The prestige beauty business continues to move ahead as the holiday shopping season approaches its critical phase, beginning next week.
This story first appeared in the December 16, 2011 issue of WWD. Subscribe Today.
That was the consensus emerging from a spot check of interviews with retail executives and market analysts.
“We continue to be pleased with the very strong performance of the beauty business,” said Howard Kreitzman, vice president of cosmetics and fragrances at Bloomingdale’s.
He admitted that this year has been “a roller coaster” with the shift of Chanukah from early in the month last year to next Tuesday this year. But the extra shopping day on Saturday — generally the busiest day of the week — will be a major plus.
At Nordstrom, Laurie Black, executive vice president and general merchandise manager of cosmetics, said her business has been on track with double-digit gains, particularly in treatment and fragrance, and she plans to finish the selling season ahead in the high single digits.
“It looks like we are seeing a continuation of record growth this season,” said Karen Grant, vice president and senior global industry analyst at The NPD Group. While it is difficult to judge with the selling season still in mid-flight, Grant talked about “the momentum being just so strong.” She said that consumer sentiment seems to be running slightly more positive than the recent Conference Board poll.
Macy’s, which controls an estimated 50 percent of the prestige fragrance business, declined to participate in the survey. But market sources gave wide-ranging assessments of the department store chain’s beauty performance, ranging from running ahead of the market but with inconsistent strength that will depend on the final days and hours. Another viewpoint is that Macy’s business is gathering momentum approaching a 10 percent gain for the first two weeks of December.
Looking at the overall market, Grant at NPD described this fall as a season of powerful fragrance launches, ranging from an onslaught of designer brands led by Gucci Guilty Homme, Marc Jacobs’ Daisy Eau So Fresh and the new Jimmy Choo introduction to a powerful tag team of celebrity launches in the form of Justin Bieber’s Someday and Taylor Swift’s Wonderstruck.
Referring to the latter two, Grant speculated that this may be the first year that a celebrity scent pushes aside classic brands to land in the top 10. However, the classics are coming on very strong — exemplified by Chanel, Donna Karan’s Cashmere Mist and Giorgio Armani’s Acqua Di Gio for Men. Skin care continues to sell well and makeup is riding a renaissance of glamour and femininity.
“It is very good to see the business performing all across the board,” Bloomingdale’s Kreitzman continued. “It’s very strong in the high-end skin care and in the opening price points — Clinique and MAC Cosmetics. The middle of the business is equally strong,” he said, adding “we’re firing on all cylinders.” He noted that both men’s and women’s fragrances are selling well, which is a rare occurrence. Although the fragrance launches this year have been “a mixed bag,” Kreitzman said, the high-priced limited distribution scents like Viktor & Rolf’s Flowerbomb have done well and it’s an “open secret” how strongly the Chanel brand is surging. Customers clearly responded to Chanel’s TV advertising, he said. While it is unclear what effect the new advertising is having for Dior’s J’adore scent, the fragrance’s performance “has been quite good,” he noted.
In the past, TV advertising has normally been reserved for fragrances during the holidays, but manufacturers are now talking about other times of the year, mostly in skin care. “We’ve heard about lots of people really pursuing TV,” Kreitzman said, describing the effort as “a toe in the water for spring.”
Kreitzman refused to discuss numbers, but acknowledged that his goal was to do better than last year. According to industry sources, Bloomingdale’s had a gain for December in 2010 in the strong single digits.
Black at Nordstrom said customers have responded well to a number of innovations that the store has pioneered, mostly involving a more focused use of fragrance modeling and sampling. Also the store has switched to a policy called “sample and hello,” which means customers are handed a bottle when they enter the department. This differs sharply from the industrywide practice of giving a sample as the customer is leaving, or “sample and goodbye.” By greeting shoppers with a gift, “it immediately puts the customers at ease,” Black said.
In terms of new product launches, Nordstrom has a hit with Prada Candy “as strong as any launch we had” and did not have the benefit of modeling. Strong businesses also have been done in women’s fragrances, treatment lines attached to designer brands like Chanel and Dior and new launches including Katy Perry’s Meow, Gucci Guilty Homme, Amazing Grace from Philosophy and Coach Poppy. Blue de Chanel also has been strong in men’s. The classics have been strong, including Burberry Brit, Flower Bomb, Coco Mademoiselle and the rest of Chanel.