NEW YORK — With the Cosmetic, Toiletry and Fragrance Association celebrating its 100th anniversary this year, the beauty industry is focusing on new ways to do business.
Only two years ago, technology talk centered around putting UPC bar codes on packaging, allowing outgoing products to be scanned at the checkout counter. But now many firm have progressed to the testing stage for the computers that keep tabs on inventory and automatically fire off new orders to manufacturers.
The first steps are being taken toward adopting a computer network called Electronic Data Interchange, used for automatic stock tracking and replenishment.
A number of firms have either begun testing new systems with their department store partners or are contemplating the first hookup. Some companies that produce cosmetics for the mass market have a head start on prestige manufacturers because discounters like Wal-Mart have been tracking inventory for years.
Sampling techniques have also been revamped. New technologies allow for fragrance to be added to objects such as faux jewels or wood chips. The imbued items are then either mailed to prospective customers or used as an attention-getting giveaway in stores.
As for treatment and makeup, the samples keep getting larger. Elizabeth Arden is giving away the first three steps of its new Alpha-Ceramide regime with any purchase of the fourth step. “Trial before buy is still the way consumers operate,” said EstÄe Lauder USA president Robin Burns. “You have to get samples into their hands.”
While promotional methods are being re-evaluated, beauty companies are looking to new growth areas overseas.
Recent changes in tariff systems and distribution laws in Mexico and Japan have created new potential in these traditionally tough markets.
As many import duties went from 20 percent all the way down to zero percent on Jan. 1, the 90 million residents of Mexico became prime prospects for American-made perfumes, toiletries and personal care products.
“We even had to pay duties on artwork created here, but as these extra costs are eliminated, it will be possible to move close to having comparable prices in Mexico as in the U.S.,” said Jeanette Wagner, president of Lauder’s international division.
Meanwhile, a Japanese retailer’s court victory over cosmetics giant Shiseido may transform the face of the personal care industry in Japan to the benefit of U.S. cosmetics firms, analysts here say.
In essence, the ruling gutted Japan’s long-standing dictum that all cosmetics have to be sold to consumers at retail stores by “beauty consultants” — cosmetics salespeople.
Should the Tokyo court decision hold up and the FTC rule in favor of the retailers, trade attorney Emalee Murphy said, it could help American cosmetics companies make deeper inroads into that market.
The CTFA itself is keeping tabs on these evolving markets, as well as several issues pending in Congress.
At the forefront of change, said CTFA president Edward Kavanaugh, is getting rid of the attitude of government against business.
“We can’t have globalization without the help of government,” he said.