm and are part of a strategy to acquire new customers and partner with complementary businesses.More is moreAdore Beauty’s private-label branded product portfolio has grown from 38 to 61 SKUs in FY24 and building on this in FY25 is front of mind for the retailer.These brands include Viviology, Adore Beauty and Ab Lab, which all have higher gross margins than the third-party brands it stocks.Further, in support of expanding brand awareness, the retail is testing the wholesale distribution of Viviology with Advanced Cosmeceuticals.Media revenue stream Adore Beauty also reported a significant increase in revenue from its retail media business, which more than doubled year on year to generate $4 million in revenue in FY24.The retailer aims to further grow retail media revenue in FY25 through scaling owned channels as part of the ‘operational optimism’ pillar of the strategy.Tamera Francis previously worked with Adore Beauty as a freelance journalist and model. She last worked with the company prior to joining Inside Retail in 2023.