Good looks: Model’s attractiveness play may give it a luxe glance

Fashion brands eyeing new revenue streams don’t have to look far — the opportunity may be right under their nose in the form of beauty and fragrance, according to a report by Coresight Research and CEW.

Why it matters: The lap of luxury is the place to be in retail (see Prada’s move today) — and beauty and fragrance are “natural entry points for fashion brands seeking to elevate themselves to luxury positioning,” the report says.

Yes, and: We’ve seen the marriage of fashion and beauty take place in the market already, with online fashion retail platform Farfetch’s acquisition of beauty retailer Violet Grey to form Farfetch Beauty earlier this year.

Flashback: Global brands such as Chanel, Dior and Marc Jacobs had their start as fashion brands, but added fragrance to become the luxury behemoths they are today, the Coresight/CEW report notes.

What they’re saying: Beauty is an attractive option to retail players because it is “unlikely to interfere with a company’s existing lines,” the report says.

• “With lower price points and virtually no cannibalization, beauty and fragrance add to a brand’s offerings, increase potential discovery touch points and allow many more consumers to access luxury at a significantly lower cost,” it says.

State of play: Compared with most luxury products, the price of beauty and fragrance products doesn’t come close.

• Even so, a fragrance and beauty portfolio can “achieve many of the same goals, providing consumers with something intangible and ephemeral outside the physical product,” according to the report (i.e., that luxe flex.)
• Licensing is the key, the report finds.
• Fashion brands can partner with an established beauty player — a L’Oréal or Estée Lauder (which has a longstanding licensing deal with Tom Ford already) — which can then manufacture, distribute and market the products for a nice royalty to the fashion brand of around 7% to 10%.

The bottom line: “Stretching a brand’s coverage from fashion to beauty and fragrance can enrich a luxury brand, giving it staying power and, therefore, making it more of a complete lifestyle,” the report says.

• It may also be a signal for fashion brands to jump on the wagon fast, while those affluent consumers are still spending.