Critical Mass: Shoppers Drug Mart Adds Essence Cosmetics

Canadian retailer to roll out beauty line after store test.

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The Canadian retailer Shoppers Drug Mart sports some of the most admired beauty departments in drugstore retailing. When the chain adds a new brand, the industry takes notice.

This story first appeared in the January 27, 2012 issue of WWD.  Subscribe Today.

In March, following a successful 18-store test, Shoppers Drug Mart will roll out Essence Cosmetics to 900 stores across Shoppers and its nameplate in Quebec, Pharmaprix. The 160-stockkeeping-unit collection of eye, lip, nail and face products will be sold exclusively in Canada at those two chains.

“We are always traveling the world and take inspiration from Europe. We were attracted to the assortment of Essence and the interesting display,” said Mary Kelly, the executive vice president of front store for Shoppers, referring to the German cosmetics brand.

It was the high-quality and on-trend products that drove Shoppers to Essence, said executives, but the value pricing also was a plus, since it opens up the opportunity to build greater sales. Prices mostly fall under $5.

“We thought it would help bring in young customers, but we also saw business from customers 45 years old and up. And our total beauty purchases went up, so people weren’t leaving another brand — they were buying more,” said Kelly. That was a key insight for Shoppers, which sells premium beauty brands, including Clarins and Lancôme, and doesn’t want to trade customers down in price. “People are buying these items as add-ons,” Kelly said.

Essence, owned by Frankfurt-based Cosnova, is the third-fastest-growing beauty company, with worldwide retail sales exceeding $400 million, according to Beauty Inc’s annual ranking of the top 100 beauty firms. According to Euromonitor International, it is the number-one value brand in the world, with sales gaining 24 percent in 2011 over the prior year. One in every four cosmetics sold in Germany is an Essence product.

Christina Oster-Daum, the founder and chief executive officer of Cosnova, said, “We’re on the pulse of what is new and cool in the makeup world. We want to ensure our customers always have access to the latest makeup trends at a great price.”

Kelly agreed that freshness is what drives customers to Essence. “I love the nail color and the new I Love Extreme Volume Mascara,” said Kelly, singling out a few items. She also expects big sales from six limited edition collections, which will ship to stores over the course of this year.

Essence is housed in a two-foot linear display that Shoppers will position on an end-of-aisle display in its mass beauty area, according to Howard Schwartz, general manager of U.S. for Cosnova. “We are known for high quality but also the fact we are quick to market with new concepts,” he said.

Essence first emerged in the U.S. market in 2010, at Ulta, and is now stocked by retailers such as HEB and Fred Meyer. Schwartz said the sales trend at Fred Meyer has been so positive that footage is doubling to four linear feet.

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