Department stall

Beauty halls are a key driver of visits to department stores, with a wide range of brands complemented by experiences such as makeup tutorials and exclusive brands.

However, with department stores facing well-reported difficulties across the globe and closing, where are the beauty sales going?

Online vs Offline
Beauty products have traditionally been more resilient to changing shopping habits. Our recent Pragmarket survey, the results of which were featured in our Property White Paper, showed that 91% of shoppers commit a higher proportion of their personal goods spend to physical stores versus 66% for clothing and footwear.

Generation Z shoppers are the least likely to make their beauty purchases in store – they feel they don't need to go to a beauty hall to be shown how to apply the latest products, having grown up in a world where YouTube make up tutorials are the norm.  However, beauty is the one shopping experience they prefer to undertake in person. A US study (by investment bank Piper Jaffray) mirrored our white paper survey - 90% of female teens prefer to do their beauty shopping in-store. While they may carry out research on smartphones and laptops (80% take inspiration from influencers), when it comes to making a purchase, they want to go to a store.

This is contributing to the expansion of new brands such as Morphe, with a younger shopper base than department stores. They are in the midst of an expansion drive in the UK, although it is notable that their stores so far are in locations with large department stores including Birmingham Bullring and Liverpool One.

What are the big brands doing?
Both L'Oreal and Estee Lauder are reporting increasing global sales, but both online sales and travel retail are potentially masking a decline in non-travel retail sales.

L'Oreal's latest annual report stated that 11% of sales are online, while Estee Lauder reported that e-commerce represents c.30% of their business.  Innovations such as L'Oreal's Virtual Try On tool, which enables consumers to `Live try' a variety of hair and makeup products, has contributed to this while influencer-driven sales are growing increasingly fast. L'Oreal has partnered with Boutiquaat, a multi-brand e-commerce site in the Middle East that hosts more than 200 beauty influencers. Consumers receive recommendations for products via the platform, where they can also buy them directly.

In contrast, Birchbox's reported expansion into Wallgreen stores in the US and their pop-up shop in Carnaby Street, shows they understand not only the importance of brand recognition but also that consumers want to be able to see, touch and test products before committing.

What of the future?
The department store beauty hall is not dead but it is in a period of transformation with an increasing focus on providing a `real life' experience.  Harrods is expanding its beauty hall (seen above) and is due to open in early 2020. It will be 90,000 sq ft (over 50% larger than previously), while if the Frasers department store in Glasgow in anything to go by, beauty halls will be a key focus of their new format stores. It's not just traditional department stores either – Boots are making revamped beauty departments the star of their refurbished stores, meaning they have the potential to fill the hole left by department store closures.

Brands will continue to invest in their e-commerce capabilities but for beauty brands at least, physical space will continue to be important.

Sam Fox