By  on February 27, 2009

L'Oréal Wise to Close Stores

Reports surfaced this week that L'Oréal will close its two stores, one in Los Angeles and the other in Farmington, Conn. It isn't surprising this move is being made and at this time. Of course, there's the obvious downturn in shopping center traffic, causing many retailers to retrench. And, industry sources estimate the company was losing between $2 million and $3 million at those doors.

Paco Underhill, chief executive officer of Envirosell, which gets into the mind-set of shoppers, recently told Time magazine that shoppers just don't want to be in shopping centers so they aren't tempted. He also said American is overstored, so a decision to get out of retail for L'Oréal isn't off base, according to his findings.

When L'Oréal opened those stores five years ago, the company was experimenting with fixturing and products that could be neatly fit into mass stores. Rather than enact expensive and complicated tests within retail doors, the company tried these stores as living labs. In fact, many new fixturing programs rolled out across the country have been proven within the two experimental stores. A visit to Walgreens in Times Square shows just how far L'Oréal has come with fixturing and testing. In today's economic world, there's not as much money around to invest in experimentation. And, L'Oréal probably got a solid base from five years of learning how to be a retailer as well as a manufacturer.

From a consumer standpoint, the units are hardly necessary. Sure, it was nice to find all L'Oréal products neatly presented in one store. However, shoppers can find L'Oréal at any local drug chain and usually at their favorite discount and even food store. Also, L'Oréal kept pricing at the high end of the spectrum so not to rob its bread-and-butter merchants. Service levels, however, were superior to most mass doors and included consultations and other experimental sales tools. Still, the disappearance of these stores won't eliminate shopper access to the brand. The Lancôme stores are a slightly different story. Lancôme's distribution is more limited and those vertical stores still serve a purpose.

As more and more mass merchants look to partner with vendors to develop upscale store fixtures, L'Oréal will undoubtedly get a chance to have more experimental departments within chain stores. Finally, it is a time within L'Oréal where challenges in North America have forced reductions in staffing and other belt-tightening measures. It is time for L'Oréal to put its efforts into manufacturing and marketing, rather than minding the store.

NEXT: People, Place and Things >>

People, Place and Things

A few words with David Woolf, vice president of American International Industries, the power behind the mass market eyelash business and a well-known face in the industry.

WWDBeautyNews: How is the eyelash business?

Woolf: Business is great because once women try false eyelashes; they realize they are better than mascara. Our biggest sellers are actually individual lashes [of one or two hairs grouped together]. We see more chains giving more space to lashes and we hope it continues.

WWDBeautyNews: How do you get people to try lashes?

Woolf: We do a big Halloween business and sometimes that helps get people to realize how easy they are. We have videos that show application to help, too. We've done some in-store demonstrations, but word of mouth is the best.

What's in Store

Artificial nails: Watch for sales to grow thanks to new technology of kits such as one from Kiss that has a molding technology and a television commercial to support it. Called Everlasting French, the kit retails for less than $6 and is timed right for an economy where women are foregoing salon visits.

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