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Counter Attack

<CS:BOLD>NEW YORK -- Ralph Lauren is looking for a little elbow room.<BR><BR>As Lauren's fragrance volume has soared, rivaling some full-line cosmetics companies, the company has been feeling a little squashed in the fragrance bar. Now the Ralph...

NEW YORK — Ralph Lauren is looking for a little elbow room.

As Lauren’s fragrance volume has soared, rivaling some full-line cosmetics companies, the company has been feeling a little squashed in the fragrance bar. Now the Ralph Lauren Fragrance Division of Cosmair is determined to claim its own space on the retail floor.

Lauren is not alone. Calvin Klein Cosmetics, considered the leader among fragrance-only manufacturers, is trying to disentangle itself from the knot of scents at the fragrance bar with a freestanding merchandise unit for CK One, its bi-gender scent that will be launched this fall.

Guerlain also is devising a plan that would provide for perhaps 50 to 100 of its own fragrance-only counters in department and specialty stores that do not carry its full range of makeup and treatment, according to Patrick Waterfield, president and chief executive officer.

The manufacturers can make the issue sound quite simple: If they produce the volume, they merit the space and location.

But in vendor-retailer relations, space and location are the primary points of contention. Retailers dealing with already crowded cosmetics departments point out that the average space has not gotten any larger in recent years, even while more entries vie for position.

“Space is a precious commodity to us,” said Michelle Williams, merchandise manager at Federated Merchandising in New York.

Traditionally, only full-line beauty companies — those that sell color cosmetics and treatment as well as fragrance — have operated their own counters. Fragrance houses generally have all shared space at the fragrance bar, a situation that leads to constant battles for linear feet of counter space and a heavily trafficked location.

But over the last several years, the industry has watched Klein and Lauren build fragrance volumes that overshadow many full-line vendors. The two companies are often among retailers’ top five or six beauty vendors.

Although the companies do not disclose volumes, Klein’s worldwide total has been estimated at over $400 million and Lauren’s at $250 million.

“We’ve become, in a lot of stores, not only a major fragrance player, but in the context of the whole cosmetics department, we’re a major player,” said Jack Wiswall, senior vice president and general manager at Lauren. “I think retailers have just now recognized how big the Calvin Klein business got and how big the Ralph Lauren business got.”

The Lauren division already operates 12 of its own fragrance counters — including all of its brands — in the U.S. Wiswall said he plans to double that number by the end of 1994 and quadruple it by the end of 1995.

Wiswall added the main reason the company needs its own installations is to escape the clutter of the fragrance bar.

“We want to step out and have a very visual Ralph Lauren home,” Wiswall said.

“The problem you have in the regular fragrance business today is the person who sells Ralph Lauren sells Calvin Klein, and the person who sells Ralph Lauren sells Drakkar,” he said, adding that sales associates who are not “dedicated” to a particular brand push what’s new and what’s in promotion.

One way to make the fragrance business less promotional and less dependent on peak gift-giving periods is to invest in training a sales staff that the company employs.

“Do you really treat this business any differently than you do the cosmetics business?” Wiswall asked. “If the fragrance business is ever going to be viable, it needs to be a more level business.”

Wiswall said the company plans to undertake this expansion plan gradually. In the interim, Lauren intends to provide more sales help at the fragrance bar and rely on national advertising to make the sale.

Eventually, Wiswall would like to see corporate counters in branches as well as in flagships. Lauren counters are now in the New York flagships of Bloomingdale’s, Macy’s and Abraham & Straus, Macy’s in San Francisco, four Dillard’s stores in the Midwest and Southwest, two Jones Store units in Kansas City, one Foley’s in Houston and one Belk’s in Charlotte, N.C.

Calvin Klein is less gung-ho about building traditional corporate counters. The company does not operate any of its own installations in the U.S., but it has one in Galeries Lafayette in Paris and one in Japan at Isetan.

Paulanne Mancuso, executive vice president of Calvin Klein Cosmetics, said she could envision counters in 10 doors in the U.S., mainly in downtown flagships. But she said the company’s discussions with retailers have been “limited” because Klein is not in a hurry to leave the fragrance bar, where the customer has been trained to go.

“We still feel the fragrance bars are where the volume gets done,” Mancuso said. “Certainly, endless battles for space and location are not easy, but we can’t ignore the fact that we’ve been enormously successful [at the fragrance bar].”

“We have a huge business to protect, so whatever we do has to be carefully considered,” she added. “It’s got to be image and business both.”

For the launch of CK One, Klein is presenting retailers with a plan for a freestanding, open-sell environment. Mancuso said the unit serves two purposes: It offers the customer easy access to the products and it prevents CK One from being hemmed in at either the men’s or the women’s fragrance bar.

Guerlain already operates 35 in-store boutiques, which carry all of the company’s fragrances as well as its skin care and color products. Waterfield would like that number to grow by 10 to 20 doors a year until it reaches 80 to 100.

Of the 3,500 doors that carry the classic Shalimar women’s fragrance, Guerlain’s best-selling scent, 2,000 also stock the 1989 women’s entry, Samsara, and about 500 of those sell at least one additional Guerlain scent, all at the fragrance bar.

“We have to renegotiate our locations at least every year,” Waterfield said. When Shalimar outperforms Samsara, as it did in many stores last year, some retailers try to split up the brands in the display cases, which Waterfield said dilutes the power of the Guerlain stable.

Acknowledging that Guerlain is “relatively unknown” in the treatment and makeup categories, Waterfield said he wants to take an intermediate step between the chaos of the fragrance bar and the commitment of a boutique by building fragrance-only installations in possibly 50 to 100 stores.

These counters, which would carry four to six Guerlain scents, would be staffed by the company, but would not require the two full-time and one part-time sales associates needed in a boutique, Waterfield said.

The hope, he said, is that given the space and the personalization, Guerlain would achieve a high enough volume to warrant a transition to a full in-store boutique.

Federated’s Williams asserted that more corporate installations may not be the way of the future. Instead, she said, the out-from-under-glass freestanding approach that Klein is taking with CK One and that Elizabeth Arden has been using with Sunflowers and Lauren with Polo Sport may be what the cosmetics floor needs to achieve user-friendliness.

Margo Scavarda, senior vice president at Carter Hawley Hale Stores in Los Angeles, pointed out that the Big Three cosmetics companies — Estee Lauder, Clinique and Lancome — already occupy the prime locations.

As for the burgeoning fragrance companies, she asked, “Where do you position them?”

Allen Burke, divisional merchandise manager at Dayton’s, Hudson’s & Marshall Field’s, Minneapolis, agreed that although Ralph Lauren’s “volume is definitely big enough” to support an installation, he has not been able to find the right store and the right location for the project.

Part of the dilemma, Burke said, is whether to put a Ralph Lauren counter in the men’s area or in the women’s. Since the company is a men’s powerhouse, Burke said he is “more inclined to do it in the men’s area or adjacent to the men’s area than the women’s.”

Williams said she has had “conversations with Ralph Lauren” about corporate counters.

“There are certain stores where we probably feel we could consider this project. It’s on our minds,” she said.

“The ideal situation is when there’s a bay near the fragrance bar,” Williams said, adding that even then she has to wonder whether a corporate counter would “help the business or hinder it.”

“That,” she said, “is the $64,000 question.”