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Fashion brands have always been intertwined with the beauty industry as they historically benefitted from the same demographic of female consumers.
Luxury fashion brands such as Valentino, Giorgio Armani and Saint Laurent have been selling cosmetics since the 60s and 70s, with most finding a niche in producing luxury scents made from premium ingredients, while others such as Jason Wu, Alexander McQueen and Moschino’s Jeremy Scott have also teamed up with makeup brands such as Lancôme and MAC for special collaborations.
However, in recent years, the trend of fast fashion labels creating beauty products or partnering with existing brands has been on the rise, with brands such as H&M, Zara, TopShop, Asos and Primark opting to create their own in the 2010s. The first fast fashion brand to have started this trend is thought to be Forever 21, which launched its own cosmetics line in 2009.
This investment by fashion brands proved to be an untapped profit potential, independent of the fact that the beauty industry is projected to make $784.6bn (£664.7bn) in revenue by 2025.
The most recent retailer to make this venture into the beauty realm is Boohoo with their strategic investment in Revolution Beauty. It is reported that the group has a direct interest of 7.1% of Revolution Beauty’s issued share capital. This also builds upon their existing relationship whereby Revolution Beauty products are sold through several of the group’s direct-to-consumer brand websites and its online digital department store, Debenhams.
The news of Boohoo’s investment came after the retailer was warned earlier this year that higher operating costs and a rise in customer returns would dampen its profits by 6.3% from the prior year and lower its 10% margins pre-pandemic.
However, in addition to a stake in Revolution Beauty, Boohoo had launched its own cosmetics line back in 2017. Therefore, the fashion retailer’s urgency to strengthen its ties within the beauty space is perhaps linked to the attractive profit margins they stand to gain.
So why is beauty a good investment for fashion brands? Jenna Jackson, principal of growth at CAVU Venture Partners, told POPSUGAR: “Beauty products tend to have high margins and high repeat rates. Beauty products are also not trend driven and not usually subject to the mark-down pressures of apparel due to seasonality or trend.”
In addition, Ashley Kang, global beauty director at Kantar Worldpanel explained that, fashion houses “often launch beauty lines because they can attract a new customer base that does not usually buy into luxury fashion items, either because they cannot afford to, or they are not interested in buying these items”.
To conclude, fashion retailers have acknowledged that the beauty industry is estimated to make £664.7bn in revenue by 2025 and are ensuring that they participate through creating their own beauty offering or supporting other company’s through collaborations or shares.
