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Sephora Steps Up Private Label

PARIS -- As part of an ongoing strategy to improve operating margins, Sephora is stepping up private label activities with the June launch of its first bath-and-body line, called White and Brown.<P>As reported, Sephora Europe's president and chief...

PARIS — As part of an ongoing strategy to improve operating margins, Sephora is stepping up private label activities with the June launch of its first bath-and-body line, called White and Brown.

As reported, Sephora Europe’s president and chief executive officer Serge Brunschwig’s goal is to increase operating margins to 8 to 10 percent in 2004, versus the 1 to 3 percent today.

Private label — which generates 7 to 8 percent of the store’s volume — is an important category for Sephora, as it is for other retailers. It can vastly improve margins plus boost consumer loyalty. And, when private label items are sold at low price points, sell-through is generally fast, explained William Grant, director of brand retailing at London-based brand consultancy Management Horizons Europe.

“[This] can make a strong contribution in terms of volume and profit, if it’s done right,” he said.

While Sephora executives refused to divulge numbers for White and Brown, the mid-priced, 12-stockkeeping-unit line, industry sources estimate it will ring up about $10 million at retail in its first year.

Another advantage to private label lines is they “may occupy a gap in the [store’s offer] in terms of range and price architecture,” said Grant.

That’s expressly what White and Brown is meant to do. “[Customers want] selective products at accessible prices, and there are very few mass market brands” meeting these demands in the bath-and-body segment, explained Alexandre Rata, Sephora’s private label manager.

White and Brown is an extensive line divided into two product groups — six cotton milk-based “White” items and six palm milk-based “Brown” products

The “Brown” line comprises a 200-ml. bottle of Creme de Lait shower milk, a 150-ml. bottle of Huile Sensuelle bath and massage oil, a 200-ml. bottle of Lait de Velours body milk, a 200-ml. jar of Baume Fondant body balm and a 28-gram Nougat Petillant bath tablet. The products will sell for $5.50, $7.30, $7.30, $9.20 and $0.90, respectively.

All prices have been converted from the euro at current exchange rates and are for France.

The “White” line includes a 200-ml. bottle of Creme de Lait shower milk, a 150-ml. tube of Creme de Gommage cream scrub, a 200-ml. flacon of Nuage de Lait body milk, a 200-ml. jar of Creme Fondante body cream and a 28-g. Dragee Petillante bath tablet. These items will go for $5.50, $7.30, $7.30, $9.20 and $0.90, respectively.

Two Souffle de Nacres sparkling body powders — one for each line — will be added in late June or July for $13.80 each.

White and Brown will bow worldwide in June, except for the U.S., whose introduction is set for August. At launch, one million bath tablets will be distributed in store.”