Department Stores Try Discounting Prestige Makeup For The First Time

Image courtesy of DCvision2006

How desperate are department stores to get shoppers in the door and spending money? Chains including Lord & Taylor, Macy’s, and Bloomingdales are taking the unusual step of actually discounting their cosmetics, trying to get back prestige cosmetics sales that have drifted to cosmetics-only stores like Sephora and Ulta.

Sure, deals are common in the cosmetics department, but they’re “gift with purchase” offers instead of giving customers an actual discount on the products. Now, the Wall Street Journal reports, the one section of the store that had seemed to be immune to discount offers is giving it a try.

In a June promotion, Lord & Taylor had a 15% off sale on almost every product in its cosmetics and fragrance department, following a similar promotion that Macy’s had in the spring. Bloomingdale’s didn’t do a traditional percent-off sale, but gave members of its rewards card a $25 gift card if they spent $100 on cosmetics.

Watch out: Discounts are addictive

The former CEO of Bloomingdale’s, Michael Gould, was pretty blunt about his perspective on this idea.

“Department stores shoot themselves in the foot when they do this. It’s like they’re putting themselves on drugs,” he told the WSJ, mixing metaphors to get the danger across.

Like drugs of abuse, discounts are addictive and can require ever-escalating dosages to get the same effect that you got when you first started using them. This is a lesson that other departments in department stores have already learned, and is why some brands like Michael Kors have pulled some of their products from department stores. They worry that rampant discounting will hurt their brands, training shoppers to wait for sales, or to ignore suggested retail prices entirely.

Since discounting cosmetics is such a new practice for prestige brands, stores don’t have deals in place to protect them. Clothing manufacturers usually guarantee margins, the WSJ explains, but a 15% discount on makeup comes out of the department store’s markup on that product.

It’s up to retailers to decide whether increasing their sales temporarily is worth paying out of their own pockets for it, and worth the danger of creating a culture of discounting for their competitors as well.

Know the competition, then copy ’em

Ulta and Sephora do offer periodic sales on individual items or store-wide, and Ulta even puts small coupons in its Sunday newspaper inserts. The reason why younger shoppers prefer these stores may go beyond price and deals, though: They remove the salesperson as a barrier to trying new products, letting shoppers smear eyeshadows on their own arms. Salespeople are available if customers want them, but they sell all of the brands, not just one or two.

Department stores are starting to catch on that this is something that they can mimic too, and Macy’s has opened up the cosmetics departments in about half of its stores, letting customers sample at least some products.

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