Beauty brands Sephora, Mecca challenge fashion labels for prized retail real estate

In the queue outside Mecca Maxima's store opening in Melbourne this week, a young woman patiently waited for her chance to get a selfie with big-name Australian beauty blogger Chloe Morello.

The line was long, but Madeleine was happy to wait to share a precious few seconds with one of her beauty idols and be one of the first customers admitted into Mecca Maxima's biggest store to date in the newly opened precinct at Vicinity Centre's Chadstone shopping centre.

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Madeleine is a self-confessed beauty addict. She is far more interested in cosmetics than fashion and she's not alone.

Further back in the queue was Courtney, who also prefers to spend on make-up rather than fashion.

"Even though it's expensive, you get your money's worth," she says.

Courtney and Madeleine are driving the rapid growth of beauty mega-brands such as French cosmetics giant Sephora, The Body Shop and Mecca.

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But the rise of so-called "fast beauty" has also transformed these brands into anchor tenants for major shopping malls and retail precincts.

The Australian beauty market is estimated to be worth about $4 billion and the fast-beauty market, driven by online bloggers and YouTube beauty stars, has shown fans how they can use make-up looks to keep up with fashion.

Mecca Maxima's Chadstone outlet is the chain's biggest store so far.
Mecca Maxima's Chadstone outlet is the chain's biggest store so far. Photo: Penny Stephens

"Fashion is still important but beauty sets your style and mood from the moment a person looks at you," Sephora's country manager, Libby Amelia, says.

Sephora opened its first store in Sydney's Pitt Street mall in 2014 and set its sights on securing as much as 10 per cent of the total beauty market in Australia.

The rise of so-called "fast beauty" has also transformed brands like Mecca Maxima into anchor tenants for major shopping ...
The rise of so-called "fast beauty" has also transformed brands like Mecca Maxima into anchor tenants for major shopping malls and retail precincts. Photo: Penny Stephens

Its launches are more like rock concerts than store openings and it's understood that Australia is one of Sephora's most important territories.

The strategy, according to Amelia, is a tight focus on fashion trends and must-have global brands at competitive prices.

The Australian market is growing better than most, both at the luxe end and in the mass part of the market.

The Body Shop's general manager, Australia, Cathy Seaholme

"We offer affordable product that is fun and fast," she says.

"It's an easy investment that won't break the bank and it can make you feel good in seconds."

The Body Shop is happy to be close to French cosmetics giant Sephora in Chadstone's new wing.
The Body Shop is happy to be close to French cosmetics giant Sephora in Chadstone's new wing. Photo: Penny Stephens

The Body Shop is a near neighbour of Sephora in Chadstone's newest wing and general manager, Australia, Cathy Seaholme, is happy to be close to the French cosmetics giant.

"There is no question they [Sephora] are a destination and The Body Shop has a very loyal customer base but being in the "hottest" part of the centre continues to bring people past our door," Seaholme says.

"We don't mind being near our competitors because we think we do have a point of difference and our view is the industry is big enough, there's enough to go around if we're all doing our job well."

Seaholme says retail landlords recognise the pulling power of the beauty brands and in new developments they are often grouped together in high-profile beauty precincts.

Beauty is a high margin business. Unlike apparel it's not affected by the weather and it's one of the last categories to be hurt by slowing consumer spending.

"Because we are part of the L'Oreal group, we get a lot of consumer data ... and the Australian market is growing better than most, both at the luxe end and in the mass part of the market," Seaholme says.

"I don't know that retail has had the strongest year ... but we've had a good couple of years of solid growth."

Vicinity Centres chief Angus McNaughton says cosmetics have had a massive resurgence in the past couple of years and sales from cosmetics retailers have been "incredibly strong".

"It's been one of our strongest performing categories," McNaughton says. "All health and beauty is now mainstream in a shopping centre, whereas historically they were add-ons."

Jones Lang LaSalle associate director of strategic research Andrew Quillfeldt​ says you only have to look at Pitt Street mall to see the influence of the big beauty chains.

"There are a couple that have taken up big flagship tenancies along Pitt Street mall," he says

"Sephora opened recently with quite a bit of hype and I think that's half the story with these big internationals, there is a big marketing push."

Mecca will have 80 stores in Australia and New Zealand by the end of the year. Its latest Maxima store at Chadstone is its biggest yet, covering 400 square metres and incorporating a communal make-up play station with touch-screen tutorials and a selfie stand.

The sector has bounced back from post-global financial crisis "conservatism", according to Mecca founder and chief Jo Horgan.

"Our industry has been enjoying phenomenal growth over the last few years, particularly in Australia where the appetite for beauty continues to snowball," Horgan says. "It really is beauty's moment in the sun."

Horgan has embraced the influence of social media, which she says has driven an important power shift in beauty.

"What makes the power of social media so refreshing is that it really has put the power in the hands of the consumer, which is exactly where it should be."

If the palpable excitement of the girls lining up for Mecca Maxima's store opening this week is any measure, it's a power that's going to translate into a lot of sales and safeguard beauty's claim on some of Australia's most prized retail real estate.