Why beauty brands are looking good in their own space

Beauty retail is having a makeover. Freestanding cosmetics stores are on the rise, as brands seek to supplement their department store concessions.

April 18, 2017

Cities across Europe and the US are seeing a marked increase in standalone beauty stores. In New York, the likes of Dior and e.l.f. Beauty have set up shopwith their own concept boutiques. London too has seen a recent spate of high end openings from Nars Cosmetics to Estee Lauder.

“A number of factors feed into this trend,” explains Duncan Gilliard, Director of London Retail at JLL. “People are generally becoming more beauty-conscious and willing to spend more on looking good.” The cosmetics industry as a whole is experiencing significant growth, with global sales set to reach an estimated $675 billion by 2020.

Yet consumer expectations are also changing fast. “Today’s consumers want to be immersed in the shopping experience whether that’s through technology or new ways of trying products,” says Gilliard.

A changing retail world

Many now-established beauty brands built their fan base through concessions in department stores. However, a growing number now feel the time is right to explore other options. “The department store setting doesn’t allow fully immersive personalised brand experiences,” says Gilliard. With a freestanding store, brands are free to express their identity and build the kind of unique experiences that foster customer loyalty, from the décor they use to the latest technology.

Dior, for example, has 16-foot digital screens displaying videos of backstage footage from catwalk shows while Burberry has a digital runway nail bar, allowing customers to virtually try the latest shades. “MAC on Carnaby Street, has created a visually striking store that really reflects the values of the brand,” says Gilliard.

A new type of relationship

Creating relevant experiences is ultimately about building a deeper connection with customers. For consumers, a focus on experiences means access to quality advice, leading to long-term relationships with a particular product and an in-depth knowledge of a brand’s capabilities and offerings. “Consumers respond to opportunities to connect with brands,” explains Gilliard.

Social media – in particular Instragram – has become an increasingly important part of the way beauty brands communicate with their customers and the wider world – and the in-store experience is crucial to building on the online relationship. “Estée Edit on London’s Carnaby Street offers products that help you take a better selfie, and encourages you to take photos in store and share them on social media,” says Gilliard.

The new growth sectors

While many beauty brands are aimed at women, and the in-store experience is tailored accordingly, the cosmetics industry is seeing growing interest in male beauty products. According to the Financial Times, the male grooming sector was worth almost $50 billion in 2016, with further growth expected.

Standalone male beauty stores are slowing opening such as Marc Jacobs Beauty in New York and Biotherm Homme in Singapore. “This is an interesting development and certainly contributes to the shift as a whole,” says Gilliard. Beast in Seven Dials is London’s first male-only cosmetics outlet, offering products from a selection of international brands. Gilliard expects more such stores to open as the male beauty sector develops.

It’s not just beauty brands that are benefitting from the shift; they can also drive footfall to complementary industries, such as fashion. “Thanks to the range of price points, cosmetics as an industry is accessible and many of the standalone stores we’re seeing are being innovative and creative with design and technology,” concludes Gilliard.

“The signs suggest that people’s appetite for cosmetics will continue to grow, and with it we’ll see an increase in freestanding portfolio, as well as some positive knock-on effects, such as higher footfall in areas around beauty stores and greater innovation in the in-store experience from other retailers.”