The range of cosmetics and beauty products available in Australia continues to surge, partly thanks to the arrival of Sephora in 2014, and the ongoing expansion of Australia’s own luxury beauty retailer, MECCA.
Domestically the sector enjoyed 30% growth year on year, with increasing ongoing demand for overseas products. Korean cosmetics are becoming extremely popular, and South Korean brand Innisfree is due to open a Melbourne store in 2018. Both the beauty and cosmetics industries are forecast to continue outperforming their retail counterparts, with further new international brands expected to enter the market over the next 12-18 months.
The much-hyped ‘lipstick effect’ suggests that in periods of economic downturn, consumers are likely to purchase more inexpensive luxury goods, for example a Chanel lipstick. This has partly explained why the cosmetics and beauty industry is considered ‘recession proof’, and the other current driver of demand is the re-imagination of cosmetics and beauty through immersive retail.
Gone are the days of skincare and makeup locked safely within glass counters, controlled by sales assistants ready to upsell. The industry has been reinvented and is now home to exciting and immersive retail destinations where customers are surrounded by products they can touch, smell and interact with.
The focus on immersive retail not only encourages customers to shop in store rather than online, but also significantly increases dwell time. A prime example of this is department stores, where more often than not, the area with the highest amount of foot traffic, entry or street level access is dedicated to cosmetics and beauty, thus removing potential barriers for customers.
Offering increased dwell time, growing demand and consumer appetite it’s no wonder that for savvy investors and landlords in an increasingly competitive landscape, beauty and cosmetics are key to strong retail strategy.
So what’s next for beauty and cosmetics?
- ‘Green’ packaging – the use of plant based plastic and glass packaging is increasing alongside the focus on the environmental aspect of products
- Masks and patches – a shift from tube to sheet masks and a wider range of masks
- Transparency – consumers are increasingly savvy and demand clarity around ingredients and their origin
The above originally appeared on Cushman & Wakefield’s The Retailer series – an Australian publication highlighting the latest retail and consumer trends.