Traditional apparel retailers launching beauty is certainly nothing new, but the trend appears to be reaching new heights with H&M last week announcing that it will open its first two beauty flagships in Oslo.
“It’s something we’ve seen before. It seems to come around in cycles,” said retail analyst Wendy Liebmann, chief executive officer of WSL Strategic Retail, of the trend. “I think at the moment one of the reasons we’re starting to see this bubble up, if we can call H&M bubbling up, is that with apparel retail struggling pretty much everywhere, retailers with a solid brand name for a specific audience are trying to figure out ways to either get shoppers back into the stores or to come more regularly for things that are connected to fashion, but are things that we need often and always for some of us.”
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Part of the attraction of branching out into beauty is the category’s resilience, even in economic downturns, as the lipstick effect — the theory coined by beauty mogul Leonard A. Lauder that beauty sales increase during tough times — often comes into play.
This was proved by a recent study by the NPD Group, which found that U.S. prestige beauty sales jumped 15 percent in 2022 despite fears that the world’s largest economy was in danger of tipping into recession. What’s more, across the consumable sectors NPD tracks, prestige beauty was the only one to gain double-digit sales in units.
But in addition to getting more shoppers through the doors, it’s also part of retailers’ strategy to be viewed more as a lifestyle brand, with the addition of home and beauty. As well as H&M, think Zara, Urban Outfitters and Primark to name just a few.
“& Other Stories [H&M’s sister brand] was probably their sort of entryway into essentially creating a lifestyle brand,” said Lucie Greene, founder and CEO at consultancy Light Years. “The move into beauty is similar to the move into home. The way we think about brands now is less about one pure vertical and more about the brands.”
Online marketplaces that launched with apparel have also jumped on the trend recently. Following its acquisition of specialty retailer Violet Grey, Farfetch launched beauty last year with an assortment of more than 100 prestige brands, while Amazon-owned Shopbop and Moda Operandi quickly followed suit.
Of all the apparel retailers that have dipped their toes into beauty, Liebmann believes Urban Outfitters is the standout. In 2018, it launched its private brand Ohii with products ranging from deodorant to skin care, lipstick, highlighters and hairstyling products. Prior to that it had been stocking a wide selection of niche beauty products on its website and in its brick-and-mortar stores since at least 2015, spanning all categories, from skin care and makeup to hair, fragrance, nails, wellness and bath and body.
While only one Ohii product (an Extractor Tool Duo offered at a reduced price) was on Urban Outfitters’ website and a representative did not respond to requests for comment about the private label, the retailer now offers an even wider range of external brands such as Benefit Cosmetics, Anastasia Beverly Hills, Flower Beauty, Maude and Hims and appears to have dived deeper into the wellness category.
“They’ve been quite smart and cagey in the U.S. because little by little they’ve added either beauty or they’ve added personal care or they’ve added everything from period panties, menstruation products or vitamin waters,” Liebmann said. “They’ve been quite interesting and consistent in little by little learning more and more about their shoppers and adding products that are intriguing and fit the profile not just in color cosmetics, for example. To me, they’re the most interesting on this journey and the ones that have been most consistent about it instead of coming in, going out and coming in and going out.”
Nevertheless, their beauty play wasn’t enough to prevent overall comparable sales across all categories decreasing 10 percent for the three months ended Jan. 31 at Urban Outfitters. It did not break out figures for beauty.
As for H&M, it has been selling beauty since the late ’70s, with the brand’s private label present in almost 2,000 stores in more than 50 markets around the world, while external beauty brands are carried in about 300 H&Ms. The new beauty flagships will bring together H&M-branded beauty products and around 80 external beauty brands.
And while it has had its own brand color cosmetics for some time, it is also gearing up to launch an in-house body care range called Oh Hey Hero, targeting Gen Zers.
Analysts generally agreed that color cosmetics is a good category for these retailers to develop (Zara, for example, has a wide ranging private label color cosmetics brand), but the jury is still out on apparel retailers creating in-house skin care brands.
Oliver Chen, senior analyst for equity research at Cowen, thinks it’s easier for these brands to launch color cosmetics. “When you talk about skin and hair, there’s a lot of technology and efficacy like with molecules in the hair and antiaging and that can be more difficult.”
Greene, meanwhile, questioned whether they might be challenged by falling into a similar bucket to influencer beauty brands that feel like they’ve been churned out. “With skin care people are much more about what is actually in it. A big part of their brand positioning if it’s not already should probably be building out credibility.”
Services are another new piece of the puzzle. H&M will include nail and lash-and-brow services, plus a mask bar.
“Maybe it’s a post pandemic thing, but they’re realizing that by having services and having cultural programming and having this sort of play type environment is a way to get people in the store,” Greene said.
And with all that H&M is gearing up to offer at these locations, for Liebmann, the success of its new and improved beauty offering will answer her question: “Is H&M about a lifestyle or is it about cheap and cheerful fashion?”
“The success really depends on the strength of the corporate brand as a legitimate lifestyle. If I buy into this aesthetic then, yes I definitely buy into as a place that can offer me not just clothes but what goes with that — accessories, beauty, accessories for my home,” she said.