People walk past Mecca’s flagship store in Sydney.Credit: Oscar Colman
Step into any one of Mecca’s more than 100 buzzing beauty stores across the country where curious shoppers are trialling products, getting a personalised regime consultation or picking up their Beauty Loop box, and you might wonder if we’re in a cost of living crisis at all.
“It does still resonate,” Mecca’s chief new concepts officer Maria Tsaousis said of the lipstick effect, the phenomenon where people turn to more affordable luxuries and small indulgences when times are tough to boost morale.
Customers are still coming through the doors because they feel better leaving than they did when they came in, she added. “Beauty has always been a platform to people to go, ‘this is who I am. This is how I want to show up in the world’.”
Despite household budgets coming under pressure over the past two years, Australians’ willingness to fill their shopping baskets with skincare, makeup, fragrances, and other cosmetic and self-care products has been virtually immune, even as we made sacrifices in other areas. The $5.9 billion cosmetics, perfumes, toiletries and personal grooming industry is forecast to grow 2.4 per cent over the next five years, and 2.7 per cent in the five years after that, according to IBISWorld.
Mecca’s flagship Sydney store.Credit: Oscar Colman
Cosmetics and skincare were stand-out categories shoppers waited for and seized upon during Black Friday sales, with Shopify data revealing Tower 28 Beauty’s Swipe Serum Concealer was a top-trending product, along with moisturisers, nail polish, and sunscreen and other makeup.
The lipstick effect has been one driving force behind this. Another is that beauty is inherently connected to our sense of self-image and wellbeing, making it a highly emotional purchase.
“Skincare has become so innate to us … [it’s] not considered a luxury anymore. It’s considered more of a necessity,” said long-time beauty writer and editor Sarah Tarca, who co-runs a weekly beauty newsletter gloss etc.
“It’s easy for [beauty] to be democratised, because everyone can go out and go get a lipstick.”
Sarah Tarca, beauty editor and co-founder of beauty newsletter gloss etc.
Leading the charge on this front is Mecca, which has been busy expanding its national footprint at a time when businesses collapses are at record highs. In Australia’s beauty retail industry, Mecca’s position as the market leader is not disputed: the 27-year-old homegrown specialty store has led the way in defying the ‘retail recession’ and becoming a shopping destination by creating a highly loyal and deeply engaged community and a dynamic store experience.
Mecca’s revenue is estimated to sit around $1.3 billion for the 2025 financial year, commanding roughly a fifth of Australia’s beauty and toiletries industry, according to IBISWorld. A strong online presence is bolstered by bespoke store design, tailored to the demographic of that area, that houses digital and interactive displays and personalised beauty experiences.
The pandemic also triggered a shift in the way we engaged with beauty. During that era of countless Zoom meetings, makeup spending dropped, but what climbed was a desire to understand skincare ingredients and their functions (vitamin c to reduce hyperpigmentation, salicylic acid to unblock pores).
Consumers pushed back against descriptors like ‘anti-ageing’. “They didn’t want to be sold the dream anymore,” said Tarca. “People were like, first of all, to age is a privilege, don’t tell me this is wrong. Second of all, it means nothing … they want [products] more specific to their concerns.”
Crossing generations
Millennials and Generation Z are the most targeted demographic by beauty retailers, but those with the greatest spending power are Gen X and Baby Boomers, who prefer to shop at more traditional retailers such as department stores, which are falling out of favour with younger customers, according to an IBISWorld report.
Consumers across different generations have their own preferences for how they want to shop. “Boomers, accustomed to personalised service, often
gravitate towards familiar, trusted brands. Gen X consumers, prioritise product quality and efficacy,” said Sephora Australia general manager Mark O’Keefe.
“Millennials, heavily influenced by online reviews and social media trends, seek recommendations before making purchases. Gen Z, a generation defined by its focus on inclusivity and social responsibility, prioritises brands that champion diverse representation and sustainable practices.”
Department stores – once a key touchpoint for customers – are refreshing the way they show off their wares. David Jones has been refurbishing its beauty floors across a number of stores, starting with its Bourke Street store seven years ago. General manager of beauty, Alicia Shoolman, insists it is not trying to compete with specialty retailers Mecca and Sephora, which operate a “brand-agnostic” model.
“We are playing a game of catch up,” Shoolman acknowledges. “Sephora was rolling out, Mecca was rolling out and evolving the concept, and David Jones was a little bit off the mark.
“They’re phenomenal retailers in that space, they do it so, so well. So we’re not going to try and be them,” she said. “For us, it’s about investing in the brands.”
David Jones Melbourne, November 2023: The department store has been refurbishing its beauty halls.Credit: Elke Meitzel
Shoolman identifies luxury skincare, niche fragrances and exclusive brands (La Mer, SK-II, Aesop among a few) as David Jones’ competitive edge, requiring highly knowledgeable staff trained on that brand. “That’s always been DJ’s heartland and we’ve maybe lost it for a while. But we’re really coming back to that focus that that is who we are.”
To attract customers, department stores are doubling down on in-store experiences like facial treatments and personal styling suites. Customers who enter the store for something else might incidentally browse beauty products and may find it less intimidating to do so than walking into a beauty retailer, Shoolman said. Finding new ways to place beauty products throughout the store despite “clear zoning of categories” is also an opportunity.
In a market getting more crowded by the day, offering something original is key to maintaining relevance and strengthening sales.
“The beauty category is the most exciting, innovative, future thinking category. I don’t think there is more innovation that is happening in any other category, maybe [other than] tech,” said Mecca’s Tsaousis.
Everything to everyone
Shoppers are navigating tougher economic conditions by trading down to more affordable brands, fanning the ‘dupe culture’ craze that has sent “luxe for less” cosmetics business MCoBeauty’s sales storming higher.
Specialty retailers and department stores are now contending with greater competition from the likes of Kmart and Chemist Warehouse. “Supermarkets and discount pharmacies have continued to make inroads into the beauty market by stocking an ever-increasing range of salon and professional products, drawing away consumers,” stated the IBISWorld report.
A new frontier of competition is opening up: men’s products. Almost every beauty business this masthead spoke to said men’s skincare, haircare and fragrance was a fast-growing category.
Having the right mix of products at various price points is crucial to capturing as many consumers as possible. L’Oreal, which produces makeup and fragrances for some luxury brands including Prada, Gucci, Yves Saint Laurent and Lancôme, recently held an event in Sydney to showcase that all of its 32 brands belonged to one roof: ‘Maison L’Oréal’.
Resembling something between a makeup artist’s showroom and a tech conference, various branded “stalls” displayed hand-held devices helping serums absorb into skin and futuristic hair dryers alongside rows upon rows of foundation, handwash, lip glosses, fragrances and other bottles. Designer brands like Giorgio Armani Maison Margiela sat paces away from supermarket brands CeraVe, Thayers, and bold makeup line Nyx.
Inside the Maison L’Oreal event in Sydney on Wednesday 27 November 2024.
“Beauty for each is this idea of ultra-personalisation, which is enabled by beauty tech, a focus beyond the formulas, how can technology help deliver innovation that’s more sustainable,” said L’Oreal Australia CEO Alex Davison. “Through the use of tech, you can have devices that can consult, guide, diagnose, predict, to read, to help people through the beauty journey.”
“It’s very much in L’Oreal’s interest to connect the right products with the right usage in the right regimen with the right consumer to get the right experience, otherwise there might be disappointment.”
Social media has become one of the quickest and most impactful ways to build a brand, market, and sell out a product. Sabrina Carpenter, a brand ambassador for Prada, spruiked a soft matte lipstick in her music video Taste that sold out quickly after.
In a sleepless social media cycle, Tarca believes the concept of ‘trends’ is becoming redundant. “It’s just fast viral moments,” she said. “No sooner has a Gen Alpha got a Summer Fridays lip butter [does] someone else on TikTok tell them the next thing that they need is the Rare Beauty one. The trend cycle’s much shorter.”
Despite Mecca’s significant market share in Australia (which far outstrips that of LVMH-backed Sephora’s 4.6 per cent), the sector’s market concentration is relatively low, leaving room for disruptive online players to take a bite of the growing pie.
Adore Beauty, founded in 1999 as an online-only retailer, has signalled its intention to open 25 stores within three years. About 87 per cent of beauty sales still happen offline, suggesting there’s “a terrific opportunity”, said Adore Beauty’s new chief executive Sacha Laing.
Adore Beauty is moving from e-commerce-only to omnichannel, with ambitions for 25 stores in three years.Credit: Supplied
“[Mecca are] a significant player in the total market, but they certainly don’t command the sorts of market share that we see in supermarkets and other categories. There’s an enormous opportunity for us to take share.”
The move to establish a network of stores is part of a plan by the ASX-listed company – whose shares fell by about a fifth in 2024 – to ramp up growth and expand margins.
But like department store David Jones, Laing shies away from suggestions Adore Beauty will be competing directly with Mecca.
“We are not looking at this strategy to say we want to take on Mecca. That’s intentionally not our strategy,” said Laing, who added that Adore Beauty’s core demographic differs to Mecca’s by skewing older towards 25-55 year olds and more heavily towards skincare.
What isn’t different is the need to drum up loyalty, and hang onto it. “We currently have a very, very strong affinity with customers, particularly in that skincare space, which will be an important part of our store experience.”
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