SALES & MARKET SHARE:
January to August 2005
Sales for Skincare and Color Cosmetics were $10.9
billion, 4% over the same period in 2004.Color Cosmetics grew 5% to
$5.5 billion. Sales for lip color products slowed down
significantly. Nail color continued its
decline. Applicators, eye shadow, eye
liner, brow products and makeup sets were strong sellers.
Skincare grew 3% to 5.4 billion, led by anti-aging
products and lip plumpers. New
products were an important factor, even though they often were
reformulations of line extensions.
Niche brands are gaining market share at the expense of
larger, more traditional brands.
PRESTIGE DISTRIBUTION
Saks, Inc. - sold its northern department
store group to Bon-Ton Stores for$1.1 billion in cash, plus around
$85 million in liabilities. The
northern department store group is made up of Parisian, Younkers,
Boston Stores, Carson Pirie Scott, Herbergers and Bergners.
Still to be sold is Club Libby Liu.
Bon-Ton's purchase of the 142 doors makes it the second
largest regional department store retailer in the country. The largest is Dillard's.
Federated - the closing of 75 doors will likely hurt a number of
prestige brands. According
to "Cosmetic World" one major company estimates that it may lose $18
million in sales in 2006.
Extreme Makeovers - getting ready for
Bloomingdale‚s West Coast debut, the big four Union Square
retailers (Neiman Marcus, Nordstrom, Saks Fifth Avenue and Macy's)
are undergoing major renovations. Each store is spending
millions on its makeover, hoping this will result in increased sales.
Department Stores - are searching for a way to stop
the sales decline in the prestige beauty category and are beginning
to face up to the possible need to reinvent themselves.
As a result of surveying customers, Macy's has eliminated
tables and etageres in the cosmetic department, and has standardized
visuals to give single-focus brand messages, rather than a sea of
communications. Bloomingdale's is bringing in more niche brands. Nordstrom is returning to its
reputation as tops in customer service.
Special in-store events are on the increase for all stores, as
are better educated beauty advisors.
It may be that the beauty business in the department store has
become a dinosaur, and these efforts may not work.
Nurse On Call - Nordstrom in San Francisco has hired a registered
nurse (a former beauty advisor) who consults with skincare customers,
then recommends products for them, with no loyalty to any specific
brand.
For Sale - Estee Lauder has put the Stila brand up for sale.
BROAD DISTRIBUTION
Pushing the envelope - on retail prices with
brands‚ state-of-the-art formulations.
Some prices in this distribution channel now match entry level
department store retails, risking losing some consumers to prestige
brands. These brands can
match prestige in formulation, packaging, advertising and promotion,
but they haven't found a way to test actual product at
point-of-purchase, giving department stores the edge.
Wal-Mart exclusives - Wal-Mart has contracted for
products exclusive to its stores with Jessica Simpson and Ashanti,
following the success of Skin Simple by Elizabeth Arden, the
Enchantment scent based on the television soap opera "All My
Children" and the Mary Kate and Ashley line.
ALTERNATIVE DISTRIBUTION
Global Focus - Avon will have fewer, but more "impactful" launches in
order to strengthen its key global brands.
Team Spirit - Kiss My Face and Old Navy have joined forces to launch
Onbody, a natural-based
body care line. The
products are said to bridge pampering one's self and traditional personal care. The line will be in all of Old
Navy’s 850 stores.
Providing the personal touch According to the
Direct Selling Association, U.S. sales for door-to-door and in-home
selling has almost doubled in the last decade to more than $30
billion a year (including clothing and other non-cosmetic items).
This method of selling products can be an effective extension
to a brand's multichannel marketing.
Salons/Spas
There were 136 million spa visits in the U.S. in 2003.60% were to day spas. More than 70% were female,
but in a survey of 500 men, ages 21 - 65, conducted by Equation
Research, 73% of men feel spa treatments can alleviate the stress of
travel. More than 26% of the men in
this survey have been to a spa at least once.
Spafumerie, a venue that is half day spa and half retail
cosmetics may be an important niche for future retailing. Another store that falls into this category is
Ulta, which has a beauty salon in each of its cosmetics and
toiletries stores.
Also, Peninsula
Beauty, an 8-store chain in northern California that offers a full
range of products, many from niche brands.
The stores each have a full service salon.
In February Klinger Advanced Aesthetics
(KAA) will introduce Cosmedicine in its 12 spas and exclusively in
Sephora. Cosmedicine is a skincare
regimen formulated with active ingredients.
The line's positioning, "Truth Is Beauty" is to tell the truth
about what the products actually do.
To support this credo, KAA hired Johns Hopkins Medical to
design clinical trials and evaluation of the results, and to confirm
the product benefits reported by Klinger.
The 18 products are segmented into 8 "skin states",
including Excessive Dryness, Loss of Elasticity and Basic Skin
Health. The line utilizes a
diagnostic machine to analyze skin and recommend products.
Advanced Aesthetics Institute, a company that specializes
in cosmetic medical and non-medical appearance enhancement, bought
the Georgette Klinger salons earlier this year.
E-tailing
Freestanding Stores/Specialty Cosmetic Stores
The Economy
The Product Scene
Luxury Spending
Consumer Demograaphics
Celebrity Signings