Daniela Rinaldi has built Harvey Nichols into a beauty powerhouse and witnessed firsthand the rapid evolution of the industry into a multichannel—and multiservice—business. Last year, she oversaw the opening of Beauty Bazaar in Liverpool, England, a stand-alone specialty store that offers products and services ranging from hair cuts and color to makeovers, injectable treatments, tanning—and champagne. Here, she reflects on what’s selling and why, and the importance of preserving the luxury experience and building an “ecosystem” around the consumer.
This story first appeared in the August 9, 2013 issue of WWD. Subscribe Today.
WWD: What are the major changes you’ve witnessed in beauty since you began working at Harvey Nichols 27 years ago?
Daniela Rinaldi: In the Eighties, when I started, the ranking of brands was very, very different. Helena Rubinstein featured within the top five. There was Princess Marcella Borghese, Charles of the Ritz. The turning point, with cosmetics in particular, was the advent and the introduction of the makeup-artist brands. Harvey Nichols was responsible for launching both Shu Uemura and MAC 20 years ago. Before Shu Uemura came on to the market, the idea of makeup accessories was the little sponge applicator that you got inside your compact. Shu introduced a range whereby 30 percent of the offer was all about brushes and eyelash curlers. It was game changing. MAC was the first to introduce such a wide color range, and change the texture of lipsticks, for example. They introduced the first matte lipstick range.
WWD: How was MAC received when it launched?
D.R.: It was extraordinary. The beauty landscape was quite neutral in its tone, very ladylike. At the time, you had lots of very well-dressed girls and boys in lovely little suits, who stood behind counters, offering perfect little service levels and all of a sudden, you had this big, brash noisy space with piercings and tattoos. We launched MAC with six or seven transvestites walking up and down Knightsbridge. I came in here to watch the Saturday trade, and [customers] were queuing 10 deep. It was a catalyst for change, and [brands] upped their game in terms of broadening their offer, looking at the finishes. The performance of all the heritage brands around MAC gained business that year. The original MAC lipstick [packaging] was a dark graphite color and it was a different shape to anything else on the market. It stood out, because that was their thing about getting people talking. For a long time, I’d sit on the train and see someone get a lipstick out and think, ‘That’s nice, that’s the buzz.’
WWD: How has digital media changed your approach to the business?
D.R.: Ignore it at your peril. This has been a significant area of investment for us as a business…and we have been working on what this means for a consumer. At the end of the day, the world’s changed and the consumer is really king, and if you want to put the consumer at the center of everything you do, in her own little ecosystem, then you have to work towards a multichannel proposition. Ninety percent of our online customers shop in-store, and I don’t think that one is a substitute for the other. Our challenge is to replicate that experience that you get in store. Alongside the redevelopment of our Web site [relaunching in September], we will have salons in each store to give opportunities for customers to click and collect, click and try and click to buy. It’s really tying up that thread that runs through bricks and mortar and online. It’s an opportunity for us to give style advice and take the experience to the next level. Ultimately, that’s our goal in the beauty realm, too.
WWD: Six months ago you launched Beauty Bazaar, a stand-alone beauty retail concept in Liverpool. What is your vision for it?
D.R.: We continually search for what’s new, and I think that the traditional brands have done an exceptional job. Do I see very many more MACs on the horizon? My answer is no. So, Liverpool for us has taken beauty to that next level. Against a background of discounting and price matching, Liverpool really is the antidote to beauty being commoditized. Our challenge was to come up with a concept with the tag: “What price is great beauty?” If we could offer a space with a compelling brand mix, beautifully designed, with all of your services under one roof, would that give you reason to go there? So that the 10 percent saving you got elsewhere in a more cash-and-wrap environment is less of a draw. The space, which is 22,000 square feet over three floors, is a real lifestyle choice. There’s a champagne bar, there is every treatment you can possibly think of, every brand, a fragrance library.
WWD: How is it doing?
D.R.: The average spend of our top 15 percent of customers in Liverpool is over double that of the rest of the [Harvey Nichols] group. It’s early days, because the store has been open six months, but we have a regular customer coming back, and based on that average sale, it’s pretty well received. Nars is really popular— it’s an exclusive, so clearly that helps. Obviously, MAC and Jo Malone and Tom Ford [are doing well], but also things like Sleep-In hair rollers that we did with glitter to wear out in the evening.
WWD: What are some of the most popular services?
D.R.: Waxing, particularly the chocolate waxing. There is a giant piece of chocolate wallpaper behind you, like an open chocolate bar, and the wax is chocolate. The girls in Liverpool are very well groomed, so we put a wolf whistle in the ladies’ bathroom, so when they come out it does the whistle noise.
WWD: What isn’t working in Liverpool?
D.R.: One of the things that was a surprise for me was tanning. It wasn’t as successful as we had anticipated, because there is a feeling that in Manchester and Liverpool, they like their tans. But that was probably slightly wide of the mark. They probably tend to do [tanning] themselves.
WWD: Do you plan to roll out the Beauty Bazaar concept?
D.R.: We do have the intention of rolling out Beauty Bazaar, but only when we find the right space and at the right point in time and subject to the location and deal.
WWD: What stimulates your creativity on the job?
D.R.: My role is to go to markets and look for the new and different, and it cuts across so many categories—food, fashion, cosmetics. The basis for everything is customer focus—so as long as you get who she is and what she will want. On very many occasions we have given customers what they didn’t even know they wanted. The consumer really is king: They are spending their money, they want results, and that’s investment shopping—whether it’s a handbag or Crème de la Mer body cream.
WWD: The U.K. market is inundated with loyalty cards for beauty products and services. Everyone from high street to department stores is offering them. What’s your take on them?
D.R.: Loyalty is not just about stamps on a card every time you make a purchase. Loyalty is a very basic phenomenon, and it comes from giving customers what they want, when they want it and with a smile. Going that extra mile. It’s as simple and basic as that. Our view of loyalty should and could be “money can’t buy” propositions. That’s compelling, isn’t it? So it could be me getting my buying team to go Liverpool, and if you are a consumer you can come in and have a conversation with a buyer, and ask her what she’s wearing and what’s new. But you don’t go out with a card stamped because that’s not luxury.
WWD: You’ve spent your career at Harvey Nichols, starting on the selling floor and now sitting on the board. What’s kept you here so long?
D.R.: I love the brand. It’s intimate and has a heritage. Of course, it helps to enjoy what you do. My responsibility and area is all-encompassing, so that makes it even more interesting—to look at what’s happening in fashion and apparel and food and wine and beauty. Fundamentally, it’s all here and it’s pretty similar. People want a price-quality ratio.
WWD: What are some of the future challenges facing beauty brands and retailers?
D.R.: Brands have developed to a certain level, but I don’t see any of them really future-proofing. There has been lots of catch-up, which we have also been a part of, but I don’t necessarily think that the customer journey is satisfied. I do shop online occasionally, and whilst it’s incredibly convenient and easy to do, the style of these sites might be applicable to desktop but they don’t work across mobile phones. Navigating these sites, you get to your basket and you don’t know whether something is in stock or out of stock, then you put your card details through, and you get told they never had any stock in the first place. The consumer has caught up, and is now demanding a better proposition in terms of service and everything it involves. [Consumers] are far more savvy, and far more demanding.
WWD: What does the future hold for you and your team?
D.R.: My opportunities are greater than they ever were. The industry is still plagued by discounting. Points! Win prizes! For me, beauty and apparel are in a similar place, and we have to redefine what that luxury proposition means. That’s going to be the key, because discounting on beauty has taken away from the image and the brand from a consumer point of view, and how do you get that back?
Our answer was building a space [Beauty Bazaar] that is so unique and so compelling. But it’s no different to a luxury handbag brand. For years, customers have been told that it’s all about luxury, about waiting lists, only to find that if you want to buy one you have to wait in a queue of about 100 people. So it’s about satisfying customer demands at the same time as understanding what that luxury service proposition really means.