“MAC has partnered with Nordstrom Rack to sell through several of the brand’s discontinued products,” a spokeswoman for the brand confirmed. “This is not an ongoing partnership; rather it allows the brand to free up space on our selling floors and make room for the season’s new launches and our top-selling products.”
Recently, the Estée Lauder Cos.-owned MAC has diversified its distribution strategy with a major push into Ulta Beauty, where it will open 100 boutiques with 600 stockkeeping units before the end of the year. The move was designed to bring MAC a new customer, and industry sources have estimated that it could bring in an additional $5 million in sales.
The addition of Ulta and selloff of products through discounting — at Nordstrom Rack, but also through sample sales — comes as MAC has faced declines in the U.S. market (the brand had a multiday, 60 percent off sample sale in New York in July 2016). While MAC is still growing internationally, low foot traffic in midtier U.S. department stores and fewer tourists where the brand has freestanding stores have taken a toll on financial figures. In addition to its Ulta debut, MAC is working on revamping its freestanding store format, Lauder chief executive officer Fabrizio Freda has said, introducing more technology and “different formats that speak to different consumers in different ways.”
At Rack, MAC products are selling for between 20 percent and 55 percent off full price, according to a report from Jefferies analyst Stephanie Wissink. “Displays within the (small) beauty section featured about 50 to 75 items…At checkout, associates were placing small printed cards into shopping bags highlighting the arrival of the brand,” Wissink wrote. The printed cards said, “Coming soon, MAC is at the Rack up to 55 [percent] off original prices,” according to a photo shared with WWD.
MAC is far from the only beauty brand being sold at Nordstrom Rack, Wissink noted. “Nordstrom Rack’s beauty section has been expanding over the last year to include more cosmetics with full feature displays now in place for NYX and combo racks for prestige beauty including Charlotte Tilbury, Too Faced, Urban Decay, MAC and Nars,” she wrote.
“There’s been a massive shift in where the traffic is going. Sephora and Ulta Beauty have built out the middle ground between department stores and mass, and the department store model is heavily in question right now,” Wissink said. “That has created some dislocation of inventory, no doubt about it.”
Brands, including MAC, could potentially reach a new customer by being in Nordstrom Rack or other off-price retailers, Wissink added. “Brands just need to be where the consumer is going,” she said.