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What to Watch: Retailers Reinvent the Beauty Floor

The renovated beauty floor at the Saks Fifth Avenue flagship is expected to open in 2018, while specialty retailers like Ulta Beauty and Riley Rose provide a more compelling shopping experience for mass beauty brands.

It’s not just major makeup brands that are getting a makeover in 2018 — retailers are doubling their efforts to lure beauty shoppers away from online and back into stores.

On the prestige side, Saks Fifth Avenue in April is expected to complete the reinvention of its second floor into a full-fledged beauty and fragrance playground complete with service offerings as part of its ongoing flagship renovation plan. In London, Harrods is working on a renovation of its own. The retailer’s signature ground floor beauty hall will take the place of men’s on the lower ground floor, with plenty of space for disruptor brands like Huda Beauty — influencer Huda Kattan’s product line is among one of Harrods’ top five best-selling beauty brands.

“It’s about the immersion and the education. That’s central. What we want to do is create a new area for beauty, and we’re going to broadly double the size of our beauty business to be able to engage with those new trends,” Harrods chief executive officer Michael Ward told WWD last year.

In the U.S., department store retailers such as Bloomingdale’s and Neiman Marcus are expected to continue growing the Millennial beauty initiatives they introduced in 2017, designed to rejuvenate the department store beauty counter business. For Bloomingdale’s, that’s Glowhaus — 400-square-foot shops-in-shop formats containing 30 niche, online-born brands targeted at younger consumers and located on the retailer’s contemporary floor. Neiman’s in late 2017 opened its Trending Beauty Shop at the Dallas North Park flagship, with 650 new products from niche brands in the makeup, skin-care and “self-care” categories. “A handful” of Trending Beauty Shops are expected to roll out to other Neiman’s doors in 2018.

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On the mass side, retailers are being forced to innovate as they watch sales decline due to slowing foot traffic. While major mass-makeup brands like Cover Girl and Almay are in the midst of reinvention, retailers are doing their part to stay relevant for a consumer who wants trends fast and would rather shop for them online or in specialty channels.

Target is among the retailers doing the heavy lifting in beauty aisles. Banishing the bland atmosphere endemic to mass-market beauty retailing characterized by rows and rows of pegged cosmetics, Target created a department that invites product discovery. Gondola heights are lower, lights are more conducive to testing shades and there is a service counter for consultations and swatching. More than 400 stores will get the white-glove treatment by the end of 2018. Other core departments in the new look are men’s, natural personal care and more South Korean-inspired lines.

Not to be outdone, Wal-Mart is installing more gadgets in aisles, such as iPads to help with product selection. Stalwart brands are being joined by up-and-coming lines, especially those for multicultural consumers. More and more stores will sport sparkling white fixturing and shelves stocked with trends at the same time they are launched at prestige.

CVS is going all in on K-beauty, upscale skin care and niche beauty brands. Select stores are outfitted with enlarged product offerings either from South Korea or inspired by the beauty hotbed. In the coming year, CVS will also expand its proprietary beauty brands to distinguish itself from competitors.

It is full speed ahead for Walgreens Boots Alliance’s Beauty Differentiation Program, which places an emphasis on its own brands such as No. 7 and Soap and Glory, as well as new cosmetics lines Sleek Makeup and CYO.

Meanwhile, the specialty channel is becoming an increasing source of competition for mass retailers. At the end of 2017, Sephora introduced ColourPop and Deciem’s The Ordinary online and in stores — both primarily focus on products priced under $10. Not to be outdone, Ulta Beauty is also ramping up its efforts in mass beauty. While the Midwest-based chain has historically carried the traditional mass brands — think Maybelline and Neutrogena — it is fast-growing its lower-priced assortment. In 2017, the retailer added brands like Morphe, Milani, Beauty Revolution and Sleek Makeup to the mix, and WWD reported this week that Wet ‘n’ Wild is set to enter two-thirds of Ulta doors in February. More mass brands will enter the retailer in 2018.

Ulta is also working to create a beauty experience in its mass department that rivals its prestige area, implementing tester stations — a feature that one-ups the drugstore experience in a fundamental way. At the newly opened Manhattan store, this concept is being tested on NYX fixtures.

Last year saw the introduction of Forever 21’s edgy beauty brand emporium Riley Rose, now in eight locations and set to expand in 2018. At the Bridgewater Crossing Mall in Bridgewater, N.J., the 5,000-square-foot space houses a slew of South Korean brands and niche lines not commonly found at bricks-and-mortar retail. Riley Rose also offers plenty of space to experiment, with ample tester stations and iPads displaying how-to-videos stationed across the store.

Retailers will have to contend with the growing number of monobrand beauty stores as well. In the mass space, E.l.f. and NYX Professional Makeup both ramped up freestanding store efforts in 2017. Both of these rapidly growing beauty logos are aggressively building their own branded stores in major malls or downtowns. The stores are loaded with technology including a new virtual reality experience at NYX. Consumers can use a Gear VR Controller powered by Oculus to select products they would like to learn more information about, and at the end of the experience, users will receive a special offer to purchase the products featured in the tutorial at a special price.

“NYX Professional Makeup is a digitally native brand with millions of followers across our global social media platforms,” said Mehdi Mehdi, the company’s vice president of digital. “We aim to seamlessly incorporate digital into everything we do, and see virtual reality as the new frontier in the beauty industry.”

Although virtual reality was much hyped last year, the human touch is another key component of experiential retail that will continue to progress in 2018. Sephora, for instance, is experiencing with boutique format stores. The first Sephora Studio opened in Boston in 2017 with a heavier-than-usual focus on services. “In today’s retail environment where very little is constant and clients’ expectations are ever-evolving, one thing has remained true for Sephora: there is no better way to create meaningful connections with clients than through personalized experiences and a customized approach to beauty,” said Calvin McDonald, Sephora Americas’ president and chief executive officer.