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An avid Formula One fan, Carmen Bauza is changing Wal-Mart’s approach to beauty at lightning speed.
“It’s a team effort and there is one goal and that’s to win,” says Bauza, who is Wal-Mart’s vice president and divisional merchandise manager of beauty. She is speaking not just of her passion for auto racing, but also of what drives her personally and professionally. “That’s how I work. That’s how I go about every day.”
Bauza’s competitive fire is no mere bluster. Since joining Wal-Mart three years ago, she is transforming its beauty business into a rapidly evolving, tightly edited enterprise that prizes established brands and eliminates underperformers. Despite the magnitude of the retailer’s beauty business—industry sources estimate Wal-Mart’s U.S. beauty business ranges between $2 billion and $4 billion in size—Bauza believes that employing the same-old strategies to what she sees as a rapidly changing category is a road map for disaster.
“Consumers have given us, as an industry, a second chance, but they are expecting a lot more,” says Bauza. “[In the past] we’ve met those expectations. Now we want to exceed them,” she continues, referring to Wal-Mart’s 40-year history. “We’ve got to change and we’ve got to change faster. We need to be agile.”
To that end, Bauza is reengineering Wal-Mart’s beauty message. Whereas once the vision would have been value driven, today it is resolutely consumer centric. “I want to help every woman celebrate her beauty by making inspiring beauty brands affordable for everyone,” says the retailer, when asked her vision of beauty for Wal-Mart. “Wal-Mart will provide the brands she loves in an environment where she can luxuriate in having that “me moment” that is all too rare in her day—a moment where she can indulge herself, knowing that she’s getting the quality products she wants while saving money so that she and her family can live better.”
Key to her vision is offering prestige cosmetics brands, both to satiate her existing customer’s interest in upscale brands and to retain the new shoppers who were drawn to the retailer because of the recession. “Customers were asking, ‘Why are you making me go to another store to buy prestige beauty when I am already shopping in your store?’” Bauza recalls. An avid shopper with a keen eye, Bauza herself exemplifies the cross-channel shopper she hopes to attract, as comfortable in Bergdorf Goodman as she is in a big-box retailer, wearing on a recent chilly spring day a sleek black dress accessorized with round-toe Christian Louboutin pumps and an Yves Saint Laurent tote.
Of course, mass retailers eyeing prestige beauty brands for growth is nothing new—both CVS and Walgreens have been vocal and aggressive in their attempts to enter the arena—but Bauza is not one to take a wait-and-see approach. “I started looking for an opportunity—I look for them every day,” she says.
After proving unsuccessful at wrangling the prestige brands she wanted, Bauza’s thoughts turned to Hard Candy, an indie makeup line that in its heyday was a darling of high-end beauty boutiques. Wal-Mart partnered with contract manufacturer and Hard Candy licensee NuWorld Beauty, and together they re-created the brand, injecting edginess into Wal-Mart’s beauty department. The 261-item line began hitting Wal-Mart doors last fall, and is now in 3,000 stores. At launch, sources expected the line to generate as much as $50 million in sales the first year.
Bauza declines to comment on sales, but says: “Our real estate is very valuable. [Hard Candy] is paying the rent in the stores that it has.” Her stamp is visible on all aspects of the brand. For instance, during a brainstorming session for the mascara, she blurted out, “ginormous”—a word that she frequently heard Wal-Mart’s chief financial officer use—and Ginormous Lash mascara was born.
The success of Hard Candy has percolated the interest of prestige beauty companies, says Bauza, and while she won’t divulge if there’s an upscale concept in development, she says: “The customer is shopping across all channels. We want to offer her accessibility to all brands, including prestige.”
That attitude is markedly different from how Wal- Mart approached beauty in the past. “We gave her so much to select from, but did we really stand for something?” Bauza asks. “Now, we have the breadth of assortment and the brands she wants, but we’ve made more clear statements to customers. Our evolution has given us that authority.”
That’s not to say Bauza has turned her back on the mass market beauty industry—far from it. She just has a new message, key to which has been a rigorous editing and assessment of each brand’s offering in an effort to fully focus on what the customer wants—and axe what she doesn’t. Wal-Mart declines to comment on what percentage of the overall assortment has been trimmed, but some Wall Street analysts estimate it is around 15 percent.
“If they don’t move faster and become more agile, they will miss out,” Bauza says of mass beauty brands. “Some are getting it, and replacing five [stockkeeping units] with two.…We know change is not easy. It was unknown territory for some [suppliers]. And some moved faster than others.”
Bauza also is on a mission to reengineer the promotional levers that mass market suppliers have employed for decades. “Buy one, get one free is not a sustainable model. We need to change the way we are going about promotions and use ones that are engaging, but that don’t give product away. That takes her out of the buying cycle,” she says.
As an alternative, Bauza says Wal-Mart has been testing a fragrance-sampling program, and suppliers say it will soon add in-store product demonstrations.
Bauza’s changes are happening across Wal-Mart’s more than 4,000 U.S. doors, but the most dramatic expression of her vision is the beauty department inside the retailer’s Project Impact concept, a major overhaul that consists of wider aisles and a clean, upscale look. Currently implemented in about 600 stores, the spacious area features a display wall for lighted brand imagery and signs touting new items, sharpened end-of-aisle displays, less clutter and lower shelves, to about 6 feet, each accentuated with light-wood headers and clear plastic category markers. The department—with cosmetics aisles angled toward the entrance—is set on a faux-wood floor and heralded by navigational signs for each beauty category.
With the backing of the largest retailer in the world, Bauza’s approach to both merchandising and promotion will have a significant and potentially lasting impact on the mass market beauty business. After all, many beauty brands rely on the retail behemoth for one-third of their sales, and Wal-Mart’s reach is broad—more than 140 million customers stream through its doors each week—and global.
“Merchandising is storytelling,” says Bauza, who spent 12 years at Walt Disney Co. and, more recently, three years at Bath & Body Works. “I start by putting together what I envision in the store, and then I put the numbers to it.” She acknowledges that it’s a renegade approach at the efficiency-driven Wal-Mart, where number-crunching analysis generally comes first. But Bauza is quick to point out that, if the numbers don’t work, she revises her plans. “Numbers speak the truth,” she says, echoing Wal-Mart’s long-standing credo. “It’s a mix of art and science.”
Bauza is intensely curious, frequently picking the brains of shoppers and bouncing ideas off store managers. “I like dialogue,” she says.
She is also teeming with creativity, say beauty executives. “Carmen is a brand builder who meets with suppliers on a quarterly basis to really understand their businesses,” says Jeff Rogers, president and director of Physicians Formula, a brand included in the Project Impact concept. “She’s very involved. She understands the numbers and categories and she works with each brand to increase its sales.”
Revlon president and chief executive officer Alan Ennis says of the retailer: “Carmen is making dramatic enhancements to the beauty shopping experience for the Wal-Mart shopper. She has a clear focus on category growth and we look forward to the resulting progress based on the benefits of an enhanced environment.”
Bauza has boundless energy. She’s recently made exercising a priority, opting for workouts on the treadmill and elliptical machine as she blasts Ricky Martin tunes. “It takes away a lot of the pressure,” says Bauza. She and her husband, Mike, are self-described history buffs who travel the globe. They recently visited Greece and Turkey, and their passion for Formula One has taken them to Monte Carlo, Monaco; Barcelona, and Montreal.
Bauza wants to win, and winning, in her view, means listening to consumers—even if it means convincing brands to tweak their approach. The outgoing, Puerto Rican–born executive informally chats with customers in the store, accompanies consumers on shop-alongs and listens in on Wal-Mart–hosted focus groups.
Consumers’ input is embedded in the new cosmetics wall. “We put hundreds of consumers in front of the wall and they voted,” she says. For instance, many mass retailers allow each beauty brand to organize their offering within their allotted space as they see fit. But Wal-Mart, based on shoppers’ insights, had each brand organize its assortment into three vertical categories—lips, eyes and face—for ease of shopping.
Bauza herself stood in front of her competitors’ walls prior to Wal-Mart’s revamp only to discover most looked strikingly similar. She then gave her suppliers marching orders: “Each retail experience has to be different.” Within Wal-Mart’s universal display fixture, a smaller assortment of brands—including Cover Girl, Maybelline New York, L’Oréal Paris, Revlon, Almay, Physicians Formula and Hard Candy—customizes its visuals and product trays. For instance, in the North Bergen, N.J., store, L’Oréal Paris’ display includes a shadow box with three mascaras under the words “Mascaras for Every Lash.” Hard Candy displays an illustration of an eye with the products used to create the look, and Cover Girl has a photo of spokesmodel Drew Barrymore and the products used to create her look.
Bauza also unveiled a new ad campaign, reading: “Unbeatable prices. Incredible you,” followed by Wal-Mart’s tag line, “Save Money. Live Better.” She says of the efforts to turn up the volume: “We were somewhat quiet about beauty. We had just been delivering.”
One consumer insight that surprises her is consumers sometimes see new technology before the brand name, which she discovered after listening to women excitedly talk about a double-ended mascara with a lash-growing serum. While they could easily list the product’s benefits, they couldn’t remember which brand made it.
Using that insight as a guide, Wal-Mart’s beauty brands now carve out space (read: remove some product) within their displays to tout new items, technology and product benefits. The changes are all in the name of the consumer.
“The past is the past,” says Bauza. “This is a new day.…We have to shake it up.”