Will dropping prices on cosmetics drive traffic to department stores?
Declining department store traffic has compelled mall anchors to make some unprecedented moves to draw customers. Recently two major department store retailers have begun discounting in an area typically off-limits for price drops.
Macy’s and Bloomingdale’s have begun to drop prices on makeup and cosmetics, an area that CNBC reports is rarely involved in promotional sales, store-wide or otherwise. Macy’s has begun to offer a general discount for the products and Bloomingdale’s has offered a loyalty discount both online and in-store for the entire year. Analysts quoted in the article note that dropping prices in a category, then later raising them back to normal, is a strategy that is rarely effective.
The makeup counter remains one of the biggest draws in the otherwise battered category of department store retail. Cosmetics retailer Sephora has been a notable bright spot. The company’s store-within-a-store outlets inside J.C. Penney have been a source of ongoing success despite the department store retailer’s other struggles. A large part of Sephora’s success can be attributed to its omnichannel strategy. The company has innovated unique methods of meeting customer needs and connecting the mobile, online and in-store experiences.
In light of Sephora’s ongoing success it’s easy to see why Macy’s and Bloomingdale’s may want to try increasing the draw of their own makeup counters with more attractive pricing. But trying to compete on price could be a risky maneuver, given that it could set off the type of discount addiction the retailers have experienced in other categories without meaningfully improving store traffic or sales.
There is some indication, however, if pursued correctly, retailers could benefit from focusing on price-sensitive cosmetics shoppers. Moderately-priced cosmetics brands with a quick speed-to-market, like e.l.f. and NYX, have been touted as the beginning of a “fast beauty” trend, comparable to fast fashion in apparel.
The makeup price drop isn’t the first attempt Macy’s, Inc. has made to attract discount shoppers. Last year Macy’s began expanding its Backstage off-price concept, setting up Backstage shops inside 45 of the chain’s full-price stores.
- Macy’s and Bloomingdale put long exempt cosmetics on sale – CNBC
- Will fast beauty be the new fast fashion? – RetailWire
- Will adding off-price shops lift Macy’s full-price stores? – RetailWire
DISCUSSION QUESTIONS: Will offering discounts on makeup provide a meaningful lift in sales or traffic for department stores? What other strategies should mall anchors be looking at to leverage their cosmetics offerings given the success of retailers like Sephora?