Mass-market makeup

By Published on .

Costco isn't the first retailer to challenge the idea that department stores are the only place to sell high-end cosmetics.

Discount retailers Kohl's and Target are strategically positioning themselves to take advantage of changing shopping habits in the $40 billion industry. Last year Estee Lauder helped Kohl's enter the beauty business, creating a line for the retailer.

Target, meanwhile, launched its own Sonia Kashuk line and is experimenting with new store displays and self-service samples.

The Borghese move into Costco has some industry analysts wondering if other brands will soon follow, trading their prestige positions for volume.

Despite their long-standing places on makeup counters, brands such as Lancome and Estee Lauder's Clinique-stalwarts of the category-simply are not growing. Not only are they being hurt by declining foot traffic in department stores, but the fastest-growing brands in cosmetics over the last five years are niche brands such as Mac, Bobbi Brown, Nars and Physicians Formula, according to research firm NPD Group.

"Those brands are growing 20, 30, even 40% a year. It's just explosive," said Karen Grant, a beauty-industry analyst at NPD.
Most Popular
In this article: