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With increased competition, the proliferation of discounts and the relentless launch of new brands, the beauty model in department stores is under strain. The traditional brand counters on the ground floor are no longer enough for customers seeking agnostic advice. For Falabella, Latin America’s largest department store group with operations across Chile, Peru and Colombia, the answer is Beauty F. In November 2025, they launched this new format, a new in-house beauty space inspired by the Sephora and Ulta Beauty models, built within the department store and then becoming a standalone business. This article analyses Falabella’s bet. Early results show it could help department stores maintain their leadership in beauty, but the investment intensity remains a challenge to building a specialist retailer within a department store. But beyond beauty, Beauty F tells a story of transformation. 

The strategic problem: the new pace of beauty 

How small brands are rewriting the rules of the beauty shelf

Large French-heritage brands occupying department store entrances (such as Hermès, Chanel and Dior) and conglomerate-owned brands (such as L’Oréal’s Lancôme or Puig’s Jean Paul Gaultier and Rabanne) have been successful traffic builders for decades. While they remain beauty floor anchors, as department stores still show to this day, the rise of small, indie beauty brands threatens this old model. Customer habits have changed as brand loyalty erodes, with 70% of consumers worldwide in 2025 having switched brands because they enjoy experimenting.

With more than 25% of all new brands launched in the U.S. being beauty brands, the impact on beauty retailers is significant: conglomerates' market share was 71% in November 2024 and 68% in 2025, with indie brands growing 3% at their expense. Not long ago, they were a niche market with a reduced following. They are now becoming a segment, even though most fail to scale beyond a US$1-US$50 million turnover bracket. In 2024, indie brands grew +22.3% vs. only +6.1% for conglomerates such as L’Oréal and Puig, accelerating from +16.1% the prior year and continuing to siphon market share. Emerging players spark curiosity and drive volume while conglomerates rely more on price increases: specifically, 62% of indie beauty dollar growth stems from more shopping trips, and 64% of conglomerate dollar growth stems from price increases. Overall, indie brands are growing across all beauty categories even though conglomerates still own the lion’s share.

The wake-up call: the agnostic model 

These numbers show how consumer behaviour has shifted, from relying primarily on the Maybelline, Dior or Chanel of the world to expecting renewed brand diversity. In the meantime, Sephora and Ulta Beauty had trained consumers to expect a free-flowing, agnostic experience with open shelves, product testers, expert advice, and constant discovery of emerging names. Even though department store beauty counters, managed by brands, cannot replicate this agnostic model, transforming traditional models into more open, experiential spaces has become a growing concern. So far, however, the question has been more about how to best adapt to this trend than about transforming the floor and the business model.

Falabella is a regional leader, with an average selective market share of approximately 50% across Chile, Peru and Colombia, leading in the fragrances, makeup, and skincare categories. Yet this traditional method of measuring brand power masked a strategic vulnerability. For sure, the department store was capturing significant rental income and foot traffic. But by acting more like a landlord rather than a retailer, the department store was giving customer relationships, brand curation, and trend agility to brands and other beauty retailers. So the risk was losing beauty market share and the younger, trend-engaged consumers most likely to drive the next years of retail growth, as Gen Z is the generation most structurally aligned with indie and new brands. Instead of merely adapting, Falabella gave a structural and strategic answer with Beauty F, facing the challenge of giving up the traditional rental and safer model.

The context of the local cosmetics market reinforced the potential for a beauty rethink. The Chilean beauty market reached US$443 million in 2025, projected to grow by over 10% by 2035. On its side, with a market reaching US$418 million in 2025, Peru maintains an estimated annual growth rate of 6-8%, driven primarily by the dynamism of the skincare and makeup segments. Colombia’s US$264 million market is expected to grow by over 4% by 2035.

Building a beauty retailer from within: Falabella's Beauty F and Glow Bar

Curation, staff and ownership: a beauty retailer built from scratch

Rather than awaiting the arrival of Sephora (both a recurring expectation and a threat to other beauty retailers), Falabella designed and built its own specialist beauty formats, operated fully in-house, on its own terms: Beauty F in Chile and Colombia and Glow Bar, a local adaptation for Peru.

Both formats share the same architecture: an enclosed space within a Falabella department store that functions as a standalone retail business rather than a leased corner or a collection of brand concessions.

A few ownership-based principles distinguish the model from the rest of the department store beauty floors:

• Closed space with a single-entry point.
• Open-shelf layout integrating testing stations, intuitive navigation, and on-floor advisory zones.
• Own sales force, with all staff across every Beauty F and Glow Bar location being Falabella employees, trained beauty specialists, not brand-supplied promoters with competing loyalties.
• Own imports with Falabella dealing directly with brands, importing and curating a much wider and faster-rotating selection.
• Private brands fully controlled by Falabella.
• Focus on younger, trend-driven, celebrity brands with Beauty F opening with over 100 brands across skincare, makeup, fragrances, hair care, and dermo-cosmetics, including a dedicated K-beauty section. Critically, 80+ new brands have been added since launch, of which 15 were first-time entrants to the Latin American market. Hero names, Rare Beauty, The Ordinary, Drunk Elephant, coexist with emerging labels discovered through social media trend cycles.
• Flexible assortment and presentation, as in some cases, legacy brands like MAC have been moved inside the Beauty F space, with the rationale that the concept avoids replicating items (each SKU is either inside Beauty F or in the rest of the beauty floor, not in both). Most brands offer no personalisation, but some, like Fenty, have a branded presence inside.

While Falabella still has traditional beauty counters, this model is that of a specialist retailer, implying additional complexity of managing different business models. Additionally, developing Beauty F is part of Falabella’s strategy to become a specialist in beauty, sports, home equipment, and fashion (particularly with its private labels), through separate business units and P&Ls.

Experience design as a commercial tool

The decision to enclose the space is experiential and commercial, not only operational. A high-touch beauty experience runs on a different register than the rest of a department store floor. Spanning 80 to 250 sqm, depending on location, Beauty F is designed around different sensory dimensions: its own soundtrack, distinct from the ambient store environment; a signature scent that creates a fragrance customers associate with the format; and warmer, more theatrical lighting, consistent with prestige beauty standards.
A single monitored entry point signals the transition into a different, specialised space. It also addresses a critical operational reality: beauty is among the most shrink-exposed categories in retail. A controlled threshold is both a material loss-prevention tool and an experience marker.

Proof of concept: what Beauty F has delivered so far

Beauty as a win-back and recruitment engine

One of the most commercially significant Beauty F successes is re-engaging customers who had been absent from Falabella stores for more than 12 months. The customer profile that Beauty F is attracting is 85% female and around 20% aged 18-35, a cohort that has largely abandoned the traditional department store beauty experience. Overall, as Falabella reported to the IADS, the share of young customers and new customer acquisition both doubled since the format launched, and new brands introduced through the format are contributing significantly more than the legacy assortment. The average basket is CLP40,000 ($43, approximately two products per transaction), indicating an engaged purchase rather than a transactional visit. Finally, e-commerce already accounts for a significant share of the Beauty F business.

The speciality beauty format is functioning as a CRM tool, reactivating dormant customers and introducing new demographic segments to the Falabella ecosystem. At a time when customer acquisition costs are escalating and loyalty is increasingly fragile, the ability to generate new visits and convert them is a powerful argument to justify the investment the format requires.

From pilot to platform: from one to 15 locations in nine months

Falabella set Beauty F up as a separate, startup-like company with its own leader and staff. When they opened Beauty F inside Parque Arauco in November 2025, it was presented as a cosmetics and personal care shop-in-shop format, a specialist zone within the department store. In July 2026, Beauty F had 10 stores across Chile and Colombia, with 9 more coming; Glow Bar had 5 in Peru, with 4 more coming, targeting upper-market segments where there is no Falabella store presence. This pace of expansion from zero to fifteen locations in under nine months is possible because the group retains full operational control. The specialist model, kept fully in-house, scales on the group’s own timeline. Falabella sees the standalone ambition as a natural evolution of the project. As a result, a standalone Beauty F is no longer a feature of the department store; it is a competitor in the speciality retail market, occupying the same category space as local beauty retailers such as Aruma and Dermotienda, two of Peru’s most important beauty retailers. This trajectory poses a direct question: when does an internal speciality format become a spinout competitor to the very department store to the point where it could cannibalise the traditional beauty floor? Beauty F is believed to have the potential to transform beauty for Falabella. By becoming a standalone beauty brand, Beauty F is expected to strengthen the traditional beauty floor, benefit the department store’s overall ecosystem, and create a precedent for its international peers. 

The operational friction behind Beauty F's early success

Even successful, the new beauty format comes with operational challenges. CapEx intensity is high due to investments in fixtures and architectural elements, which decreases profitability and limits scalability. A lighter CapEx version is needed to extend the concept without diluting returns. With no comparable historical baseline figures, inventory management and forecasting at launch have been a challenge. In addition to the inventory-related financial burden, stock-outs at the time of opening damaged both the customer experience and commercial performance. Beauty F’s curation is oriented toward selective and prestige brands. Meanwhile, high-frequency, convenience-driven categories such as dermo-cosmetics are underrepresented, creating a missed opportunity to increase frequency, an assortment question for the next openings. Finally, even though the enclosed format reduces retail crime, the smallest and highest-value SKUs still require dedicated product-level staffing, adding costs. 

Beauty F and Glow Bar are an argument about ownership of space, customer relationships and brand curation. The early results support the premise. Dormant customers are returning, younger demographics are engaging, new brands are performing above expectations, and formats are expanding at a pace few in-house retail projects achieve. Yet Falabella is not the first department store to pursue a beauty spin-off strategy and claim success for it. In 2020, Harrods launched H Beauty, a new concept of standalone beauty boutiques designed to attract younger customers and to claim territory before Sephora entered the market in 2023. Six years later, results are mixed, as exemplified by the absence of new openings and the recent Bristol store closure. The UK beauty market is certainly crowded with department stores and multi-brand retailers such as Space NK, Boots, Lookfantastic, Superdrug, Cult Beauty and Sephora. But also, H Beauty did not transform the beauty model as it mostly operated as a smaller department-store beauty floor with branded boutiques and a multi-brand attempt, mixing own-bought brands and concessions. Functioning as a startup company with its own staff, store concept and merchandise, Beauty F is about transformation. If Falabella’s bet proves right, Beauty F could be more than a retail success story. It could be a renewed way of selling beauty and, for a legacy department store, a beacon of retaining leadership in the beauty category.  

Credits: IADS (Christine Montard)