Commercial real estate industry sees a big opportunity in cosmetics

By Deanna Utroske contact

- Last updated on GMT

Related tags: Real estate, Retailing, Shopping mall

Commercial real estate industry sees a big opportunity in cosmetics
This week, that industry’s news coverage highlights the success of standalone beauty shops like Sephora and Ulta but also points to the increase in foot traffic that the right personal care and cosmetic brands and services bring into drug and big-box retail stores.

It’s an interesting outside perspective on the business of beauty, given that there’s so much emphasis on e-commerce today. But there certainly has been an increase of brick-of-mortar shops recently. Even online brands like Credo have opened stores with doors.​ And now Kylie Jenner is reportedly shopping for real estate where she’ll open her first beauty boutique.

As Donna Mitchell reports for The National Real Estate Investor online, “the beauty category is good for retail business and retail real estate.”

In-store advantage

Mitchell opens her report with a quick JC Penny case study. It’s been 10 years now that Sephora shops have been nested in the department store. Penny’s is opening a new store in a California shopping mall and in November that location will add a Sephora: “It means expansion in one of the few retail categories that post consistent sales increases through bricks-and-mortar locations, and it exploits an important competitive advantage over Amazon.com,” ​writes Mitchell.

Big-box stores get a traffic boost from beauty too. This is due in part to the rise of experiential retail in the beauty space.

“Changes in the beauty industry have bolstered the growth of chains like Sephora and Ulta, and transformed the beauty aisles in drug stores,” ​affirms Mitchell. "Even big-box retailers like Target employ beauty consultants to answer customer questions and advise on purchasing decisions,” ​she says.

L’Oréal products, in particular, were singled out for the consumer spending they generate. According to Mitchell, that’s partly because the company helps retailers merchandise in an effective way.

“To enhance relationships with retailers, L’Oreal would launch exclusive products though a channel for a period of time,” ​Erin Lash, an analyst with Morningstar, tells Mitchell. “It creates excitement and drives traffic to the store.”

 

Get a bit more insight into the commercial real estate industry’s take on beauty here​.

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