Beauty Strategies Pivot in Department Stores, IADS Study Shows
PARIS — There’s a new normal for department stores when it comes to beauty selling.
According to the International Association of Department stores, or IADS, the retailers’ cosmetics and beauty business grew on average 1 percent between 2021 and 2022, to practically reach their pre-pandemic level. However, the category’s fundamentals have shifted dramatically.
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During the peak of the health crisis, big brands shifted to direct-to-consumer, while in tandem, people’s expectations and tastes changed, shaking up the market. Big beauty names became challenged like never before by upstarts and niche brands, which sometimes streaked past them.
As a result, department stores adjusted their strategy and invested in niche fragrances and rising makeup brands. They also entered the wellness market, backed by revamped loyalty programs and strong social media presences.
“Interestingly, these evolutions forced department stores to adapt their offer, but not their price structure: In 2022, segmentation remained stable compared to ’21, with luxury representing 47 percent of the business, premium products 24 percent and prestige products 10 percent,” IADS said in a statement. “The only notable evolution comes from the mass-market segment decreasing to 8 percent and benefiting the ultra-accessible business (7 percent), which had already been increasing before inflation hit.”
In department stores during the period, fragrance was far and away the bestselling beauty category, generating on average 36 percent of the business. Bolstering that turnout were niche fragrances that were increasingly attractive to consumers, IADS said, adding its members mentioned such brands as Creed, Maison Francis Kurkdjian, Jo Malone, Byredo, Kilian Paris, Les Eaux Primordiales, Montale, Ex Nihilo, Mancero and Le Labo.
“El Palacio de Hierro and Breuninger in particular are pursuing a strategy which aims to become leaders and were recognized by experts in Mexico and Germany, respectively,” IADS said.
In department stores, makeup made up 20 percent of the overall beauty business.
“While it has a long way to recover to 2019 levels after COVID-19 slowed down sales, in-store events represent great opportunities to redevelop the business, on top of sourcing and adding exclusives, new trendy brands,” IADS said.
Trend forecaster and consulting agency Nelly Rody, a partner of the department store body, revealed results from its scouting done for IADS’ members of up-and-coming brands. Some findings were:
In skin care: Topicals, Dieux, Cosmoss, Haeckels, Earth Library and Herbar
In makeup: Stryx, Isamay Beauty, Youthforia, Eclo Beauty and 19/99
In hair care: Fur, Oway, La Bonne Brosse, Make My Mask and Everist
In fragrance: Non Fiction, the Nu Co, Costa Brazil, Les Eaux Primordiales and Aer
In other categories: V Vardis, Sentara Holistic, Miyé and Gaesk.
Within the department stores’ overall beauty business, the skin care segment represented 34 percent on average and was bolstered by the demand for wellness-related and green/clean products. Department stores jumped on the trend, with Galeries Lafayette on Paris’ Boulevard Haussmann opening its massive Wellness Galerie on a below-ground floor. El Palacio de Hierro in Mexico launched the Origen multibrand space focused on wellness and green beauty. Switzerland’s Manor gave clean beauty product more visibility in-store and online, while in Hong Kong, Sogo’s new Kai Tak store, to open at the end of this year, will target younger consumer and give space to wellness and green brands.
IADS said beauty services are performing well in department stores and that their wellness offer can be boosted by products in the sexual wellness and tech beauty categories.
“Building a captive customer base is critical in the beauty market,” IADS said. “To compete with retailers such as Sephora, developing a loyalty program dedicated to beauty — a sort of ‘beauty club’ — could make a difference. Those that already have a beauty-specific loyalty program note that customers are buying way more than the regular ones.”
Beauty-dedicated social media accounts, on the likes of Instagram and TikTok, are also an efficient way to grow business, according to IADS.
It bills itself as the only expert body specializing in the department stores retail format worldwide. IADS’ permanent members include Centro Beco in Venezuela, Boyner in Turkey, Chalhoub in the United Arab Emirates, Galeries Lafayette in France, Lifestyle International Holding in Hong Kong and The Mall Group in Hong Kong.
The members represent more than 27 billion euros in cumulated annual sales generated through more than 380 stores, with 147,000 associates in 20 countries.
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