The founder of Melbourne cosmetics contract manufacturer New Laboratories, Rohan Widdison, says it’s the brands caught in the middle that are the most vulnerable during tough economic times.

“Mid-market products that fail to innovate and differentiate themselves from the broader market are thus being squeezed on both ends – they can neither claim to be premium luxury cosmetics, but they’re not the kind of cosmetics you’d buy from the drug store either,” he said.

‘Beauty is one of the highest growth categories right now ... not a category we have ever really been able to get traction [on before].’

Brad Banducci, Woolworths boss

Meanwhile, online sellers such as Amazon have increased the breadth of skincare and make-up products and offer subscriptions where shoppers can get them regularly delivered.

“We have seen a growth in ‘Subscribe & Save’ subscriptions within beauty, showing Australian shoppers are looking to save on beauty essentials. We have seen an increase in subscriptions to products from trusted everyday beauty brands such as Maybelline, La Roche-Posay, Revlon, and Cetaphil,” an Amazon Australian spokesperson said.

Last month, Big W told investors in its parent company Woolworths that “luxe for less” beauty brand MCo was the fastest growing make-up line in its supermarkets and discount department stores, noting that shoppers were “trading in” purchases at specialty retailers to buy make-up with them instead.

“Beauty is one of the highest growth categories right now ... not a category we have ever really been able to get traction [on before],” Woolworths boss Brad Banducci said.

Kmart boss Ian Bailey is also upbeat about the performance of his store’s beauty offer.

“We’ve put a lot of effort into cosmetics, and actually the product offer has been very, very popular – it’s growing really quickly,” he said after an event for Melbourne Fashion Festival this month.

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He said that Kmart had become better at producing home-brand products across a range of categories that were similar to more expensive stores. This encouraged some shoppers to trade their purchases down to more budget-friendly products, freeing up their cash for other things.

“[They say], why would I spend more for this item? I can get it from Kmart for this price, and if I’m at a higher income level, I can then choose to go and do something else,” he said.

There’s still a broad network of bricks-and-mortar beauty retailers across the country, from the beauty halls at Myer and David Jones to Sephora and rich-lister Jo Horgan’s Mecca.

The trading environment means that pure-play online cosmetics brands such as Adore Beauty have to work extra hard to increase their customer bases. The company’s shares are down by more than 19 per cent year-to-date, and the business told investors in February that it was no longer expecting double-digit revenue growth for 2023.

Adore’s chief executive, Tamalin Morton, said the company was focused on expanding its private label offer to make products that resonate specifically with the brand’s customers. She also pointed to the company’s strategy of stocking products that span multiple price points.

“Adore Beauty has a wide range of over 270 brands and more than 12,000 products – spanning masstige through to luxury, so we’re well-placed to meet evolving customer needs and budgets,” she said.

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