Cos Bar

Banana Republic is experimenting with beauty.

Cos Bar, the boutique luxury beauty retailer, has opened a shop-in-shop in the retailer's San Francisco flagship.

"It is a test," said Cos Bar chief executive officer David Olsen. "It was built out as a Cos Bar, the look and feel is a Cos Bar, it is staffed by Cos Bar and it has Cos Bar brands."

The 400-square-foot location is about one-third of the size of a standard Cos Bar location and will sell products from the retailer's luxury base, as well as newer, less expensive brands. The assortment includes products from Clé de Peau, RéVive, Clinique, Patchology, LipSmart and other brands. Some are located in traditional shelf space, similar to full-fledged Cos Bars, and others are stocked in a grab-and-go section.

"We're launching some new brands because of this partnership and then we'll hopefully expand those brands into other Cos Bars," Olsen said. "We're bringing in Kosås, we're bringing on Bastide for bath and body — we're launching it in Banana and a handful of stores — and we're launching R & Co in the hair category."

The new brands will be in a Cos Bar Labs section within the store that's primed for consumer discovery, Olsen said.

For Cos Bar, which has 20 freestanding locations in the U.S., the concept allows it to penetrate the San Francisco market in a high-traffic area, as well as potentially reach new customers and test indie brands. "It's been in our pipeline since the beginning — we've always wanted to deploy in downtown San Francisco," Olsen said.

"Retail is changing, retailers are partnering together and everyone needs to be nimble about how you think about retail and how you learn," Olsen said.

Banana Republic is one of many apparel retailers to start experimenting with beauty. Madewell launched a beauty assortment earlier this year, and the Urban Outfitters family of companies has ratcheted beauty as a proportion of its business, according to research from investment research firm Jane Hali & Associates. These days, 11 percent of the Urban Outfitters assortment is beauty, she said — that number was even higher, 13 percent — at Anthropologie and Free People, said Jane Hali, chief executive officer of Jane Hali & Associates.

"Everyone's trying to get into lifestyle," Hali said.

For Banana Republic, beauty should lure more shoppers into the store, Hali said. "Beauty draws in the customer," she said. "They are also looking for items that create dwell time because the more you stay in the store, the more you're apt to buy.

"They're having difficulty, their apparel is mediocre, and if you're just in the apparel business and not in the sneaker business, which is performing, I don't know what you're going to sell," Hali said. "What's selling is beauty and home…those things are going to be important for the holiday season."

Banana Republic, which has struggled in recent years, is undergoing a shift in strategy under president and ceo Mark Breitbard, who joined the business in 2017 from Gymboree. In its most recent quarter, the chain showed signs of improvement — a 2 percent comp gain, versus the prior year's 5 percent decline — with total sales of $604 million.

In September, Breitbard told WWD those improvements were driven in part to the recapturing of the brand's "soul" — something that was pulled through a fall campaign that focused on classic Banana Republic styles, like trenchcoats, chinos and cable-knit sweaters.