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Beauty Bar Boosts Cosmetic Center

WASHINGTON -- In an effort to further solidify its position as a one-stop specialty beauty retailer with a department store feel, Savage, Md.-based Cosmetic Center Inc. is counting on its fancy, black formica fragrance and cosmetics bars to make it...

WASHINGTON — In an effort to further solidify its position as a one-stop specialty beauty retailer with a department store feel, Savage, Md.-based Cosmetic Center Inc. is counting on its fancy, black formica fragrance and cosmetics bars to make it happen.

“We’re making changes according to what our customers want,” said Allen Nehman, senior vice president of marketing at Cosmetic Center, which currently operates 51 stores in four states.

Nehman was standing at the newly renovated store in Fairfax, Va., which features the revamped bar. The new design stocks 8,000 products, from Fendi to JouJou, and occupies the length of the 5,000-square-foot store, about 60 feet. It also features gold trim and is located smack in the middle of the selling space.

The cosmetics bar prototype also features a more visible bath and body products area. It is now in eight stores and is receiving kudos from analysts.

“While Cosmetic Center has been improving the look of its stores, the bar is the crowning touch,” said Michael Mead, a regional analyst at the Baltimore-based brokerage firm Legg Mason Wood Walker. “The image of the store has now moved to an elegant level. Before, customers could blow in and out of the store without noticing the prestige area. The new bar serves as a magnet to draw the customer in.”

Mead also added that the bar, which carries a line ranging from loofah scrubs to nail care kits, all discounted at 10 to 50 percent below manufacturers’ suggested retail prices, has several long-term implications.

In particular, he said, it will send a message to fence-sitting prestige manufacturers, who have acted a little skittish about selling directly to the off-price retailer. The new prototype will also make for a more user-friendly environment for those consumers who normally shop for cosmetics at department stores.

“Increasingly, the company is getting its prestige products directly from the manufacturers, and I think the new store prototype will push that process along,” Mead said, noting that at least 80 percent of Cosmetic Center’s prestige cosmetics and fragrances are now purchased directly, compared with only 40 percent in 1985.

About half of its products are in prestige lines, a figure company officials say they would like to increase.

They are counting on its aggressive expansion strategy, which includes opening 15 new stores this year, to push the retailer to become an even more powerful force in the marketplace.

While Cosmetic Center plans to fill in the Chicago marketplace and the Washington, D.C.-Baltimore area for fiscal 1994, it is also planning to enter two new markets: Philadelphia, with three new stores, and Atlanta, with two stores. The retailer also plans to add more units in the Charlotte, N.C., area, which it entered last November.

While company officials admit they are in competition with department stores, discount drug stores and specialty shops like Crabtree & Evelyn, which have overlapping categories, they believe that no other retailer competes entirely on the same level.

“We offer sophisticated customer service and prestige products at discounts in an attractive environment,” said Nehman. “No one does what we do, and that’s why we’re so successful.”

For the fiscal year ending September 24, 1993, sales for the company, which went public in 1986, were $109.5 million. Net income has grown to $3.6 million, or 82 cents per share.

The company’s meat-and-potatoes business is fragrance and cosmetics, which, according to industry sources, garnered at least 55 percent of sales last year, or $60 million. Still, company officials, who wouldn’t comment on the cosmetics sales figures, said the two biggest growth categories are hosiery and bath and body products.

The company is aiming to further develop bath and body, which sources say generated around $10 million last year. The category is expected to grow at a 20 percent rate for the next couple of years. As part of the company’s strategy, bath and body, featuring such lines as Kneipp and Caswell-Massey, now has its own wall in the newer stores.

While the new display does not feature more products than before, it is merchandised more elegantly and puts an emphasis on prestige lines.

“We’re constantly reviewing the category,” said Nehman, adding that the store has edited out over a dozen lines since 1989.

Nehman stressed that while there’s been heavy emphasis on prestige lines, the retailer is not abandoning the mass market category. For example, in the cosmetics area, a big business is done with L’OrÄal and Maybelline.

“Our customers can come into a store, spending $40 on bath and body products, while paying just a few dollars for lipstick,” he said. “We have to give the customer what they want and offer lines at all price points.”