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Cos Bar Weathers Recession, Expands in Calif.

The Cos Bar isn?t immune to the recession, but the beauty retailer appears to be surviving it better than most.

Inside a Cos Bar store.

The Cos Bar isn’t immune to the recession, but the beauty retailer appears to be surviving it better than most.

This story first appeared in the September 18, 2009 issue of WWD.  Subscribe Today.

The company said sales for the 11-unit beauty chain in September, for example, are projected to be down in the single digits. But for October and the holiday months, sales are expected to be flat, or at least coming in at up or down 2 percent, officials continued. Sales projections for 2009 are down approximately 10 percent, according to industry sources, far less of a decline than expected in this economy.

Lily Garfield, owner of The Cos Bar, which sells department store brands of cosmetics, bath and body and skin care products in upscale markets where department stores are more than a 20-minute drive away, said that overall gross sales have been affected by the economy, mainly attributed to aspirational customers keeping their hands in their pockets. Garfield’s son, Oliver, who handles operations and financial responsibilities, added that the chain’s average unit sale is up by just over 4 percent, as their bread-and-butter customer is still shopping there.

“With customer traffic unquestionably slower, we know this is inevitable. Relative to what other retailers in the luxury prestige industry are experiencing, we are very happy with our performance. I think the fact that we are opening another door in 2009 demonstrates our comfort with business performance,” said Garfield.

Indeed, The Cos Bar, which opened its first unit in Aspen, Colo., in 1976, is planning new store for Montecito, Calif., in mid-November.

Some Cos Bar units have suffered more than others, such as The Cos Bar at Wailea, Maui.

“The more of a destination a door is, the greater the impact of the recession. Maui is a relatively global destination, and certainly an expensive one, too. Without a doubt, total visitors to the island are down dramatically. People are just not traveling as much to Maui and other cache destination resorts,” Garfield said.

However, stores in Santa Fe, Carmel and Edina, Minn., are maintaining sales and even growing, she said.

“For Santa Fe and Carmel, both have a 12-month affluent resident and both are accessible by automobile travel. Edina is doing well because the customer is a local affluent resident who prefers to shop in her backyard. Also, many shoppers from across the Minneapolis suburbs are continually discovering Cos Bar, and giving us their year-round business,” Garfield said.

The Montecito store, which will measure 1,000 square feet, will fit in well with “the quaint downtown shopping feel that is there with all of the small boutiques,” said Oliver. According to industry sources, Cos Bar stores average between $800 and $1,500 per year in sales per square foot with the average store size at 1,100 square feet.

Garfield finds new locations in several ways. Aspen, where she lives, is home to many developers. Through them, Garfield learns of new lifestyle centers they’re building, places that are ripe for an upscale beauty boutique.

She also has learned to go to markets where department stores are closing. The Santa Fe location, which opened in the mid-Eighties, started at the suggestion of friend and mentor Leonard Lauder, former chief executive of the Estée Lauder Cos. Inc.

“He lost a department store there called Dunlaps and he wanted a strategic location” that could service the beauty consumers in the area, said Garfield.

And, when Saks Fifth Avenue closed in Carmel, a Cos Bar popped up soon after.

Garfield also chooses locations void of a department store. The neighborhoods she nestles into have an average household income of $90,000 to $140,000.

“We walk around the neighborhood and you just know by the customers going into the stores” if an area is right, said Garfield.

Cos Bar only carries multinational brands, such as Lancôme, Clinique, Chanel, Dior, La Prairie, La Mer, Estée Lauder (in two stores), Bobbi Brown, Natura Bissé, Amore Pacific, Laura Mercier and Clé de Peau and have stuck to them exclusively.

“There’s just no place for small indie brands in Cos Bar,” she said recalling the one time years ago when she added Vincent Longo, Erno Laszlo and B. Kamins to the mix. “It just didn’t work.”

All staff are trained by each individual brand, who Garfield said make suggestions based on regimen.

But doing business as a small chain, where stores average 1,000 square feet, isn’t always easy.

“We fight for boutique displays. And when we get an account executive who gets us, that’s great. But if we get someone who has only dealt with department stores his whole career, it’s more difficult. They need to think out of the box. We are considered the lost stepchild and we don’t do the volume [that department stores do] but we showcase [beauty] beautifully. Vendors are more profitable with us.”

Garfield, who likes to think skin care products should be shown as one would present jewelry, caters to the 35- to 65-year-old crowd, who are the top 5 percent of baby boomers.

At 27, the younger Garfield is new to the beauty business but learned the ropes during two summer internships at Estée Lauder and a floor position at Bloomingdale’s management training program. He joined Cos Bar four years ago.

New stores are planned for 2010, but Oliver said they’ll wait until October’s comp-store sales come in to see if they move forward with those plans.