Can Small Beauty Brands Succeed At The Huge Hudson Yards Development?
In the biggest private development in the biggest city in the country, can small beauty retailers and brands contend for customer dollars amid well-known and well-heeled names that have spent gaudy sums to secure spots in the 1-million-square-foot The Shops & Restaurants at Hudson Yards?
Certainly, upstart beauty retailers and brands, real estate firm Related Cos., the driver behind the $25-billion, 28-acre neighborhood on Manhattan’s West Side, and equity partner Oxford Properties Group are interested in the Hudson Yards’ presences of emerging companies prospering. The retailers and brands are hungry for state-of-the-art brick-and-mortar spaces to energize a retail segment that seemingly can’t shake a slump, and Hudson Yards operators are unlikely to thrive if the new shopping complex isn’t coveted by cool consumer goods concepts and their fans.
“We need more differentiated beauty and those who realize this is a special space,” says Wendy Liebmann, CEO of retail consultancy WSL Strategic Retail, speaking of the Manhattan beauty retail landscape. “The offer has to be better than just another lipstick or people will just go online.”
Out of the gate, Hudson Yards is making a splash with its design and sheer size. A 150-feet tall, 16-story Instagrammable interactive honeycomb-shaped structure called the Vessel, which boasts 154 flights of stairs and 2,500 steps, is the symbol of the development and leads to the stores and restaurants at The Shops & Restaurants. Making its first foray in New York, Neiman Marcus is the anchor tenant and commands 188,000 square feet across three levels. Even without a store in the city, the retailer reveals it racked up $100 million in online sales from New Yorkers last year, indicating its physical store could account for a significant chunk of the nearly $5 billion retailer’s business. In June, the inaugural Equinox Hotel is slated to open at Hudson Yards with 200 rooms.
Niche brands are among the lures to draw locals and tourists to the development’s retail. They crowd Neiman Marcus’ Trending Beauty assortment, are responsible for the superfood beauty items at Batch, a format based around a rotating merchandise selection, and populate a so-called Floor of Discovery that enticed direct-to-consumer specialists set up traditional stores. More than 125,000 people are expected to flock to the development daily to visit their offices (L’Oréal’s U.S. headquarters are at Hudson Yards), shop or live. The nearby High Line pulls in 5 million people a year.
The Related Cos. purposely put together a varied retail directory to appeal to a broad spectrum of customers. Fast-fashion powerhouses Uniqlo, H&M and Zara are on the store roster as are luxury stalwarts Tiffany, Dior, Fendi and Cartier. In the beauty retail mix, Sephora, Kiehl’s, Molton Brown, The Body Shop and MAC join nail salon Sundays, hair salon Sally Hershberger, high-design multi-brand store The Conservatory, co-working spa 3DEN and Batch.
“The offer has to be better than just another lipstick or people will just go online.”
“We curated The Shops & Restaurants with New Yorkers and the customer in mind—offering a diverse array of leading brands across categories and price-points, bringing new experiences, creating a suite of hospitality amenities never seen before in a shopping center, and embracing demand for differentiated dining and cultural experiences,” says Kenneth A. Himmel, president and CEO of Related Urban, the mixed-use division of Related Cos. As of the opening Friday, the center was 90% leased.
For an indie beauty brand, the rent at Hudson Yards isn’t easy to swing. In 2016, WWD estimated retail rents at The Shops & Restaurants spanned $200 to $750 a square foot. In contrast, the average asking retail rents in the main Brooklyn corridors ran from roughly $101 to $351 last summer, according to the Real Estate Board of New York. However, sales at Hudson Yards could justify lofty lease outlays. The WWD article contains a projection of annual retail sales per square foot for Hudson Yards stores at $2,000 to $4,000. If that projection is realized, it would be one of the most productive shopping centers in the U.S.
Sundays took out bank loans amounting to hundreds of thousands of dollars to help pay for its 1,200-square-foot Hudson Yards location. “The expense can be very high in Hudson Yards, but I’m thinking about it for the long term,” says Sundays founder Amy Ling Lin. “Eventually, I think I will get the return. I’m pretty determined about my vision to create a community and something more than just a salon. Making the business profitable is not the biggest concern for me right now, but, eventually, people will get to know us more and more. I’m testing out a lot of things, and I think of it as a learning experience almost like investing.”
Last week, the stations were booked at Sundays in Hudson Yards, the nail salon’s third location, for manicures. Sundays’ vegan nail polishes are formulated without dibutyl phthalate, TPHP, toluene, xylene, ethyl tosylamide, camphor, formaldehyde, formaldehyde resin, parabens, and tert-butyl hydroperoxide. In addition to doing manicures, the store was hosting a Tea Ceremony, Love Writing Station and Gratitude Journaling during the opening festivities.
“The expense can be very high in Hudson Yards, but I’m thinking about it for the long term. Eventually, I think I will get the return. I’m pretty determined about my vision to create a community and something more than just a salon.”
For most indie beauty brands, their roles at Hudson Yards are limited to exposure in a retailer with a panoply of brands. The boldest indie beauty statement belongs to Neiman Marcus. Curated By Shen, a in-store shop at the upscale retailer’s store, showcases a dozen brands, including Swiss Smile, Ikoo, Ellis Faas and La Sirene. Indie brands Fur and Lelo are on display in a sexual wellness presentation, and custom-blended beauty is served up by Giella Custom Cosmetics.
CBD? Yes, Neiman Marcus sells CBD beauty brands such as Sagely Naturals and Cannuka. “We feel we have the largest assortment of CBD right now,” says Michelle Daquioag, beauty selling manager for Neiman Marcus at Hudson Yards. Soon, CBD will be incorporated into facial services at Neiman Marcus. Ingestibles aren’t overlooked, and Vital Proteins is a mainstay in the ingestible category. Beauty technology has its own area with products from Panasonic and GloPro. LightStim’s bed with FDA-cleared infrared light to promote cell rejuvenation is a unique item available for purchase.
Emerging brands like Vie Healing are grouped together in the Trending Beauty installation. BLVD, a partnership between Neiman Marcus and Hudson Blvd Group, features services from DreamDry, Pucker and Spruce & Bond. A floor up from the beauty department, which is on the fourth floor, is a men’s section where C.O. Bigelow Trading spotlighted its Proraso brand by supplying shaves throughout the opening days.
Beyond Neiman Marcus, Batch, located on The Shops & Restaurants’ second floor dedicated to the Floor of Discovery, has introduced items from Loli Beauty like Plum Elixir, Matcha Coconut Paste and Tea Seed Elixir. The assortment at Batch changes every eight weeks, and next up it will focus on a wellness theme. Other Floor of Discovery tenants are Lovepop, B8ta, Dirty Lemon, Mack Weldon, Heidi Kline, M. Gemi, Frankie CoLAB and Rhone.
“We feel we have the largest assortment of CBD right now.”
Rhone co-founder and CEO Nate Checketts told CNBC that the rising costs of acquiring customers digitally prompted him to secure physical stores. Hudson Yards marks men’s fitness apparel brand Rhone’s third store. Checketts said developers provided “flexibility in terms of leases” to reduce the risk of opening at Hudson Yards. Some tenants report they were offered one- or two-year leases versus 10-year contracts. Mack Weldon founder and CEO Brian Berger informed CNBC that physical stores can boost sales of online brands as much as 30% in the markets their stores are located.
The Conservatory—a creation of Brian Bolke, president and co-founder of Forty Five Ten—has an intriguing slant on beauty. Malin+Goetz and Frederic Fekkai’s Bastide are in its beauty selection. A room at the rear of the store takes shoppers, via the Bastide brand, on a sensory tour of Provence designed to propel purchases of Bastide’s products. Hudson Yards is home to New York’s first Forty Five Ten, too. The 16,000-square-foot outpost of the Dallas-based premium retailer has four distinct storefronts. One storefront has a smattering of beauty products such as Lumira candles and Loewe scents, but Forty Five Ten officials say beauty is due to be amplified.
Sephora is, of course, brimming with beauty. Hudson Yards kicks off the retailer’s 2019 expansion expected to add 35 locations to bring its total store network in the Americas to around 460 plus 660 in-store shops at J.C. Penney locations. New Sephora stores are stocked with more than 13,000 products from 200 brands and encompass beauty services, including free 20-minute makeup and skincare sessions. The Hudson Yards store is one of only a handful of the technology-fueled TIP format stores. TIP stands for teach, inspire and play.
On Thursday, there was plenty of inspiration for guests of Hudson Yards during a pre-opening party to generate social media buzz for the center headlined by Liza Minelli, and attended by Whoopi Goldberg and Andy Cohen. On Friday, the grand opening was attended by Big Bird, Carmelo Anthony and Sen. Chuck Schumer, who noted that two years ago the area was “barren.” Anderson Cooper, master of ceremonies for the opening, joked he’d need assistance nabbing reservations at TAK Room, the hot eatery in the development.
“We curated The Shops & Restaurants with New Yorkers and the customer in mind—offering a diverse array of leading brands across categories and price-points, bringing new experiences, creating a suite of hospitality amenities never seen before in a shopping center, and embracing demand for differentiated dining and cultural experiences.”
Food will undoubtedly be a strong magnet for Hudson Yards. The restaurants range from fast-casual burger joint Shake Shack to the food hall Mercado Little Spain assembled by chef and philanthropist José Andrés. Hoping to duplicate the mobs at Whole Foods in the Time Warner Center uptown, Hudson Yards has a Citarella grocery store on the premises. It will also house The Shed, New York’s first arts center to commission new work across the performing arts, visual arts, and popular culture, 14 acres of public open space, and a 750-seat public school.
The attractions distinguish Hudson Yards in an evolving field of New York retail. Nordstrom will open in Manhattan this year, and Saks Fifth Avenue recently unleashed a dazzling beauty floor as part of a $250 million renovation. Bloomingdale’s unveiled a snazzy beauty department earlier this year with 36,408 square feet as well as an additional 1,100 square feet for outposts on multiple floors.
As the competition grows, the success—or lack thereof—of the retail at Hudson Yards could answer Liebmann’s pressing question, “Do we need more beauty?”