Opinion: American Malls Have Rebounded Thanks To Beauty Retailers

Department stores like Macy's are eerily quiet, with racks of unsold inventory, sparsely scattered customers, and a palpable sense of retail decline. Just a few storefronts away, Sephora is busy with shoppers—clusters of women testing products, associates providing tutorials, and registers ringing consistently.

This scene isn't unique. It's playing out across America as Macy's begins closing 150 "underproductive" stores by 2026. Four Pennsylvania locations—Logan Valley Mall, Exton Square Mall, Philadelphia City Center, and Wyoming Valley Mall—are among the casualties of this strategic retreat.

The straightforward narrative is to see this as another chapter in the "retail apocalypse" story. But I see something different emerging.

Beauty will no longer be a department within the anchor store but the new mall anchor itself.

The Department Store Exodus

Macy's isn't simply closing stores—it's executing a fundamental strategic shift. Its plan to focus on its remaining 350 locations while cutting underperforming stores speaks to a broader recognition that the traditional department store model requires reinvention.

It's about redefining what drives mall traffic in the first place.

Department stores have traditionally served as mall anchors for one primary reason: they drew consistent foot traffic that would spill over to smaller retailers. But that gravitational pull has weakened considerably.

The question isn't whether malls need anchors – they do.

The question is what kind of retailer can generate the necessary traffic and excitement to revitalize malls.

Beauty's Experiential Advantage

Beauty retailers have quietly built the perfect model for physical retail in the digital age. While department stores struggled to articulate their in-person advantage, beauty chains focused on creating experiences that were impossible to replicate online.

Consider what happens in a Sephora, Ulta, or specialty beauty boutique. Customers don't just shop—they discover, experiment, interact, receive personalized advice, and connect with a community of fellow enthusiasts.

I've observed beauty retailers transform shopping from a transaction into a social activity. This fundamental shift explains why cosmetics floors in department stores often outperform other departments – the experiential element transcends simple product acquisition.

The numbers back this up. While department store traffic continues its decline, beauty specialty retailers have seen consistent growth. Beauty retailers recovered faster than traditional anchors during the pandemic's darkest days.

From Subsidiary to Star

Traditionally, beauty counters were departments within larger stores – subsidiaries to the main retail operation.

That relationship has been inverted.

The beauty section now drives traffic that department stores struggle to generate elsewhere.

Savvy real estate developers recognize this shift.

I've witnessed increasing instances of beauty retailers receiving premium locations once reserved for department stores. These aren't just strategic stopgaps but acknowledgments of a new retail hierarchy.

The beauty sector brings additional advantages beyond traffic generation.

These retailers typically require less square footage than traditional anchors, allowing developers to diversify with multiple smaller-but-powerful traffic drivers rather than betting everything on a single department store.

Beauty retailers also attract precisely the demographic most malls covet – younger shoppers with disposable income who view shopping as entertainment rather than obligation. This synergizes with other experience-focused tenants like dining and entertainment venues.

The Challenges Ahead

Beauty retailers must navigate significant challenges to assume the anchor role successfully.

First, there's the matter of scale. Even the largest beauty specialty retailers operate in footprints considerably smaller than traditional department stores. This creates both an opportunity (more efficient space utilization) and a challenge (filling remaining anchor space).

Mall developers will need to reconceptualize how anchor spaces function. The most promising approach splits former department store locations into clusters of complementary experiential retailers – beauty alongside fitness, food, and limited entertainment.

Beauty retailers themselves must be careful not to dilute their experiential advantage as they expand. The intimate, high-touch environment that makes these stores successful could become compromised in oversized locations.

Beyond Beauty

While beauty retailers lead this transition, they aren't the only specialty sectors positioned for anchor status. Home goods, sporting goods, athletic apparel, and certain technology retailers have similarly cracked the experiential retail code.

What unites these potential new anchors is their focus on creating an environment where products can be experienced.

The retailers who master this distinction will define the next generation of physical retail.

For mall developers watching Macy's retreat, the message isn't to panic—it's to adapt. Beauty retailers aren't just temporarily filling spaces; they're creating the template for sustainable physical retail environments.

What's changed is which retailers can deliver the experiences consumers value.

As I drive past another closing Macy's store, I didn't see retail decline. I see retail transformation.

Just a few doors down, the future was already visible, as shoppers weren't just buying products—they were engaging with them.