Kmart and Big W store-within-a-store beauty hubs, Digi Mart USA News (Australia): Discount department stores are defying the broader retail downturn that has claimed David Jones by borrowing a signature tactic from cosmetics powerhouse Mecca. The strategy appears to be paying off as budget-conscious shoppers return to bricks-and-mortar aisles for affordable indulgences.
Ahead of the Black Friday and Christmas trading period, Kmart and Big W are rolling out dedicated “store-within-a-store” beauty concepts following successful initial trials. The strategy pairs everyday value with an elevated, boutique-style shopping experience, capitalising on demand for accessible cosmetics and skincare.
Economists and retail watchers refer to this phenomenon as the “lipstick effect”, the resilience of small luxury purchases during tough economic times when big-ticket items are off the table. RMIT fashion academic Carol Tan told 9News that shoppers choose to treat themselves in affordable ways when they cannot afford pricier items, such as forgoing a $200 handbag for a $20 lipstick.
Kmart has spearheaded the shift, expanding its dedicated shop-in-shop beauty format to approximately 100 stores nationwide. Rather than scattering items across standard aisles, the new layout brings cosmetics, skincare, personal care and beauty accessories together into an enclosed zone within the store.
Shoppers are assisted by dedicated beauty team members during peak trading periods and can pay at a standalone checkout inside the beauty space.
The upgraded zones showcase a catalogue of more than 2,700 products across over 117 global brands, pairing international and Korean skincare labels such as Medicube and Biodance with Kmart’s own budget-friendly OXX range. Kmart Group Chief Commercial Officer Callum Smith said the national rollout was driven directly by shopper appetite for trend-led beauty without luxury price tags.
“Customers are telling us they want more choice in beauty, from everyday essentials to the latest brands and trends, at low prices,” Smith said. “We’re expanding our range and making it easier to shop, with dedicated beauty areas, team members on hand during peak periods of the day and a checkout in the space.”
Rival discount giant Big W is executing a similar strategy, introducing its own “shop-within-a-shop” beauty zones while overhauling its shelves to capture social media-driven demand. The Woolworths-owned retailer recently added 420 new products across 22 viral cosmetic brands, with more than 70 per cent of the new range priced under $25. The range includes Korean skincare brands such as Cosrx, Skin1004, Frudia and Some By Mi, as well as local favourites MCoBeauty and Skin Control.
Online retailer Adore Beauty is also doubling down on physical retail, having opened 17 stores nationally with more on the way as part of a push toward more than 25 bricks-and-mortar locations. Its anchor Melbourne Central flagship features dermal treatment rooms, a dedicated K-Beauty shop-in-shop and a fragrance bar.
According to IBISWorld research, revenue in Australian cosmetics and toiletry retailing has climbed roughly 20 per cent over the past five years, rising from approximately $5.8 billion in 2022 to a forecast $7 billion by 2027. Tan noted that making premium beauty lines and viral Korean skincare easier to access on the high street will likely prove a lucrative move for both Kmart and Big W.
“They really are trying to enter the market at the value end,” she added.
