Key Takeaways:
It’s a perfect storm for off-price beauty retailers.
Consumers are paring back, excess inventory is flooding the market, and the K-shaped economy is fueling sales at value-driven retailers. The closing of all but 12 Saks Off 5th stores could provide a windfall of customers and products for the other off-price retailers.
“It’s a bonanza for them [off-price retailers],” industry veteran Jeffrey Ten,told BeautyMatter.
Manola Soler, Managing Director in the Consumer & Retail Group at global consulting firm Alvarez & Marsal, said that people are being cautious about how they spend and are always hunting for value.
“Back in the day, you could only get [premium] beauty through department stores. They held the authority. But now it’s much more democratized.”
The global off-price retail market was valued at $317.4 billion in 2024 and is growing at a CAGR of nearly 8%, according to Market.US. North America accounts for the lion’s share of sales—42.8%, or $135.8 billion.
While exact figures are unavailable, beauty (along with a handful of products classified as “other”) is estimated to represent between 8% and 10% of that total today—and is growing. Improved assortments and consumers’ desire to find deals are driving the category. Off-price retailers have also enhanced their online presence, offering exclusive digital deals in an effort to replicate the in-store treasure hunt.
James Conroy, CEO of Ross Stores Inc., said cosmetics were the top performer in the retailer’s second quarter and one of the strongest in the third quarter of its current fiscal year during the third-quarter earnings call.
Wendy Liebmann, CEO of WSL Strategic Retail, said consumers are motivated by smart shopping and don’t want to feel they are overpaying. “They are looking for small indulgences. In our latest How America Shops research, 70% of shoppers told us ‘I’m proud of all the little ways I’ve found to save,’ and 51% said it was more important than ever to buy little treats to reward themselves,” she said.
Growth of beauty in off-price is poised to accelerate, according to beauty marketing leadership consultant Anna Vale. “Beauty demand isn’t softening—customers are shopping differently,” she said. “They are shopping more intentionally and more thoughtfully. Off-price gives them the brands they already know and trust, with a price point that feels good.” She added that the phenomenon mirrors the frenzy of Black Friday and Cyber Monday.
Off-price retail, Vale explained, was once purely about deals, overstock, and discontinued items. “The more strategic retailers have started blending in repeatable items alongside discovery. This consistency is what builds trust and gets people coming back, looking for more,” she said.
The industry is shifting, agreed Ten, from being merely “a back door for beauty brands, returns, and overruns.”
Off-pricers including Nordstrom Rack, T.J.Maxx/Marshalls, Ross Stores, and Bloomingdale’s The Outlet Store were especially busy during the holiday season.
A spokesperson for Nordstrom said that the off-price arm stocks customers’ favorite beauty products. “The same beauty brands found at Nordstrom stores are available at full price at Nordstrom Rack, including favorites like MAC, Clinique, Kiehl's, Nest, L'Occitane, Charlotte Tilbury, Drybar, Lancôme, and more,” she said in an email.
In 2023, Nordstrom Rack partnered with Beautyspace (formerly SpaceNK) to launch a curated selection of popular haircare brands in-store and online. Top brands include Olaplex, IGK, and The Hair Edit, according to Nordstrom.
“Beautyspace’s partnership with Nordstrom Rack is rooted in delivering best-selling, full-price core haircare SKUs—offered in both full-size and mini formats—while also curating compelling value sets available year-round. There are currently 10 brands in our assortment matrix,” said Noah Rosenblatt, President of Beautyspace. “This approach expands customer access to their favorite prestige brands at an entry point that meets them where they are, without compromising brand integrity.”
Rosenblatt said that Nordstrom Rack is able to introduce new and loyal customers to hero products, with a pathway to graduating those customers into the full brand assortment available at Nordstrom full-line stores.
The relationship is widening. “Leveraging the strength and diversity of Beautyspace’s portfolio, the partnership is now positioned to expand beyond haircare, with brands like Touchland [now available in more than 300 Rack locations], and additional skincare brands planned for future introduction this summer,” he said.
In fragrances, rather than appearing as typical “deal” buys, the products were clearly displayed in a manner resembling more upscale beauty retailers. Designer fragrances, including Versace, Montblanc Legend, and Jimmy Choo Illicit, appeared in specially packaged formats on pegs.
Nordstrom Rack is Glampton Beauty’s (a division of Pro’s Choice Beauty Care) largest retailer by footage and product assortment, according to the brand’s founder, Lori Waiser. The assortment includes eight luxe EDP fragrances, the complete shimmer fragrance and body oil collection of 14 SKUs, all six SKUs of lip products, disposable washcloths, and satin pillowcase sets in a 24x48 gondola. She said the unboxed scents work well at the self-service selection because people can try before they buy.
The off-pricers are committed to selling high-quality products for shoppers who love the “treasure hunt,” and the channel is thriving, she said, adding select items are also sold at T.J.Maxx.
Nordstrom Rack is expected to go full throttle on the expansion of stores and merchandise. “Nordstrom Rack wouldn’t be making the investment it is if it thought this was temporary,” said Vale. “Nordstrom Rack is fascinating—it’s figured out how to deliver value without cheapening the experience, and that matters in beauty brand building. T.J.Maxx and Marshalls move tremendous volume, particularly in haircare and fragrance, though the assortment can be hit or miss depending on location.”
Ten said Nordstrom Rack resonates with shoppers. “The Nordstrom and Nordstrom Rack shopper go back and forth,” he said. “It’s a beautiful marriage.”
Bloomingdale’s The Outlet Store featured more curated assortments focused on gift-giving, particularly fragrances. Shoppers encountered an extra 25% off already-discounted scents such as Dolce & Gabbana, Narciso Rodriguez, and Versace at store entrances, along with pegged displays of designer minis.
Store visits underscored two distinct types of bargain shoppers. At Ross Dress for Less, shoppers—especially Gen Alpha and Gen Z—hunted for brand-name items scattered on endcaps, while also grabbing dupes, including versions inspired by Sol de Janeiro. At a Ross store in New Jersey, products included L’Oréal Revitalift, Drunk Elephant Umbra Sheer Mineral Cream, Good. Clean. Goop’s The Fruit Facial Exfoliating Scrub, and a Nars lipstick refill.
On TikTok, creators proudly posted Ross hauls featuring Ariana Grande fragrances, IT Cosmetics Shadow Sticks, and Pat McGrath eyeshadow palettes. Many shoppers were well-versed in pricing, actively comparing Ross finds with those at T.J.Maxx.
Younger customers gravitated toward towers stocked with dupes such as Glow body sprays. “They’re $4.99 a bottle,” one shopper said. “They smell identical to Sol de Janeiro.”
Ross, T.J.Maxx, Nordstrom Rack, and Bloomingdale’s The Outlet Store are thriving and expanding.
Ross now operates more than 2,273 stores across its namesake brand and dd’s Discounts. Nordstrom Rack plans to open at least 18 new locations in 2026. Bloomingdale’s is also expanding its off-price concept.
Not all off-pricers, however, are winning the value shopper. Saks Off 5th announced the closing of 57 stores (leaving only 12 remaining), potentially redirecting sales to existing competitors. The reduction is part of Saks Global’s bankruptcy, which Oliver Chen, Retail Analyst at TD Cowen, estimated could release roughly $700 million worth of inventory into the market. While only a fraction will flow to off-pricers, it nonetheless suggests increased competitive supply.
Some of Macy’s Backstage stores-within-stores are part of the retailers’ store rationalization plan that called for 14 doors to close this year. The website lists 300 Backstage stores, which include a handful of freestanding units.
To attract and retain customers, Soler believes consistency is critical. “I think there needs to be more stability,” she said.
While distribution is still typically handled through wholesalers, some brands are opening up their own off-price distribution. “This isn’t for every brand, but there is huge potential in this channel for discovery and acquisition,” said Vale. “Brand equity has to be considered at every touch point. Off-price can’t be used simply to offload old stock anymore—there’s an opportunity to bring new consumers into the brand, and assortment strategy is key in these distribution paths.”
Store Counts of Leading Off-Pricers
