Why Consumers Are Finding Beauty Favorites at Off-price Stores

Kathryn Hopkins
·5 min read

Beauty brand Glossier may be officially expanding beyond its own stores and website for the first time with Sephora, but savvy shoppers have taken to social media to report they’ve found the sought-after brand elsewhere — and at a discount to boot — at TJ Maxx and Marshalls.

Other social media users have also recently found good deals at a mix of off-price retailers on high-end brands including: Laneige, Briogeo, Supergoop, Fenty Beauty, Smashbox, Estée Lauder, First Aid Beauty, Kylie Cosmetics and Nars, just to name a few.

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While beauty has long been a component of the off-price category, TJ Maxx, Marshalls, Nordstrom Rack and others have increasingly been gaining access to in-demand beauty products over the past five years, and there are a few reasons why.

“Off-price retailers are the most opportunistic whenever there’s any sort of dislocation and clearly there was major dislocation in 2020, so they got their hands on a lot of inbound inventory, which allows them to stock into those sections with more consistency. It looked more like a traditional merchandising assortment than it did this rummage sale one off,” Jefferies analyst Steph Wissink said.

“Stepping forward even one level further, you now have brands that are open to the concept of actually selling into off-price,” she continued. “The channel has been legitimized just like the club channel or the dollar channel, and you’re finding brands are building strategies. If you walk into a Nordstrom Rack store today, you will see bold displays of beauty brands and those aren’t inventory overrun. Those are products designed for the off-price channel — just like fashion companies. The evolution is exactly the same.”

In the case of Glossier, some TJ Maxx and Marshalls stores, both part of The TJX Companies Inc., have recently stocked items such as Generation G matte lip colors and Cloud Paint liquid blush, with reports that they have been flying off the shelves.

A spokesman for The TJX Cos. declined to comment. A source familiar with the matter confirmed that Glossier, which recently appointed Kyle Leahy as its new chief executive officer and is planning to open a store in Williamsburg, Brooklyn, New York, is available in off-price retailers for a limited time.

According to Wissink, the reason more brands have been selling directly to the off-price channel is because in the past several years, these stores have gained access to higher frequency customers with household incomes that are starting to challenge the department stores.

“For a lot of these beauty companies, it’s not only an inventory remediation destination, but in some cases it’s a strategic growth destination in terms of where the consumer is going,” she added. “It’s not so much a negative as it once was. When we would find products from brands at off-price five, six years ago, we were worried about their inventory management. Now, it’s a byproduct of the supply chain, but also it’s because the off-price retailers have built more robust customer databases that actually legitimizes their customer frequency, and their average household income.”

When it comes to the planned purchase model, brands and retailers sit down with buyers from the off-price category and they build a strategy around what products within the assortment would make the most sense, according to Wissink.

More recently, there has been another factor in the mix. After months of shipping delays triggered by the COVID-19 global pandemic, there has been a hefty influx of orders, resulting in oversupply, with anecdotal evidence that this is more a problem for retailers than brands themselves. As a result, this has led to more products finding their way into the off-price channel.

In an earnings call with analysts to coincide with The TJX Cos.’ second-quarter fiscal 2023 results, when describing the favorable buying environment, president and CEO Ernie L. Herrman said: “I hesitate to use the word unprecedented but it is at a different level I would say than we’ve seen and it’s across our good, better and a best zones….for Q4 gift giving I think we’re going to have some of the best branded content we’ve had in a while.” And on another earnings call, Burlington Stores’ CEO Michael B. O’Sullivan told analysts that the buying backdrop now “is better than it has been for years.”

“Many retailers and vendors overordered and overproduced versus what they’re now seeing in their sales trends,” O’Sullivan said about the increase in supply. “Also, I think that retailers and vendors probably built in a cushion to their orders to account for shipping delays, and those shipping delays have now eased, so they have too much merchandise. And finally, the mix of merchandise that the consumer is buying has really shifted, and I think that’s taken some vendors by surprise. So, there are some categories where there is now what I would call a glut of supply.”

When asked if this buying environment will last, he responded that it is hard to know. “If the economy weakens, then we could see even more merchandise sustainability. The other complicating factor though is the COVID[-19] situation in China. It’s hard to know what impact the recent shutdowns there could have. But they could create shortages later in the year. That’s possible. But on the other hand, if vendors overcompensate, then they could add to merchandise availability. We’ll have to see.”

But with an oversupply of products, there are also concerns of a gray market when items are traded via unofficial distribution channels, with the risk that products could be nearing expiration or even be counterfeit. To avoid this, experts advise consumers to always check labels carefully — especially expiration dates — before purchase.

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