American Department Stores Have a Beauty Problem

On Tuesday, the historic UK retailer Selfridges unveiled the final stage in an extensive two-year transformation: a newly imagined fragrance floor. While the marble floors and bronze doors are old, announced partnerships with niche labels Ex Nihilo and Parfums De Marly are new, as is an ever-evolving rotation of beauty-wide services on offer.

The excitement over the overhaul magnifies the ailing situation for Selfridges’ counterparts across the pond. “In US department stores today, you just don’t get that feeling,” said Paula Floyd, founder and chief executive of beauty retail agency Headkount.

Historically, department stores have enjoyed a symbiotic relationship with luxury beauty. As established gatekeepers, earning the seal of approval from a storied name like Saks or Bergdorf Goodman would instantly legitimise a beauty brand and its high price point. In return, those brands enticed those customers — and their dollars — into the store.

But over the decades, that relationship has frayed. First came the proliferation of specialty beauty retailers Sephora and Ulta Beauty; then the e-commerce boom, with digital channels entirely eclipsing department stores as the destination for beauty discovery. Revenues of the likes of Macy’s and Nordstrom have slipped for years, but it was Saks’ highly publicised Chapter 11 bankruptcy process that truly cast the future of the channel into doubt.

Globally, department stores have fared better. UK giants Harrods and Selfridges have consistently reported “stable trade”, Japan’s Isetan has seen a three year streak of healthy profit growth and France’s Galeries Lafayette has enjoyed a rapid return to pre-pandemic equilibrium. On the beauty floor, their successes have hinged on their ability to establish themselves as not just a retailer, but a lifestyle destination, blending category expertise with exciting services, nimble assortment curation and a sharp eye on visual merchandising.

US department stores began to play catch-up: since 2018, Bloomingdale’s, Macy’s, Saks, Nordstrom have revamped their beauty floors, adding services and an extended range of brands. But clawing back market share will require bigger picture thinking. “It’s not just a case of putting in a few additional services and thinking that’s going to give you a ten year runway,” said Jon Copestake, global lead retail analyst at consultancy firm EY.

Shoring up their beauty businesses would also provide a vital crutch for the channel in the midst of a seemingly endless luxury downturn. Beauty remains the entry point for aspirational luxury shoppers — a fact made literal in department store layouts.

“The most expensive real estate in a department store is on the ground floor, which is all cosmetics and perfumes,” said Anthony V. Lupo, chairman of law firm ArentFox Schiff. “They wouldn’t put it there if they weren’t making money off of it.”

The International Model

European department stores understand what experts call the “lifestyle approach,” said Dr. Julia Riedmeier, a strategist who advises luxury beauty brands. In Europe, she adds, people don’t just visit the department store to purchase something: they go for an elevated shopping experience, which starts with visual merchandising.

Here, Asian department stores excel. “The excitement visually in a department store in China is beyond: there are things you’ve never seen in your life,” said Celine Talabaza, chief executive of skincare brand Noble Panacea, citing Beijing’s SKP-S. Opened in collaboration with eyewear brand Gentle Monster, its futuristic design is spread across an immersive beauty section, including a Tamburins boutique that stocks the Soul-based brand’s fragrances.

Inside, customers of European and Asian stores are met with a fleet of knowledgeable store advisors who can walk them through the suite of luxury goods. “The US doesn’t have the same degree of entrenched expertise in stores that would make them a destination for consultations,” said Copestake.

US beauty advisors, staffed by the brands themselves, are knowledgeable but tethered to their counters. At the start of her career, Floyd said stores would encourage advisors to share knowledge about their respective brand store-wide — but that’s no longer the case. Beyond the brands “they’re failing to train the trainers,” she said.

Some stores outside the US, like Selfridges, provide beauty concierge services where a designated associate takes them from brand to brand, for a nominal fee of £30 ($40). Bloomingdale’s recently got rid of a similar service that was free. In 2012, the UK retailer also launched “The Beauty Workshop” at its London flagship to offer nail and hair services, prompting Italy’s La Rinascente and France’s Le Bon Marché to add similar appointments.

The next frontier is to create channel malleable beauty shopping experiences. Harrods has taken a multi-pronged (and multi-level) approach. On its fourth floor, shoppers can get vitamin IV drips or injectables; two levels up, the Salon des Parfums is lined with mini boutiques of niche fragrance brands. On floor five, manicures are provided by Townhouse nails, which local shoppers will recognise as the chain nestled in London’s most expensive boroughs.

A Craving For Local Curation

Flagships stores like Harrods, Le Bon Marché and SKP-S Beijing of the world are found in bustling city centres, allowing them to become tourist destinations as well as attractive places to shop — unlike several mall-based Saks and Neiman Marcus locations that require driving to a specific location. It’s undeniably a disadvantage — when selecting a retail partner, Talabaza said non-central out-of-town locations are certainly a deterrent — but it shouldn’t be fatal.

Instead, it’s an opportunity for department stores to prove their relevance through intense localisation: via assortment, services and overall brand identity.

“London has stores like Liberty and Harvey Nichols that work for right here in the city,” said Yasmin Sewell, founder and chief executive of fragrance brand Vyrao. “Liberty is very curated and very boutique, for the very discerning customer.” Along with Vyrao, Liberty’s beauty hall contains beloved British brands like Trinny London and Charlotte Mensah as part of its curated beauty edit.

Global department stores sharply cater assortment to their local consumers, whose beauty standards and climate conditions influence hero products from region to region. “US department stores aren’t creating those locally relevant assortments in the same way, which means they’re not reaching the audiences that they want to,” added Copestake. This could also be an easy win for US department stores, whose sprawling assortments have become too bloated, said Floyd.

To remedy this, US stores could prune their own assortments by tailoring them to local climates — sunscreen shops in the south, rich moisturiser edits in the north — or by furnishing an exciting mix of brands. When the French department store Printemps opened its first US store in lower Manhattan, it stocked the beauty section not only with hard-to-find labels like Manasi but also French drugstore staples like Bioderma Créaline.

But the true delight factor comes when a retailer can combine curation with localisation and scarcity to create something unique. Le Bon Marché excels in this, said Talabaza, by offering always-on programming. “Maybe it’s the author that’s speaking about her book, or a personalisation pop-up for your favorite glassware, or a master class,” she said. Mirroring something local, as opposed to “throwing in a bunch of bodies” is crucial, added Floyd.

US retailers like Bloomingdale’s have near-constant pop-ups and programmes, but not often for beauty — while Selfridge’s Corner Shop, a dedicated pop-up space, regularly hosts British brands such as Harry Styles’ Pleasing. It reiterates that while taking hints from international retailers on staffing, services and assortment is clear, it’s also important for US department stores to remember the power of being themselves.

“You need agility when you’re moving a big ship,” said Floyd. “But don’t be anyone else. Be where you are.”

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