Most Recent Articles In Beauty Features
Latest Beauty Features Articles
- L’Oréal CEO Talks Competition, Digital and Market Evolution
- Retailers and Beauty Brands Celebrate #NationalLipstickDay on Instagram
- Beauty and Luxury Creates New Division
More Articles By
The luxury consumer represents a key growth driver for the beauty industry, according to Paolo de Cesare, Printemps’ chief executive officer and chairman.
The department store, with 17 locations and sales of about $1.9 billion, has undertaken a four-year renovation starting with its Paris flagship on Boulevard Haussmann. That 500,000-square-foot door boasts footfall of more than 20 million people annually and its sales hit $900 million in 2007, up 5 percent year-over-year.
“I would like to share with you a few thoughts on a key question on our minds, which is: How do we change and grow in a period of slow economic development?” he said. “There is no question that the European and American economies are going through some terrible economic times.”
De Cesare explained that according to statistical analysis, there’s a good chance economies will have returned to growth within the next year.
“Now it is time to prepare for renewed growth,” he said. “Our observation is that during slower economic times, there is a big polarization of consumption. On one hand, the consumer will look at the cheapest and most affordable item. On the other hand, they will look at the brands that provide the highest reward in terms of quality, innovation and emotional content. The brands that are stuck in the middle are the ones that struggle most during recessionary times.”
These days, Printemps is focusing on the higher-end consumer by shifting its product offer to more luxurious items.
“We are underserving and underestimating the potential demand and spending power of these consumers and miss a critical growth opportunity,” he said. “And I’m not talking here about serving a small niche of billionaires or millionaires, but rather the high and middle classes that even in difficult economic times want to buy a $500 to $600 bag or a prêt-à-porter dress or can spend $300 and $400 for shoes.”
Printemps has conducted research into luxury customers.
This story first appeared in the May 30, 2008 issue of WWD. Subscribe Today.
“To our surprise, 60 percent of consumers in the developed world are buyers of luxury brands,” he said, adding 30 percent make regular luxury purchases. “So again, we are talking about a very broad target, a lot more than a millionaire, billionaire niche.”
Once more, that consumer sees luxury in many categories, including fragrance, apparel, shoes, food and sunglasses. De Cesare said there are three main drivers for the purchase of a luxury item.
“The first and most important one is about the quality of the product,” he explained. “The second driver is emotion-related. It is about being surrounded by beautiful items, by having a rewarding purchase experience and treating yourself. And finally, the third area is related to the status symbol of owning a luxury brand.”
Although this latter point is less important in Western markets than it was in years past, Printemps’ research showed that status is still a motivator in the selection process among consumers coming from countries such as Russia, China and South Korea.
What’s considered to represent luxury differs dramatically from country to country. De Cesare said research showed that the French, Italian and Japanese consider classic fashion and jewelry brands as iconic.
“There is also a strong nationalistic skew on preference, with the Italian preferring Ferrari, Valentino and Armani, Italian brands, and the French preferring French brands, Dior, Chanel, Vuitton and Cartier,” he said. “The surprise is when we look at what is luxury for U.S. consumers. Mercedes, Lexus and Hilton are the top three aspirational brands for luxury, with BMW and Cadillac being the fourth and the fifth.
“This underscores the big opportunity for our fashion and beauty industries to redefine the meaning of luxury, quality and inspiration in the U.S. market,” he continued.
In France, 57 percent of women have bought a luxury product domestically during the past three years, and that percentage keeps going up, explained de Cesare, adding that 28 percent of those shoppers go to department stores, making them the top shopping locations for high-end goods.
“Seventy percent of luxury consumers purchased in a department store in a year,” he said.
A department store’s key point of difference is its wide array of products. (Printemps, for instance, carries 3,000 brands and about 3 million stockkeeping units.) Such retailers should remain distinct by how they edit their product mix and they should also have appealing events, said de Cesare.
“Service is considered an advantage by only 11 percent of consumers,” so stepping up assistance remains a clear opportunity, he said.
To please this demanding luxury goods consumer, de Cesare said Printemps has a five-pronged strategy. Of utmost importance is the quality of its retail space, a portfolio shift to higher-growth brands and categories, the trading up of its offer and developing merchandising and service.
“Our objective is to combine the retail space, the brand offer and service to create a highly appealing shopping experience,” he said.
On the store front, Printemps is undergoing a $50 million, four-year renovation on the store’s interior and exterior.
“In the new design, we want to combine the best of retail and the best of the hotel industry to create a new concept for luxury shopping and entertainment,” he said.
In an attempt to focus its portfolio on categories that generate ever-higher sales, Printemps has been concentrating on men’s and women’s fashion and accessories while closing several businesses, such as toys and electronics.
“Fashion and accessories allow more differentiation and exclusivity and command higher price points. And combined, this category represents 67 percent of the business, up four points just in two years,” he said.
“In terms of customer relations, we are developing a new program to better target the top 10 percent of our customers,” he added. “The top 10 percent of our three million customers in our database represents over 40 percent of the business. This customer comes every month in the store and spends more than $2,000 on average. We clearly need to do a better job in serving them.”
Printemps also raised the average price point per product it carries. In the fashion and accessories categories, for instance, the average ticket rose to 85 euros from 65 euros in two years, or $133 from $102 at current exchange.
When it comes to beauty, the department store has a specific strategy for selling to its sophisticated, fashion-driven customer.
“As you know, beauty is a difficult market for department stores, and we don’t have a Sephora concept and we don’t want to compete on price,” said de Cesare. “So our approach is really around putting the brands in the center of our store, creating monumental brand counters, creating a full brand expression with cabins and unique launches and bringing exclusive luxury concepts and brands and a customer relationship program.”
Printemps’ “scent room,” selling what it considers to be luxurious and rare fragrances from brands such as By Kilian, has registered 20 percent growth in the last month, he said. “It is a segment that we think has a lot of potential. And these are brands that retail at $100 or more.”
De Cesare explained Printemps is concentrating on more open, accessible environments and is testing concepts such as a consultation area for hair and scalp care.
“To create space and visibility for this concept, we have reduced the brand offer by more than 30 percent and we have increased significantly the productivity of the brands we carry,” he said. “We are convinced that this is a winning strategy for beauty, and we will continue to pursue this in the next years.”
“In conclusion, I think this data shows that even in a slow-growing economy, like France, there are opportunities and some potential to better serve the higher-end consumers,” said de Cesare. “I think I’d also suggest that we need a stronger form of collaboration between the retailer and brand manufacturer to meet the high expectations of these consumers.”
To this end, de Cesare said Printemps has been working to focus less on margins and more on growth opportunities and new concepts.
“And only once we are confident and sure that we have done the due diligence on this do we discuss the specific financial arrangement,” said de Cesare, who explained Printemps has met with its top 200 suppliers to discuss the new strategy.
“We need to move from a confrontational relationship to something that puts consumers at the center and we work together to delight them,” he said.