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Critical Mass: E.l.f. Cosmetics Opens Second Unit

The company is aiming to open as many as five brick-and-mortar stores by the end of this year.

NEW YORK — E.l.f. Cosmetics has opened its second freestanding store with a company goal of as many as five brick-and-mortar units by the end of this year.

The 700-square-foot store is located on Fulton Street near the corner of Nassau Street here. “This whole area is going to get really busy soon with office workers and tourists,” said Joey Shamah, the founder of E.l.f., describing the blocks surrounding One World Trade Center. The store had a soft opening on March 15 with plans for a grand unveiling within the next few weeks. Industry sources expect first-year sales to be $1.1 million.

Experts agreed it is a market to watch with Cushman & Wakefield reporting last year that lower Manhattan retail sales are expected to grow by 14.3 percent to $2.4 billion in the next five years.

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“We wanted to open another store because the first one, which served as a test, is doing well,” said Shamah, who added that he is eyeing other New York locales. Learnings from the first store on Broadway near Eighth Street encouraged the company to move hot categories, such as lip, near the entrance.

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With a smaller footprint than the original store, E.l.f. designed gondolas that could be placed on angles or freestanding to create the sense of a “floating” display.

While there are trained beauty consultants on staff, Shamah said most women in the store prefer self service. There’s also LED lighting on all fixtures to help consumers see the colors of the 550 stockkeeping units.

With premium brands setting up shops, Shamah saw an opportunity for “mass brands” to tell their story. Although the brand began on the Web, Shamah said there’s huge demand for the in-store experience, allowing consumers to touch and play with products.

In addition to the freestanding stores, E.l.f. is expanding its reach into supermarkets while also securing wall space in Target. Other major retailers selling E.l.f. include Walgreens and Wal-Mart.

Industry observers said E.l.f. has great potential to grow in traditional retail, while perhaps bringing its store format to suburban markets.

“Rich or poor, good times or bad, cosmetics are eternal purchases, particularly when they provide quality with value as E.l.f. does,” said Faith Hope Consolo, chairman of The Retail Group at Douglas Elliman Real Estate. “E.l.f. is of course a mainstay of drugstores, and it’s terrific that they are now expanding to fully present their line.”