Op-Ed | Selfie-Loving Millennials Fuel Brick-and-Mortar Beauty Boom

NEW YORK, United States — Procuring malls are getting a clean up —with a coat of lipstick.

Millennials’ love of digital media, and want to look their greatest of their selfies, is fuelling a magnificence increase within the US and Europe. Sarcastically, that is driving demand for bodily shops the place make-up junkies can get their repair.

However these corporations in search of to learn from this development ought to take care. Magnificence could also be within the eye of the beholder, however there’s nothing enticing about over-expansion adopted by costly retrenchment.

Extra well being and sweetness retailers opened in 2016 than another sort of retailer in Europe, in response to property consultants CBRE. Essentially the most lively included specialist manufacturers reminiscent of Kiko Milano, Rituals and Aesop, in addition to L’Oreal SA’s NYX, a variety {of professional} cosmetics at inexpensive costs, and its edgy City Decay line.

It is a comparable image within the US. Ulta Magnificence Inc. stated it will open 100 new shops throughout the nation, whereas Sephora, already the nation’s number-one vendor of perfumes and cosmetics, can be persevering with to increase. And E.l.f. Magnificence Inc., which began as an internet retailer in 2004 and went public final September, plans to open brick-and-mortar areas.

The large cosmetics names are muscling in world wide, promoting direct to shoppers by their very own shops.  L’Oreal does not disclose the entire dimension of its retailer base, though it did say not too long ago that it opened near 200 retailers throughout its beauty strains (excluding the Physique Store). It is a comparable image at Estee Lauder Cos., which can be constructing out its bodily presence.

The push for brand new shopfronts is smart, given features within the make-up market. For each greenback U.S. buyers spent at department shops they shelled out $2.30 at well being and sweetness areas.

The development isn’t just confined to the US. All over the world, girls are selecting to spend extra of their cash on cosmetics.

Huge names get management over their interplay with shoppers by opening their very own areas. That is smart when U.S department shops and European supermarkets are engaged in ferocious discounting — not one of the best setting to coach buyers in regards to the newest on-line traits, and encourage them to purchase.

However there’s one other issue driving the growth: provide.

Within the US, many department shops and clothes retailers are shrinking their retailer bases. In Asia, as some luxurious manufacturers shutter retailers, there are alternatives for magnificence corporations to maneuver in. And in Europe, whereas some clothes strains are nonetheless increasing, they’re being selective about new areas.

Its straightforward to see why mall house owners wish to entice extra make-up: they function in one of many few development areas of the market, and crucially, they’re nonetheless ready to increase by the addition of recent retailers. Additionally they are likely to have fatter margins, so are extra capable of pay premium rents.

However cosmetics sellers ought to proceed with warning.

The historical past of retail is plagued by tales of over-expansion: assume British supermarkets, and now doubtlessly meals and beverage retailers. The Physique Store, owned by L’Oreal, has about 3,000 shops. It’s now promoting the chain, and any purchaser is more likely to cull areas.

There’s additionally a danger of oversupply if trend retailers pile in. Hennes & Mauritz AB and Related British Meals Plc’s Primark have launched magnificence ranges.

Lastly, working bodily shops entails additional prices from employees to property taxes, and until rigorously managed, may put strain on margins.

Jean-Paul Agon, chief govt officer of L’Oreal, stated not too long ago he is conscious of the perils of each over-expansion, and letting retailer prices escalate. He and his rivals must be. Whereas mall operators see cosmetics as a bonanza, for the make-up sellers, an excessive amount of new house may flip this magnificence increase ugly.

By Andrea Felsted and Shelly Banjo; editor: Jennifer Ryan. This column doesn’t essentially replicate the opinion of Bloomberg LP and its house owners. The views expressed in Op-Ed items are these of the writer and don’t essentially replicate the views of The Business of Fashion.