The rise of standalone: is the department store beauty counter dead?

Every week there’s a story about a new standalone beauty boutique opening. Estée Lauder Companies has opened its first bricks-and-mortar presence for its Estée Edit line in London, LVMH-owned Dior has cut the ribbon on its first make-up concept store in New York, e.l.f. Beauty has unveiled its first store north of New York’s Union Square and Burberry is gearing up for an expansion of its beauty offer, which will no doubt include further digitally enhanced retail locations.

What do these stores have in common? They’re all targeted at millennial shoppers with sleek, shiny interiors, equipped with digital bells and whistles designed to attract the selfie generation. They’re destinations – a place to hang out, with services and events held in store, ready and willing to be converted into instagrammable moments.

And with department store sales floundering, down from US$87.46 billion in 2005 to US$60.65 billion in 2015, according to US Department of Commerce figures, and backed up by Estée Lauder Companies, who reported a decline in traffic in US mid-tier department stores for the first quarter of fiscal 2017 – it’s no wonder the brands are looking elsewhere to get the tills ringing.

Of course, department stores are trying hard to pull shoppers through their doors – Japan’s Seibu has installed a multi-brand Makeup Station, while Isetan has taken a counter-free approach and JC Penney has just installed Sephora full stop. UK-based Harvey Nichols recently unveiled its refurbished beauty hall, with the emphasis on services and the décor given a boutique-style makeover.

But ultimately, department stores are stuck between a rock and a hard place. On the one hand, a new generation of consumers who want the kudos of a destination if they’re going to glance away from their smartphones for a second – and let’s face it, the place your mom shops is soooo not cool – and a chance to browse freely. On the other, the brands, who don’t want to be lumped with the competition. Add to this the stellar success of Sephora and Ulta, and you’ve got yourself a conundrum. One the brands are solving by simply going it alone.

“Standalone stores enable beauty labels to increase brand awareness, rather than relying on space within department stores where they are in direct competition to their rivals and have limited brand exposure,” Laura Sossong, Manager at Boston Retail Partners told Luxury Daily. “This monobrand concept aims to breed customer loyalty for one specific beauty brand, instead of diversifying their purchases across several cosmetic labels. By isolating themselves from the offerings of their competitors, it guides the consumer to think of a brand as a one-stop shop for all their beauty needs. This model has worked well for MAC cosmetics.”

In other words, these standalone stores are walking, talking adverts – an interactive introduction to the brand and its products. Not to mention a way to spread the word to other potential customers on social media. John Bailey, President and Chief Financial Officer at e.l.f. Beauty, sums it up, “e.l.f. stores… allow us to drive engagement with our consumers, and help them connect with one another and celebrate their love of make-up.”

In the immortal words of Olivia Newton John, department stores, you’d better shape up…

 

 

 

9 comments

  • Comment Link January 11, 2017 posted by GCN_BLOG

    Estée Lauder’s sales could take a 1 percent hit as its largest customer, Macy’s, closes stores

    https://goo.gl/uUMRJS

    #globalcometics

    #business strategy

  • Comment Link January 11, 2017 posted by GCN_BLOG

    L’Oréal, Lauder et al lose out as Sephora dedicates more shelf space to own label and LVMH portfolio
    https://goo.gl/8Lkh2T

    #globalcosmetics

    #businessstrategy

  • Comment Link January 7, 2017 posted by GCN_BLOG

    Kat Von D and Sephora create early-bird Everlasting Flash sale

    https://goo.gl/BDVe45

    Fast Cosmetics ... Clever Partnership

  • Comment Link January 5, 2017 posted by GCN_BLOG

    January 2017 - WWD

    Macy’s Bites the Bullet, Cuts Thousands of Workers Amid Slowed Store Traffic

    https://goo.gl/MDK3ii

  • Comment Link December 17, 2016 posted by GCN_BLOG

    Department Stores Are Losing in Beauty, Too

    https://goo.gl/kH3CAu

    Bloomberg Analysis

  • Comment Link December 2, 2016 posted by GCN_BLOG

    Business Strategy - Holiday Season - ELC

    Estée Lauder's pop-up Christmas beauty store is all kinds of dreamy...

    https://goo.gl/vc2Wd4

  • Comment Link November 30, 2016 posted by GCN_BLOG

    Business Strategy ....

    Revlon ups standalone presence in India; aims for 100 stores by 2017

    https://goo.gl/V4T9UT

  • Comment Link November 30, 2016 posted by Imogen Matthews

    Stand-alone stores are not a threat, but an addition to the retail landscape and are very unlikely to replace the department store offer. You're right that they are successful way to engage with Millenials, but let's not forget the growing numbers of consumers over 50 who have the money and desire to buy products that make them look good -they are department stores' core demographic. What's wrong in that? Meanwhile, look at Selfridges and Liberty in the UK and you will find examples of cutting edge beauty retail innovation.

  • Comment Link November 29, 2016 posted by GCN_BLOG

    US retailers Sephora, Bloomingdale’s et al see luxury sales spike over Holiday 2016, modest growth expected for 4Q

    https://goo.gl/tQ6H4k

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