From Department Store Decline to Direct-to-Consumer Stores
The shift of beauty brands into their own stores is a retail strategy in which labels move away from department store counters and invest in direct-to-consumer locations to control pricing, merchandising and customer experience while protecting margins as traditional partners weaken. Department store decline has reduced footfall, marketing support and bargaining power for many beauty labels, pushing them to rethink where and how they meet shoppers. In owned spaces, brands can design every element of the customer journey, from sampling and services to loyalty sign-ups and data capture, instead of competing for attention on crowded multi-brand floors. This change is also about economics: removing retail intermediaries can improve profitability and keep promotional decisions in-house. For many beauty players, especially those with global ambitions, the question is no longer whether to open direct-to-consumer stores, but how fast they can build a sustainable network.
Why Owning the Storefront Matters for Beauty Brands
Owning physical stores gives beauty brands end-to-end control over how products are priced, displayed and explained, which is central to any serious beauty brand retail strategy. Teams can test store layouts, in-person services and exclusive sets without clearing ideas through department store buyers. They gain first-party data on who shops, what they buy and how often they return, which feeds into product development and marketing. Direct-to-consumer stores also set the stage for regional product customization: a brand can adjust assortments, hero shades or skincare routines by city, based on local climate, skin concerns and spending patterns. Because store staff are trained by the brand, not a third-party retailer, they can focus on education instead of cross-selling competing labels. In an era where online noise is high and loyalty is fragile, controlled physical spaces help make the brand story tangible.
How LVMH Is Reshaping Beauty for a Slower Luxury Market
Luxury conglomerates are reorganizing beauty portfolios to support stand-alone retail and protect profits in a cooling market. According to Personal Care Insights, LVMH’s fragrances and cosmetics sales fell 3% to €8.17 billion (US$9.48 billion; approx. RM43.6 billion) in 2025, and the group has lost approximately €100 billion (US$116.1 billion; approx. RM533.9 billion) in market value over the past year amid weaker luxury demand. The group is reportedly exploring options for assets such as Fenty Beauty, Make Up For Ever and Fresh, while L Catterton, its affiliated investment firm, led a US$20 million (approx. RM92.0 million) Series A in dermatologist-developed brand Remedy. These moves show a push to back concepts that can scale across direct-to-consumer stores, specialty retail and e-commerce. At the same time, LVMH is investing in AI and cost discipline, signalling that future beauty growth must come with tighter control of margins and capital deployment.
The High Cost—and Competitive Edge—of Owned Beauty Retail
Building direct-to-consumer stores is capital intensive, from leasing prime locations to fitting out sensory-driven spaces that suit luxury beauty retail. These investments create high barriers to entry for smaller brands that lack access to private equity or conglomerate backing, especially as rents and build-out costs climb in key shopping districts. Larger groups can spread these expenses across multiple concepts, using shared real estate, technology and supply-chain infrastructure. For brands that can afford it, direct ownership enables faster innovation cycles: new formats, services and merchandising ideas can be tested in a few flagship stores, refined through sales data and then rolled out more widely. It also supports regional product customization, as local store teams share insights about shades, textures and price points that resonate. In a market where luxury spending has cooled, the brands that can turn owned retail into a flexible, data-rich engine may be best placed to outlast department store decline.
