The Wall Street Journal
Cosmetics Company Touches Up Department-Store Sections With Express Lanes, Browsing Areas
To lure shoppers to its department-store beauty counters, Estée Lauder Cos. Chief Executive Fabrizio Freda is tossing aside generations-old traditions like hidden price tags, nagging consultants and glass cases that keep makeup out of reach.
The moves are an attempt to hold the attention of increasingly fickle cosmetics shoppers, which has become an escalating challenge for beauty-industry executives.
Younger consumers don't want to be hostage to department-store sales staff. Meanwhile, websites, television shopping networks and even grocery stores have become tougher competitors for consumers' beauty dollars.
In an effort to reshape Estée Lauder's U.S. department-store base, which is nearly one-third of the company's revenue, executives from the company's Clinique, Estée Lauder and MAC brands have been testing new counter designs that allow shoppers to browse on their own, new promotions and express lanes for busy shoppers.
"There is huge opportunity to restart sales growth and shopper traffic in department stores," says Mr. Freda.
The cosmetics industry turned to U.S. department stores around World War I, in part for a reputational boost. "Cosmetics weren't entirely respectable then," says Geoffrey Jones, a Harvard Business School professor of business history. "They were more associated with actresses, or worse."
But the rise of competitors in recent years has seen upscale department stores' share of the $58.9 billion U.S. beauty market shrink.
The recession also took a bite: Beauty-product sales in U.S. department stores declined 9% to $8.1 billion in 2009 from the prior year, compared to a drop of just 1% for the U.S. beauty industry as a whole, according to market-data firm Euromonitor International Inc.
Executives at Estée Lauder, based in New York, have worked to offset the decline by opening more of their own stores, selling products on TV and boosting online selling. Mr. Freda spent much of his just-completed first year as CEO aggressively pushing the company overseas, including a focus on skin care in Asia.
Now, faced with mounting competition from cheaper drug-store brands and upstart niche brands touted by retailers such as Sephora, owned by LVMH Moët Hennessy Louis Vuitton SA, Estée Lauder executives are refocusing on their main sales channel.
Shaking up beauty departments involves cooperation between cosmetics manufacturers and retailers, because the counters and sales staff is typically funded jointly in closely guarded agreements. Mr. Freda says the economic downturn has helped ease negotiations.
"The recent recession has opened up many companies—for sure ourselves and many of our retail partners—to be willing to put more dynamic change into the way we go to market," he says. "We are cooperating, I believe, better than in the past in the area of change."
U.S. department-store chain Macy's says the changes at Estée Lauder brands' counters are part of broader adjustments to its beauty section, including offering shoppers more opportunities to browse independently.
"We see younger consumers in particular who like to test and play on their own, so we're working closely with manufacturers to accommodate that," says Muriel Gonzalez, Macy's chief beauty merchant.
Department stores have much to gain from improving their beauty business, typically the most profitable section of the store, says Citigroup analyst Deborah Weinswig. Attracting beauty shoppers is also critical to creating customer traffic. Some 80% of women who use mascara replace it at least two to three times a year, according to an NPD Group survey. At least two-thirds of women say they replenish their facial cleansers and moisturizers every two to three months.
"If you can get a consumer to love a brand and product, they will keep coming back to your store to replace it," says Karen Grant, an analyst for NPD.
Central to Mr. Freda's strategy is offering shoppers new reasons to visit department stores. The Estée Lauder brand declared the evening of July 22 "America's Night to Repair" and spent four hours giving away some 400,000 samples of its Advanced Night Repair eye treatment or face serum across some 2,200 stores.
When handing over a sample, beauty advisers collected consumers' names and phone numbers and phoned them 10 days later to see how they liked the product.
Overall sales of the Estée Lauder brand increased by a double-digit percentage the week of the event, says Jane Hertzmark Hudis, global president of the Estée Lauder brand.
Walking through Clinique's new counter in Bloomingdale's New York flagship, Lynne Greene, president of Estée Lauder's Clinique, Origins and Ojon brands, demonstrated the new ways women can now shop for the brand's cosmetics: An express line for consumers who already know what they want, areas to browse on their own, and seats for those who want a full consultation.
Employees who staff Clinique's express line try to deliver the product in 60 seconds and are coached not to offer shoppers other products unless they seem especially curious.
"If a shopper isn't asked to see any other products, we see them physically relax," says Ms. Greene. "Then, sometimes, they start browsing. Frequently, we get another purchase because of that."
Signs now list Clinique's prices, a practice adopted during the recession. "Consumers didn't want to ask, 'How much is it?'" says Ms. Greene.
Even Estée Lauder's MAC brand is rethinking its approach. The brand, whose selling space resembles a photo studio, has been testing new hand-held devices that let staffers ring up purchases.
"People today are looking for real know-how, but they want to be served in the way they choose," says John Demsey, group president of several Estée Lauder brands, including MAC.
The moves are an attempt to hold the attention of increasingly fickle cosmetics shoppers, which has become an escalating challenge for beauty-industry executives.
Younger consumers don't want to be hostage to department-store sales staff. Meanwhile, websites, television shopping networks and even grocery stores have become tougher competitors for consumers' beauty dollars.
In an effort to reshape Estée Lauder's U.S. department-store base, which is nearly one-third of the company's revenue, executives from the company's Clinique, Estée Lauder and MAC brands have been testing new counter designs that allow shoppers to browse on their own, new promotions and express lanes for busy shoppers.
"There is huge opportunity to restart sales growth and shopper traffic in department stores," says Mr. Freda.
The cosmetics industry turned to U.S. department stores around World War I, in part for a reputational boost. "Cosmetics weren't entirely respectable then," says Geoffrey Jones, a Harvard Business School professor of business history. "They were more associated with actresses, or worse."
But the rise of competitors in recent years has seen upscale department stores' share of the $58.9 billion U.S. beauty market shrink.
The recession also took a bite: Beauty-product sales in U.S. department stores declined 9% to $8.1 billion in 2009 from the prior year, compared to a drop of just 1% for the U.S. beauty industry as a whole, according to market-data firm Euromonitor International Inc.
Executives at Estée Lauder, based in New York, have worked to offset the decline by opening more of their own stores, selling products on TV and boosting online selling. Mr. Freda spent much of his just-completed first year as CEO aggressively pushing the company overseas, including a focus on skin care in Asia.
Now, faced with mounting competition from cheaper drug-store brands and upstart niche brands touted by retailers such as Sephora, owned by LVMH Moët Hennessy Louis Vuitton SA, Estée Lauder executives are refocusing on their main sales channel.
Shaking up beauty departments involves cooperation between cosmetics manufacturers and retailers, because the counters and sales staff is typically funded jointly in closely guarded agreements. Mr. Freda says the economic downturn has helped ease negotiations.
"The recent recession has opened up many companies—for sure ourselves and many of our retail partners—to be willing to put more dynamic change into the way we go to market," he says. "We are cooperating, I believe, better than in the past in the area of change."
U.S. department-store chain Macy's says the changes at Estée Lauder brands' counters are part of broader adjustments to its beauty section, including offering shoppers more opportunities to browse independently.
"We see younger consumers in particular who like to test and play on their own, so we're working closely with manufacturers to accommodate that," says Muriel Gonzalez, Macy's chief beauty merchant.
Department stores have much to gain from improving their beauty business, typically the most profitable section of the store, says Citigroup analyst Deborah Weinswig. Attracting beauty shoppers is also critical to creating customer traffic. Some 80% of women who use mascara replace it at least two to three times a year, according to an NPD Group survey. At least two-thirds of women say they replenish their facial cleansers and moisturizers every two to three months.
"If you can get a consumer to love a brand and product, they will keep coming back to your store to replace it," says Karen Grant, an analyst for NPD.
Central to Mr. Freda's strategy is offering shoppers new reasons to visit department stores. The Estée Lauder brand declared the evening of July 22 "America's Night to Repair" and spent four hours giving away some 400,000 samples of its Advanced Night Repair eye treatment or face serum across some 2,200 stores.
When handing over a sample, beauty advisers collected consumers' names and phone numbers and phoned them 10 days later to see how they liked the product.
Overall sales of the Estée Lauder brand increased by a double-digit percentage the week of the event, says Jane Hertzmark Hudis, global president of the Estée Lauder brand.
Walking through Clinique's new counter in Bloomingdale's New York flagship, Lynne Greene, president of Estée Lauder's Clinique, Origins and Ojon brands, demonstrated the new ways women can now shop for the brand's cosmetics: An express line for consumers who already know what they want, areas to browse on their own, and seats for those who want a full consultation.
Employees who staff Clinique's express line try to deliver the product in 60 seconds and are coached not to offer shoppers other products unless they seem especially curious.
"If a shopper isn't asked to see any other products, we see them physically relax," says Ms. Greene. "Then, sometimes, they start browsing. Frequently, we get another purchase because of that."
Signs now list Clinique's prices, a practice adopted during the recession. "Consumers didn't want to ask, 'How much is it?'" says Ms. Greene.
Even Estée Lauder's MAC brand is rethinking its approach. The brand, whose selling space resembles a photo studio, has been testing new hand-held devices that let staffers ring up purchases.
"People today are looking for real know-how, but they want to be served in the way they choose," says John Demsey, group president of several Estée Lauder brands, including MAC.
