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At Belk, beauty continues to be big business, and its management team continues to nurture it with a laser-sharp demographic focus, a dedication to a diverse customer base and new retail concepts.
This story first appeared in the March 18, 2013 issue of WWD. Subscribe Today.
“We just finished another good year with strong comp-store increases,” said David Neri, executive vice president and general merchandise manager at Belk Store Services. “We continue to evaluate and see where the opportunities are, both in beauty and in fragrances. We follow the ‘Modern. Southern. Style.’ mantra, and that has really helped focus the buyers when we’re looking at white space [in the department.]
“We have a very large cosmetics business that penetrates very highly, and we own our market share in our footprint. We’ve worked toward those market-share numbers, and we measure them monthly and quarterly, so if there’s a trouble spot, we know where it is and where we need to go to fix it.”
Neri noted that skin care and color cosmetics are both trending “extremely strong.”
“There’s been a nice evolution from the vendors themselves — they’re kind of reinventing themselves as they go along,” he said. “Skin care has made a major resurgence.”
Neri estimated that roughly 40 percent of his beauty business is done in fragrances, with color and skin care each generating about 30 percent of the business. “That varies by region and store, obviously,” he noted. It’s also driven by the fact that the retailer has partnerships with brands that are only available in select Belk’s doors, like Bobbi Brown, MAC Cosmetics, Kiehl’s, Origins and Laura Mercier.
“We cherish those relationships, but they are not all-door vendors,” he said. “We work with them to put them in the right stores at the right time, not only for us but for them. Because most of those vendors aren’t fragrance suppliers, it skews color/treatment a little at the top end when you start talking about penetration of fragrance to color and treatment.”
A main focus for Neri within this assortment is the ability to offer beauty brands for women of all races.
“Being in the South, we have a wide and diverse customer base, and there are a lot more opportunities there than there were even two years ago,” he said. “We know how to buy that, we know the stores where it’s more important. Within our total strategy, we have a diverse market [plan]. Whether it’s an African-American or Hispanic customer, we have a pretty good idea of what stores are stronger in those arenas, and our color and skin-care assortments are now more focused because of that strategy on diverse customers. There are more color shades out there now because the vendor community is focused on being able to serve more than just one customer.”
Foundation shades formulated for African-American, Hispanic and Asian skin tones by companies like MAC Cosmetics have led that charge, he pointed out.
“[MAC] really made the industry notice that there’s more diverse customers out there, and they’ve done an excellent job of servicing those customers,” he said.
One vendor Neri wouldn’t name recently told him that the vendor is expanding its foundation shade range from seven shades to 20.
“It underlines the importance of being able to service the diverse customer, as that’s a growing part of the population of the U.S., and there’s no reason why we can’t service these customers. Once a customer finds a foundation shade, she’s very loyal to it, so there’s a repeat business there that comes naturally.”
Neri said finding brands that serve the broad range of customers is an ongoing search.
“We’re working with our existing vendor base, but also others. We just launched Carol’s Daughter last year. What’s interesting about that is [we] bought into it, thinking it would service a diverse customer — and it is — but the product line is so large that it can service anyone. I think that’s a message they’re really trying to get out to the world.”
While fragrances overall are strong for Belk, new scents have experienced a few more challenges in the retailer’s doors lately. “The lady in the South loves her fragrances,” said Neri. But more and more, he pointed out, she’s buying the tried-and-true rather than the newest thing.
“Lately, newness hasn’t worked as well with fragrances as it has in the past,” said Neri. “There are a lot of celebrity beauty brands coming and going. But if you really dive into our business, the classics are very strong, whether you’re talking about Chanel, [Estée Lauder’s] Beautiful, [Ralph Lauren’s] Romance, to name just a few. They are very big, very penetrated businesses, and they continue to grow.”
Some launches have been stronger than others, he said, adding that new products haven’t really taken hold.
“Last year was not a good year for newness that really found a niche and is going to stay around for a while, so we really concentrated on our basic business,” he explained. “We don’t shy away from newness — it is part of the strategy — but our basic business is the strongest it’s been in five years.”
That especially applies to blockbuster beauty brands like Estée Lauder and Lancôme, he said. “The Big Three fragrances have been strong. We’ve had a nice resurgence not only in Trésor, which has been around with Lancôme for a few years now, but also with [2012 launch] La Vie est Belle. Beautiful from Lauder is one of our top sellers. It’s part of being in the South and knowing who your customers are. In the South, the customer is very loyal. When she finds a brand she likes, she sticks with it.”
Reeling off a list of “tried and true” beauty brands which included Chanel, Dior, Calvin Klein and Clinique, he noted that all are a big part of the beauty department’s success. Designer fragrances and cosmetics are strong performers. “They’re designer labels that you can bring to your store, and that may be the only place they are in the store — in fragrances,” he said. “So it adds credibility to who we are, to what we can offer the customer, and we continue to grow that. In some of the smaller towns, she can’t buy [designer offerings] anywhere else.”
A recent gift-with-purchase success has been Estée Lauder’s makeup bag partnership with quintessential preppy brand Lilly Pulitzer. “Talk about something that was tailor-made for Belk,” said Neri, referring both to his customer’s affinity for the fashion and cosmetics brands and to Lauder’s exclusive designs for each participating retailer. “We have a very strong Lilly Pulitzer ready-to-wear business, and for Lauder to come up with a gift with Lilly Pulitzer — that just says ‘modern Southern style’ all over it. That was a very strong gift.”
Neri is also seeing a strong trend toward fragrances in 1-oz. travel sizes. “We’ve taken a leadership role on this over the last 24 months,” he said. “There’s been a lot of conversation [asking if] a 1 oz. is trading down the customer from a 1.7 oz., and we really haven’t seen that. The 1-oz. program has become affordable luxury for another segment of customer — a younger customer who can’t afford the $100 bottle but can afford the 1-oz. travel spray. We’re also seeing a resurgence of the 3.4-oz. size because she’s buying the 1-oz. size to try out the fragrance, and she comes back because she liked it and wants to buy the 3.4 oz. It’s a very nice balance.”
Looking forward, Neri plans “to marry up offerings to the overall Belk flagship strategy. We very recently came out and spoke about our flagship strategy, the number of doors we [currently] have that fit that criteria and the number of doors going forward that fit that criteria. Those are the larger doors, and obviously they can carry a larger array of products. So whether it’s fragrance, skin care or color, we’re looking to expand the offerings in those doors. If there’s not a Bobbi there, if there’s not a MAC there and it demographically fits, we’re revisiting those specialty vendors to inject those brands into the right places.
“There’s a major effort on the flagship strategy around color and treatment, and expanded assortments in fragrances,” he continued. “So yes, we have a very strong and healthy basic business, but we’re looking for [additional prestige brands.]”
Without revealing too much, Neri outlined the broad strokes of a new strategy that will begin rolling out this fall. “When you look across our stores, and you look at our ‘Modern. Southern. Style.’ tag line and offering, it means different things to different people. It isn’t so much a location as it is a mind-set in terms of Southern. If you’re looking at the whole store, you’re seeing color, you’re seeing fashion — but if you looked at it two years ago in cosmetics, not so much. So we’re making a very strategic move — how do you service that modern Southern customer who’s been a loyal Belk’s customer, but now she has a younger daughter who may be buying her shoes from us but who may not have been buying cosmetics from us. We are creating a new concept that will fit in the space of our cosmetics world and really service this modern customer — underlining modern and how it relates to cosmetics. So if she’s coming in for her Michael Kors handbag, do we have the right brands for her? Do we have what she’s looking for, whether it’s a lipstick or nail polish or just the right color or treatment she’s looking for?
“We have a new concept we’re about to test that I think is a bit revolutionary, but we think it’s the right fit and that we’ve figured out [how to implement it],” he concluded. “We’re going to launch it in seven stores this fall, and then we’ll determine the rollout beyond that, but that will be a major move for us in cosmetics over the next two to three years.”