The Beauty Slowdown Has Come for Indie Retailers

The woes of some of the beauty industry’s biggest names, like Ulta Beauty and Estée Lauder, have made recent headlines. But indie retailers are feeling the squeeze too — if not more.

Clean beauty retailer Credo Beauty laid off 27 percent of its corporate staff in May 2024 and has been behind schedule on payments to some of its brands, the retailer confirmed. Meanwhile, another clean-centric retailer, Gwyneth Paltrow’s Goop, underwent two sets of layoffs in September and October this year, accounting for nearly 24 percent of its staff. These reportedly included the famed beauty editor Jean Godfrey-June, who served as Goop’s beauty director for nearly a decade. Thirteen Lune, which is focused on BIPOC-owned brands, recently restructured its agreement with JCPenney, and the upscale Violet Grey was just offloaded by Farfetch as founder Cassandra Grey bought it back.

“It’s been widely reported that there has been a pretty consistent decline across beauty, and Credo has not been immune to that,” said Credo Beauty CEO Annie Jackson.

While plenty of beauty companies are seeing slowdowns right now, the indie beauty retail model is an inherently risky business. Independent boutique chains serve as a launchpad for young brands new to retail, and at the same time, compete against giants like Sephora. They also generally are centred on more niche concepts such as Credo’s clean-beauty ethos or Violet Grey’s it-girl luxury point of view. This curated approach helps create dedicated fan bases eager to try new products and learn about brands. But their smaller size makes them vulnerable to the whims of the market if their area of focus becomes less trendy. This year, they’re also facing softening consumer demand, the rise of Amazon and decreased funding opportunities.

“From the lens of indie, access to capital has been super tough as brands continue to grow this year. Everyone is feeling those challenges; it’s been a tough market,” said Nyakio Grieco, the co-founder of Thirteen Lune. “It’s an election year. People are being really mindful about their spending and we can attribute some of the slowdown to that.”

Feeling the Pinch

With niche curations and devoted customer bases, indie retailers offer small start-ups the chance to gain brand awareness and growth at a manageable scale.

“[Indie retail is] really great, because you get to be able to get it right in a setting like that, before you go to the Sephoras and the Ultas of the world,” said David Olsen, CEO of the clean makeup label RMS Beauty. “You can learn a lot by partnering with the indie retailers.”

The clean beauty brand left Sephora and has focused on its indie retail partners including Credo Beauty over the past year. After seeing 130 percent sales growth in 2023 and 60 percent growth this year, it entered Ulta Beauty in October 2024.

But that smaller scale also brings drawbacks. Indie beauty’s turbulent time goes back to the start of the pandemic. In 2020, the UK beauty boutique Space NK closed its eight freestanding US stores, the cult clean beauty retailer CAP Beauty converted fully to e-commerce and luxury clean-beauty boutique Shen Beauty closed entirely in 2023.

Credo Beauty saw a year-over-year single-digit decrease in store foot traffic in the first half of 2024 after a burst of physical store expansion, which is “probably the most capital-intensive thing you can do,” said Jackson. Last year, it opened five stores and one pop-up, and will open a Portland location in 2025. Some payments to brands have been behind schedule, Jackson confirmed. The retailer brought itself up-to-date on payments for multiple brands on Oct. 31 after The Business of Beauty reached out.

Late payment is not uncommon in beauty retail. In fact, it is so frequent that retailers’ contracts will often include a discount of up to 3 percent for paying on time, according to multiple brand founders. But for the types of independent labels stocked at smaller retailers, inconsistent payments are disruptive. “A lot of the founders who are feeling the pinch are probably indie-owned, don’t have VC backing and deep pockets and are really concerned about their runway,” said one brand founder who has experienced delayed payments at Credo Beauty and multiple other retailers.

Many indie retailers over the years have leveraged their strong curation and branding to forge lucrative partnerships with larger retail partners, such as Space NK’s shop-in-shop locations with Bloomingdale’s, Nordstrom and most recently, Walmart.

Those team-ups can “give your company explosive growth and revenue — if done with the right partners,” said Grieco.

The retailer, which has had a shop-in-shop deal with JCPenney since 2021, changed the terms of the agreement in July after stocked brands began seeing delayed payments, according to a source familiar with the matter. Under the original partnership agreement, Thirteen Lune had ordered from brands and then sold the stock to JCPenney. But, according to the source, JCPenney would end up buying smaller order sizes than initially indicated, causing delayed payments to brands.

“Everyone that was part of the Thirteen Lune launch at JCPenney knows JCPenney completely mismanaged the inventory process,” said the source. “They significantly overbought and left Thirteen Lune financially responsible for their mistakes to ensure a more seamless process. Thirteen Lune advocated for a direct relationship between the brands and the retailer to mitigate any more frustration.”

“JCPenney and Thirteen Lune came to the mutual decision over the summer to update our working relationship, establishing a direct buying relationship between Thirteen Lune brands and JCPenney in an effort to streamline processes,” said a statement by a JCPenney spokesperson. “We are proud of the strides JCPenney Beauty has made in bringing awareness to BIPOC and female-founded brands across the industry. Thirteen Lune remains a key partner of ours and we are committed to a positive working relationship with all of our brands.”

The new agreement is a licensing deal in which JCPenney uses the Thirteen Lune name for its shop-in-shops, according to the source. JCPenney purchases products and fulfils invoices directly from the brands, confirmed the JCPenney spokesperson. Thirteen Lune and its in-house beauty brand Relevant are no longer exclusive to JCPenney. Other partnerships may start strong but not last: Credo Beauty, for instance, teamed up with Ulta Beauty for a curated collection of brands in 2020, but the program ended in March 2024. Jackson still sits on the retailer’s Clean Beauty Council and described the Ulta Beauty partnership as a “total test.”

Niche Challenges

Retailers focusing on a specific niche category are also vulnerable to shifting trends and investor and consumer mindsets. There may be no better contemporary example than “clean” beauty, a category whose contours have almost exclusively been drawn by retailers themselves.

Credo and Goop were pioneers known for stocking mindfully formulated products from tough-to-find brands. But that assortment became less differentiated after Sephora and Ulta Beauty created their own clean designations and began stocking Goop- and Credo-discovered labels like Ilia Beauty and Kosas. Further complicating matters is the clean beauty backlash, which has been brewing since the early days of the pandemic, with a growing number of critics accusing brands and retailers of fear-mongering.

Thirteen Lune and its brand roster, meanwhile, have seen a weakening funding environment as investors pull back from their 2020 promises to dedicate more funding to BIPOC founders. One of Thirteen Lune’s investors, the Fearless Fund, was even targeted by a right-wing activist who has been suing organisations over diversity initiatives.

Retailers are adjusting to a difficult market by leaning into store experience, curation, newness and discovery. Credo Beauty has been remodelling stores and bringing back services like mini facials and makeup application that it shut down during the pandemic, while also offering more monetised opportunities such as store displays.

Thirteen Lune, meanwhile, has been leveraging its unique curation and brand identity for licensing deals, such as its in-flight amenity kit with American Airlines. Grieco said it is open to more retail partnerships, and also wants to further scale Relevant, which is set to enter a new retailer next year.

Retailers may not be able to control consumer sentiment — brand founders and retail executives alike acknowledged that the election year and stress over the economy and inflation have dampened beauty spending. But Credo’s Jackson said that this fall, store traffic is up double-digits from last year, and will likely continue to grow after the election and during the holiday season. Goop Beauty revenue has increased 21 percent year-over-year this year.

“People are starting to turn the ship around,” said Jackson. “I am very optimistic about next year.”

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