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Retailers Increasingly Bet on Beauty

Madewell has joined a slew of traditional apparel retailers that now sell beauty — including Anthropologie, Forever 21 and Free People.

Beauty is becoming a more popular bet.

Retailers like Forever 21, Anthropologie, Free People, Urban Outfitters and, more recently, Madewell, are building out their beauty assortments as a means of driving foot traffic into stores and authenticating their brand positioning, experts said.

“Beauty alone brings in the customer,” said Jane Hali, chief executive officer of Jane Hali & Associates, a retail investment research firm. “Everyone likes beauty — that’s a big umbrella. It could be fragrance, cosmetics or skin care. There are junkies in each. There are footwear junkies, handbag junkies — I don’t know of any apparel junkies — so it makes sense to bring in a category that’s performing.”

“With slowing apparel spend and people generally seeming to want less stuff, it’s like a strategic pivot [on the part of apparel retailers] because people are still buying beauty. Beauty still attracts people into stores,” said Lucie Greene, worldwide director of The Innovation Group at J. Walter Thompson. She noted that swing toward beauty is apparent in other industries, like publishing. “Even in the U.K., Glamour is repositioning itself as a beauty title. I think that’s just in response to market forces.”

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For the brands, partnering with a more apparel-oriented concept is a way to get their products in front of eyes that may not have ventured into a Sephora, Ulta Beauty or Bluemercury.

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Madewell is the latest to jump on the beauty bandwagon. The chain recently launched Beauty Cabinet, its curation of about 40 beauty products ranging from fragrance to lip balms, priced between $8 and $119. The assortment contains products like French Girl Sea Polish, $38; Herbivore Botanicals Brightening Mask, $48; RMS Beauty Living Luminizer, $38; Ursa Major Hoppin’ Fresh Deodorant, $18; Olio E Osso No. 1 Balm, $28; Karuna Hydrating Mask, $8; Daughter of the Land Balancing Oil, $45; Vitruvi, Essential Oil in lavender, $15, and Bon Parfumeur Scent 101, $48.

Madewell declined to make an executive available for this story.

The company’s plan is to carry the everyday-essentials concept from its clothing line into the beauty category with products that the Madewell team specifically relies on and has tested. The selections will be available online on Madewell’s site and in 21 doors. The beauty rollout may not drive a ton of sales, but is expected to help solidify brand positioning, experts said.

“They’re not going to sell a lot of volume, but it helps to authenticate their positioning as one where design and curation is done,” said Stifel analyst Stephanie Wissink. It makes sense for J. Crew-owned Madewell, she noted, as J. Crew has also experimented with beauty and curation. “[They were] distributing up-and-coming brands that were just really cool or hitting a patch of cool — that still exists in the company’s DNA,” Wissink said.

Madewell’s beauty assortment should help it reach a prime Millennial target, according to Hali. “It’s very Millennial — nothing is antiaging,” Hali said. “A large percentage of shopping for the holiday season is going to be online or mobile, and this is an easy purchase. That’s why they’re launching it now.

“Everyone’s into beauty,” she continued. “Not everyone is into apparel, and certainly not everyone is into jeans. They’re a cool store — they’re known for their denim and this broadens their spectrum. They can’t be focused on one thing because that can go out of style. That’s why [Madewell and other retailers] want to broaden their audience.”

Madewell’s beauty launch comes around the same time as Forever 21 has started opening Riley Rose stores. While Forever 21 sells a collection of private-label and branded beauty in stores, Riley Rose focuses more specifically on beauty, with a K-Beauty section and brands like Winky Lux, Obsessive Compulsive Cosmetics and Beauty Bakerie. The store features beauty alongside accessories and home decor.  So far, Forever 21 has plans to open 10 Riley Rose stores in retail shopping centers in 2017, with three more slated for 2018.

Millennials are the driving force behind beauty brands entering into apparel retail distribution, said Reuben Carranza, president of R+Co at Luxury Brand Partners.

Riley Rose picked up R+Co’s entire assortment of hair products — it is the first time R+Co has been distributed by a fashion retailer.

The younger generations of consumers, said Carranza, are beginning to see fashion, beauty and lifestyle as intrinsically linked — and they want to shop in a place that combines all of these elements.

Though R+Co is also distributed in the salon channel, Carranza and Luxury Brand Partners have devised an omnichannel retail strategy that means the brand doesn’t have to solely rely on salons to bring in most of its business.

“They’re not thinking just about, ‘What outfit am I going to wear?’ but they’re looking at the total look — ‘How does this work with my makeup? Do I have the right concealer? The right blush? How does that work with the blouse I just picked?’” said Carranza.

“There’s been a couple of drastic shifts that affects how Millennials think about our hair brands, and indie hair brands in particular. One is that their number-one source of information is online reviews, then referrals by friends and then stylists,” said Carranza, who noted that these online reviews are coming from influencers. “The style icons of the current generation are micro-influencers — not the ones who have gotten to 3 million followers, but the ones with 5,000 to 1 million followers. They’re determining the looks and the product trends. We’re in a place where we need to be judged by the company we keep.”

Carranza said the brand chose to enter Riley Rose because of its assortment of niche products and “mix of indie brands you don’t see in Sephora or other places.”

“They were the first retailer we’d been approached by taking a different approach in curation of the brands, but their approach was very much about trial. We liked the idea of the client testing and trying products, we knew that spoke to the [Millennial] consumer. They’re the first retailer we’ve seen that’s created a product mix that really speaks to that next generation,” said Carranza.

While Madewell and Riley Rose are new to the beauty landscape, Urban Outfitters, Free People and Anthropologie have also been gradually penetrating the beauty category. Other retailers — like H&M, & Other Stories and Topshop — have taken a different route into beauty and are building out their private-label lines.

Beauty, said Greene, can also add the experiential element that most retailers now are looking to provide. She noted H&M’s & Other Stories brand, which has its own beauty line, along with sinks stationed in the store to test products in. “If you’re still doing apparel, [beauty] is a clever way of making it more like a concept store and being more experiential and interactive.”

For the brands, new eyes and awareness are key factors in deciding to partner with nontraditional beauty retailers.

For Vermont-based natural skin-care brand Ursa Major, distribution in unlikely channels helps boost overall brand visibility, according to cofounder Oliver Sweatman. Ursa Major is part of the Madewell assortment, but has also partnered with Outdoor Voices, Marine Layer, Save Khaki and Topo Designs to sell a small grouping of Ursa Major products.

“It gives us a chance, as long as the retail partner is aligned with our brand, [for a] visibility boost and helps build the brand awareness and helps acquire new customers,” Sweatman said. “For an indie brand, there’s a nice validation that comes with working with one of these national retailers. Often it has been curated, so the fact that you’ve made the cut in a review process is a nice way to cut through the clutter.”

In those channels, Ursa Major keeps its product offering tight. For Marine Layer, the brand did a discovery set, which Sweatman said works well for the end consumer.

“The discovery element is very important, but I think either that’s your thing [as a retailer] and you’re all about discovery, in which case you’re updating the assortment all the time…but if you’re going more for the replenishment angle, that can be a lot harder to do,” Sweatman said.

Shoppers who find Ursa Major seem to be replenishing after the initial purchase, Sweatman said. “That said, I feel like increasingly the consumer is channel agnostic — basically, they are open to discovery all the time and will replenish whenever the opportunity presents itself” regardless of the channel, he noted.

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For hair-care line Verb, going into Urban Outfitters just made sense, said founding

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partner Claire Moses.

“We’re created on this idea that Verb could be anywhere,” Moses said. For now, the brand is mostly in hair salons (about 5,000 of them), but it has also branched into Sephora and Urban Outfitters.

“Everyone’s response to us launching in Urban Outfitters was, ‘That makes sense,'” she said. “It’s not a huge point of distribution…[but] from the reach and branding perspective it has done phenomenal things for our brand.” Verb is in about 55 Urban Outfitters doors.

“My favorite thing about Urban is that we get an opportunity to communicate with people who are not buying beauty, and that’s really unique from our brand’s perspective,” Moses said. “We’re more of a younger lifestyle hairstyle brand that isn’t about over-the-top high-fashion looks — who we want to be talking to isn’t [someone who wants to spend $45 on shampoo].”

The brand has also benefited from Urban Outfitters’ sampling program, which places Verb products alongside purchases like shoes, Moses said. Urban Outfitters has stocked edgy and trendy beauty products for years, often testing products on its website before moving them into a portion of its doors.

For Darphin, moving into Anthropologie was a way to grow the French brand’s awareness without diluting that element of obscurity that makes it attractive to discerning customers who want to feel like they’ve discovered a special brand, said Ali Wente, vice president and general manager in North American for Darphin and Lab Series at the Estée Lauder Cos.

Darphin entered the U.S. market in 1992 and is sold primarily through Bluemercury and the spa sector — its brand awareness here is a far cry from its native France, where Darphin products are a pharmacy staple.

“We’ve kept it very niche in the U.S — a brand like Darphin needs a retail partner who can tell a story effectively,” said Wente.

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“I like to call it the best kept French secret.”

Wente said the partnership is already proving successful, noting the existing business has continued to grow double digits despite the new point of distribution.

“The Anthropologie consumer is very much like the average Darphin consumer ­— our customer wants the best and she’s very ingredient-conscious,” said Wente. “Their client is very aligned — she never knew about us before Anthropologie, but she discovered us when she was picking up a beautiful set of glassware or a couch.”