By  on July 17, 2009

Origins has a new vibe.

Nearly two decades after its launch, the division of the Estée Lauder Cos. Inc. is reasserting its early-Nineties identity as a high-performance, naturally based, ecologically friendly brand. In-store merchandising units are being reorganized to make shopping easier and more pleasurable. More importantly, since the arrival of Jane Lauder as senior vice president and general manager a year ago, Origins has found a new groove for its product advertising. One of the challenges faced by the skin care industry in general involves convincing consumers that natural products are every bit as effective as laboratory formulations. The new slogan for Origins is “Powered by Nature, Proven by Science.”

Print ads often feature a photo of a plant decorating a product combined with hard-ball claims of performance. For instance, January’s launch of Youthtopia, a wrinkle-fighting, firming and lifting serum, was trumpeted by advertising that proclaimed: “73 percent saw younger looking skin” and “75 percent agreed their skin felt firmer.”

Already, the new approach has struck a chord at retail. “It is absolutely a smart way to do it,” said Muriel Gonzalez, executive vice president and general merchandise manager of cosmetics, fragrances and shoes at Macy’s Inc. “The aesthetic they have chosen is very compelling and very, very appealing. Customers really want to see performance. [Origins] has hit a sweet spot.”

Gonzalez also said Macy’s installed the new Origins merchandising approach in a shop in the Pentagon City branch near Washington. “The customers have really responded to it,” Gonzalez said, “and we plan on putting it into other stores.”

Lauder spent the last year studying the dynamics of the brand and getting to know the customer, an effort that was given impetus by Estée Lauder’s new chief executive officer, Fabrizio Freda, who stressed the need to understand the customer and apply Lauder’s strengths — “gut, imagination and innovation” — to what it has learned about consumers to “capture their imagination” in a way that delivers what they asked for, Lauder said.

As a result, the merchandising in Origins’ retail shops was rethought. In the new pilot, products are presented according to skin care concerns, such as redness, rather than by product category or franchise, like the Perfect World subbrand.

Origins tested the concept in a couple stores, like the shop at 84th and Broadway in Manhattan. From February to May, the test store outperformed by 8 percent the other New York outlets in sales of the key skin care category and for the brand as a whole, Lauder said, adding that customers seemed to feel more comfortable with the new setup and spent more time there.

Plans call for starting to roll out the new merchandising concept to Origins’ list of 130 retail stores and 400 department store doors in the U.S.

The new tag line grew out of consumer research and became an effort to “take Origins out of the clutter of so many of these so-called natural brands or lifestyle brands and [give] it its place in the world, or [be] a green brand with the clinical results of laboratory formulas,” Lauder said, adding her competition is polarized. The natural brands don’t talk clinical performance, and the traditional laboratory labels stick to the statistics. This left a gap.

“You see the tree,” Lauder said, referring to the Origins symbol, “and you know it is from nature. But we said, ‘Powered by Nature, Proven by Science’ is really who we are and who we want to be.”

Research revealed Origins’ target consumer ranks her priorities, or what Lauder calls “communication hierarchies.” Performance and natural formulation are most important, followed by support of the environment, which Origins also does.

Green comes in shades. Women may drive a hybrid and recycle but not all the food they buy is organic. “A lot people maintain a balance based on what’s performance and what’s really important to be organic and natural. When we talk to our consumers, they say, ‘I want it to be the highest performance but with using natural ingredients.’”

So Origins sometimes uses combinations of natural and organic ingredients, Lauder said, noting the company spent the last two years making products adhere to a purity statement that forbids use of parabens, phthalates and animal ingredients. “For consumers, that’s the most important part. For them, organic and natural mean safety.”

Quoting more research, Lauder said the “sweet spot” of Origins’ customer base is between the ages of 30 and 50 with the heart of it in the mid-to-late 30s and early 40s. “You get this twentysomething-year-old who’s kind of too old to be part of the recycling generation. Then you have the people who are 30 and above who may be starting to have children and they are much more conscious of the labels.”

Lauder’s year of effort has been noticed within the halls of the parent company. “[Jane Lauder] has always been very good at finding a gap in the market and filling it,” observed Lynne Greene, global brand president of the Clinique, Origins and Ojon brands. Greene, who worked with Lauder when she headed marketing at Clinique, said, “I admire what she has focused on and done it with a great financial sense.”

Although Origins is sometimes thought of as a lifestyle-oriented bath and body brand, the majority of its business is in facial skin. Lauder noted the brand always has been anchored in beauty — skin care, color and aromatherapy. “But we had a lot of media moments in the past where some of our body products got center stage, so people started to associate us with body. Body is absolutely a nice part of our business,” she said pointing to A Perfect World, Checks and Balances and the top-selling cleanser. “But it’s not the majority.”

This was reinforced by polling results following the financial meltdown last fall. “We did a survey asking what’s the most important thing. [Consumers] said high-performance antiaging facial skin care,” Lauder noted, adding: “That is what we have been focusing on.”

This fall’s primary launch has been Brighter by Nature, which Origins touts as “nature’s alternative to lasers.” It is designed to even out skin tones and lessen dark spots.

The big launch slated for late December, early January is called Starting Over, a $45 antiwrinkle moisturizer Origins bills as “an alternative to needles.”

The launch of Youthtopia,launched in December, marked the first time the company used before-and-after photos. Apparently, it worked. The company does not break out sales results, but industry sources indicate that after only six months, Youthtopia has become a $17 million franchise.

Gonzalez at Macy’s said, “I have been encouraged by the consumer reaction. We have had a good response to the new merchandising environment and a good response to the new products.”

Sources also estimate Origins’ annual wholesale volume at $200 million, a figure that has been roughly flat for the last few years. The brand, according to sources, has set its sights on achieving a compounded 9 percent growth over the next three years. That drive will be aided by plans to enter Beijing and Shanghai department stores in March.

Origins was conceived during the heyday of The Body Shop in the late Eighties and burst onto the scene in 1990, becoming an immediate sensation and quickly gaining a voice of authority as a nature-driven, contemporary lifestyle beauty brand for the New Age.

As Lauder pointed out, what followed was an upsurge of nature-oriented or youth-centric competitors, running thegamut from Kiehl’s Since 1851, Jurlique and Carol’s Daughter to L’Occitane, C.O. Bigelow, Aveda and Korres in the prestige market, as well as The Body Shop, Burt’s Bees, Aveeno, Nature’s Gate and lately Yes to Carrots in mass distribution. Perhaps as a result, Origins’ message seemed muffled over the years, despite directional initiatives such as the Dr. Andrew Weil line and Origins Organics, billed as the first prestige beauty brand certified to USDA standards. Some critics speculate the focus of top management shifted, resulting in a meandering brand identity. Other industry experts theorized Origins’ overall image did not stay as sharply innovative and edgy as its products, a critical point in the image-obsessed youth market. Still others argue the new entries made Origins look like yesterday’s revolution.

Lauder has a plausible explanation. “More and more people entered the environment,” she said, and the room filled with noisy, boisterous competitors. “It’s hard to shout loudly when everyone else is shouting,” she said. “We have to reassert our position, let us be clear what we stand for.”

Wall Street seems to have agreed. “Origins has a definite significance and relevance,” said Piper Jaffray analyst Neely Tamminga. Although, she added, Origins’ association with Dr. Andrew Weil may have boxed the brand into an older consumer crowd. Referring to Origins’ deepening focus on antiaging, Tamminga posed the question, “Is it a mistake to be both natural and performance focused — are they targeting the right demographics?” As the principal naturally positioned brand within traditional department stores, “there’s an opportunity to capture the up-and-coming Generation Y, as they age and their skin care needs become top of mind,” Tamminga said.

Asked about occasional speculation that Lauder might divest Origins, Lauder indicated the current plan has a three-year horizon and she said, “Origins plays a very unique position within the portfolio and I think that we have a lot of very strong support behind the brand. Everyone from Fabrizio [Freda] to [chairman] William [Lauder] to [chairman emeritus] Leonard [Lauder] are very invested and spent a lot of time with us. But I think one of the challenges they give to us is, if naturals are going so fast, how are you going to grow faster, because there is a bigger opportunity.”

According to industry sources, the global natural beauty market is expected to grow 9 percent to $2 billion by 2011 and the antiaging skin care category is projected to rise by 5 percent to $2.7 billion by the same year.

Connie Maneaty, analyst at BMO Capital Markets, said, “When I look at the Lauder portfolio, [Origins] sure seems to belong. I’d be really surprised [if Lauder sold it].” However, she suggested Lauder stabilize the brand’s U.S. business before charging ahead with its international ambitions.

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