This week, I checked in with analysts to better understand the strategy behind beauty brands “trading down” in retail toward more affordable wholesale partners. This can be seen in E.l.f. Cosmetics’ November expansion into Dollar General Stores and prestige fragrance and body-care brand By Rosie Jane’s October entry into Target. Elsewhere, prestige and luxury brands continue to rely upon off-price retailers like TJ Maxx and Marshall’s for wide distribution, a trend that is likely to increase in 2025 due to President-elect Donald Trump’s proposed import tariffs.
Beauty brands “trading down” into lower-priced retailers was a burgeoning retail trend in 2024
“Trading down in the beauty industry is becoming increasingly common, driven by consumers prioritizing financial caution and seeking lower-cost alternatives due to economic pressures like inflation and other economic fears,” Anna Keller, senior global beauty analyst at Mintel market research company, told Glossy. “As a result, many consumers are switching to cheaper brands and retailers.”
According to data from Mintel market research, 74% of makeup users believe that products from affordable brands work just as well as those from premium brands. What’s more, around a third of U.S. consumers are looking to spend less on beauty and personal care items, with lower-income households being the most active in making adjustments to save money, Keller told Glossy.
As consumers shifted down this year, nimble brands followed in an effort to meet shoppers where they are. According to Howard Meitiner, former CEO of Sephora and current managing director at Carl Marks Advisors, there are two ways for brands to “trade down” — and they impact a brand’s bottom line very differently.
“One is to broaden the distribution into areas which are inconsistent with where they were being distributed before,” Meitiner told Glossy. “The other one is trading down by reducing prices.”
The former is often fueled by a brand’s desire to reach more customers. “The inference one can take from that is they’re having market share issues and growth issues, so they’re trying to increase consumer demand for their brand, [but] they’re also, in some cases, responding to a change in consumer behavior,” Meitiner said.
This is true for E.l.f. Cosmetics, which entered Dollar General Stores last month. “Dollar General has a stated strategy of serving the underserved, with 80% of its stores serving markets of 20,000 people or less,” E.l.f. Beauty CEO Tarang P. Amin said during the company’s earnings call last month. “With this launch, we hold true to our mission to democratize access for consumers who otherwise wouldn’t have the best of beauty, particularly in rural areas, which have traditionally been served by only the major legacy brands.”
Dollar General has more than 20,000 stores across 48 states and offers low-price items, unlike traditional dollar stores that top out at 99 cents or $1. The average price of an E.l.f. product is $6.50. According to shoppers posting to TikTok, E.l.f. Beauty’s November rollout has quickly become the high-end option for Dollar General shoppers with prices as high as $14. E.l.f. is also available at mass retailers like Target, Walmart, CVS and Ulta Beauty, among others.
According to Meitiner, retailers adding higher-priced options is a win-win. “It’s a great decision for the retailer [because they make high sales],” he said. “If you’re in a store buying [your regular items] and then you see, in this case, beauty products that you haven’t traditionally seen in one of those environments, you might make an impulse purchase.”
Meanwhile, 12-year-old prestige fragrance and body-care line By Rosie Jane made a similar move this fall by expanding into Target. “We took sort of a unique approach to it,” founder Rosie Jane Johnston said on the Glossy Beauty Podcast in October. “We’re not saying, ‘Hey, let’s make this product $8.99 to get onto the shelves of Target.’ It was like, ‘We’re pretty sure our customer is there, and we would love to try this with you guys.’”
Johnston launched three fragrance franchises in body wash, oil, lotion and deodorant, all priced between $15-$42, while maintaining her fine fragrance business in Sephora, Revolve and Nordstrom.
It’s a move that could help Target gain or retain consumers. Similarly, full-price beauty retailers are also being leveraged to drive consumers into value-focused centers and stores.
For example, Tanger Outlets, which owns and operates 38 outlet centers across the U.S. and Canada, added both Ulta Beauty locations and Sephora stores to its centers in 2024. Both retailers offer full-price merchandise just as they would in any other market. It’s part of an ongoing strategy to add replenishment businesses into outlet centers to create a one-stop-shop, Stephen Yalof, president and CEO of Tanger, told Glossy.
A similar strategy has been implemented by Kohl’s stores, which launched a Sephora shop-in-shop in 2021. Kohl’s is a discount retailer with more than 1,100 stores in the U.S. A similar strategy is being used at off-price retailers like Nordstrom Rack and Saks Off 5th, which offer full-price beauty alongside discounted clothing, shoes, accessories and home goods, according to previous Glossy reporting.
As Meitiner pointed out above, the second way brands traded down in 2024 included reduced prices. This can be most easily seen in the uptick of prestige and luxury brands selling into off-price retailers like TJX’s TJ Maxx and Marshall’s.
As previously reported by Glossy in February, brands like Laneige, Clinique, Kate Somerville, Laura Mercier, Murad, CosRX, Coola, Philosophy, St. Tropez, It Cosmetics, Clarins, Shiseido, Peter Thomas Roth, Kopari, Anastasia Beverly Hills and NARS were spotted in TJX stores in Los Angeles. Glossy also saw fragrances from Byredo, Calvin Klein, Ariana Grande, Viktor&Rolf, Versace and Moschino at TJX locations.
“Historically, beauty products never went ‘on sale.’ But more brands and retailers are offering steep discounts to attract customers,” said Paula Floyd, CEO and founder of retail agency Headkount. However, she warned that dropping prices can disrupt brand image and trust, in some cases. “Beauty brands that price their products right from the get-go are the brands that have proven they can sustain any economic climate.”
TJX operates around 1,300 T.J. Maxx, 1,100 Marshalls and 900 HomeGoods locations in the United States. The company reported $14.1 billion in sales, an increase of 6%, during its third-quarter earnings call in November. According to Placer.ai, a location analytics firm, around half of all TJ Maxx, Ross, Marshalls and Burlington shoppers visited a store more than once per month from June to October of this year.
As previously reported by Glossy, TJX CEO and president Ernie Herrman expects to add more beauty to the company’s assortment in 2025 thanks to ongoing preparation for President-elect Donald Trump’s proposed tariffs. Many brand owners have been inspired to order products and packaging components from China now, ahead of the possible tariffs, which creates difficulty in forecasting.
“We’ve dealt with [tariffs] before, a number of years ago, and I would tell you that this is one of the places where our model is such a benefit,” Herrman said. “The bulk of our inventory is bought from brands [where] we don’t even have visibility into where those goods are from, nor do we actually want to get involved in that. … Vendors could bring in manufactured goods early — this is what happened last time — which could actually create additional availability of goods at advantageous prices for us. … That’s as likely a scenario as anything.”
However, brand equity has long been a deciding factor for brands looking to add off-price to their distribution strategy. Once implemented, leadership at legacy brands often prefer to keep the widespread practice quiet. However, Mintel’s Keller has noticed a sea change this year away from the off-price taboo. “This type of traditional messaging from legacy retailers that trading down dilutes brand value is increasingly challenged by evolving consumer shopping habits,” she said.
That is, consumers shopping in a variety of places, from value to luxury, has become more common, she said. Brands have also found that off-price distribution is a valuable way to acquire new customers who can convert into full-price shoppers, which can take the place of costly sampling.
Trading down, of course, is not an easy decision for brands. “The question is, what does that do to the brand image?” Meitiner said. “It’s taken these brands a long, long time to build an image with the consumer, and you can get rid of it just like that. … You’ve got to be very careful.”
