By  on August 27, 2010

NEW YORK — It’s still the sweltering summer season, but e.l.f. is gearing up for Christmas.

Company founder and chief executive officer Joseph Shamah predicts it will be another value-fueled holiday season for mass retailers. To that end, e.l.f. has increased collections that help consumers get a makeup look for less than $5, while also expanding the color palette.

“Consumers really want more education,” said Shamah, adding consumers are both trading down from pricier brands and department stores where they had assistance and increasingly demanding more bang for their buck.

Last Christmas, the industry saw the first small gains in color cosmetics sales in two years. But the boost came largely from budget-priced items, leaving retail buyers to prowl for more stocking stuffers and modestly priced offerings for holiday 2010.

Achelle Dunaway, creative director for e.l.f., predicted glitter formulas and more dramatic looks will get shoppers to open up their wallets for beauty items. “We saw that trend last year,” she said, adding it should continue this year as consumers look for inexpensive ways to jazz up their looks.

Among the top picks from e.l.f. are: a 100-piece eye shadow palette for $10, and a $15 mini palette box with eye products, blush, bronzer, brow powder, eyeliner, lip items and brushes. There’s also a collection under the Studio banner consisting of 11 professional brushes. Nail is where e.l.f. will add pizzazz with festive colors including Metal Madness, Party Purple, Golden Goddess, Twinkle and Glitter Glam. The polishes priced at $1 are perfect stocking stuffers, said Dunaway.

The holiday looks will hit the brand’s online store and retail partners, such as Target and Kmart, for the holiday season. While many fledgling firms look to grow by adding more doors, e.l.f. has made a combination of brick-and-mortar and e-commerce click.Earlier this month, e.l.f. hit its two millionth online product order. The purchaser won an assortment of grand prizes valued at $3,500.

Shamah said customers who have “the gumption” to know that high-quality products don’t need to come with high costs have helped build e.l.f. And unlike many companies just trying to build door count, he believes in controlled growth in key retail partners where he knows his margins can hold up despite budget pricing. With fewer and fewer drugstore chains in the business, merchants wield more power and can make big demands, such as pay on scan, guaranteed sales and liberal return policies. These pressures have forced some smaller beauty brands, such as Jane Cosmetics, virtually out of the market.

As the two millionth purchase was tallied, e.l.f also celebrated its sixth year in business. “The recession opened doors for us. It’s no secret that the economic climate of the past two years has affected many companies within our industry;however we have been fortunate enough to not only weather the storm, but be unimpressed by it,” said Shamah. Like many beauty firms, e.l.f. is developing a stronger seasonal business around other key merchandising times. Right now, the company is promoting a back-to-school collection, which includes products with cool school themes, including header cards with notebook rules. The b-t-s collection is exclusive to Target and ranges from $1 to $10, and includes a new zit zapper as well as a bronzer-and-blush duo. Shamah thinks the $5 beauty books and color 101 kits will be especially popular with Target’s b-t-s shoppers.

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