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In a further sign of the tectonic shift taking place in the beauty world, Frédéric Fekkai, one of the ultimate luxury beauty brands ever to hit Fifth Avenue, is headed for Walgreens.
This story first appeared in the December 11, 2009 issue of WWD. Subscribe Today.
And the fallout has already begun: Sephora immediately said it will drop the line.
The decision reflects the quandary facing brands as they head to the mass arena: what’s potentially lost is high-end distribution, but what’s to be gained is significant sales volume on a global basis. And, if Fekkai succeeds, it could have a profound impact on the future marketing of professional hair care brands.
The products headed for mass — reportedly at Target and Walgreens — are the original items, dubbed “classic,” that set the Fekkai brand on fire. The existing prestige distribution will be serviced by the upgraded, more sophisticated line, Fekkai Advanced, that was launched in September to its prestige retail distribution, which includes Saks Fifth Avenue and Neiman Marcus, as well as Sephora.
The classic items include the Glossing, Full Volume and Technician Color lines. Fekkai executives said they comprise 40 percent of the brand’s overall sales. The items will sell for between $20 and $30, just as they did in prestige.
Sources said Fekkai sales generated in Sephora were an estimated $20 million.
Sephora said in a statement at press time, “In light of Frédéric Fekkai’s recent decision to expand into the mass market, Sephora has decided to discontinue in-store sales of Fekkai products.”
While Procter & Gamble, the brand’s owner, would not share its mass distribution strategy or divulge sales projections, industry sources speculate Fekkai Classic is set to enter about 10,000 mass doors over the next year — about 30 percent of total mass distribution — to be merchandised in the pro hair care set, adjacent to premium hair care brands. By the end of 2010, these sources added, Fekkai Classic could have the potential to generate about $30 million.
One analyst, who recently predicted the move to mass was imminent, said the decision “was causing problems with Sephora” but that P&G’s thinking would play as, “Do we let Sephora be angry so we lose $20 million in business but we gain a possible $50 million at [mass]?”
Saks Fifth Avenue declined to comment on the move by Fekkai, and calls to Bloomingdale’s seeking comment were not returned. Sephora, however, said its decision to cut the line is effective in March, and an assortment will remain available on sephora.com as a client service through September.
The expansion to mass from prestige is one the industry, namely L’Oréal, is likely to watch closely as the strategy Procter & Gamble will execute is sure to set a trend if successful. In 2008, Nexxus kicked off the professional to mass strategy, a move highly lauded in the marketplace, but one that is inarguably more low-key, especially since there was no risk at losing distribution.
That the hairstylist brand is entering mass — P&G’s channel of strength — isn’t surprising to many in beauty retailing or even to those on Wall Street.
“Fekkai you knew would be going into mass,” said one analyst, explaining that as soon as P&G bought the brand in 2008 for an estimated $400 million that bringing it to mass was only a matter of time. Select Target stores have already been known to carry Fekkai products, but P&G insists the items are diverted.
“It’s also the only way they could justify what they paid for it,” the analyst added.
One mass industry insider said the move, especially given the economy, was extremely risky, not only in how it may impact Fekkai’s existing prestige retail base, but also in how Fekkai is entering a category that is losing sales.
“It’s almost as if they don’t understand the pro hair care market at mass today. It’s off by 8 percent. That’s because [consumers] don’t want to pay that much for hair care, shampoo and styling products now. Fekkai will have to convince the customer to pay $20 for a shampoo,” the source said.
The insider said brand recognition would be a challenge, too.
“The woman in Middle America, she has no idea who Frédéric Fekkai is.”
Despite the obvious risks, P&G’s Julie Woffington, managing director at Frédéric Fekkai, said the company did extensive research on the brand and found about 90 percent of customers who would buy Fekkai in the mass market would be new to the brand.
“We are targeting a consumer who is new to Fekkai,” said Woffington, adding only 8 percent of mass shoppers buy Fekkai in prestige. The idea, she said, is to “use prestige to lead the brand” in areas such as product innovation and advertising.
New items, then, would first be introduced to the prestige channel, and if it made sense, could then trickle down to mass. Advertisements in print magazines, such as what is featured in W and Vanity Fair, would continue to highlight the Fekkai Advanced brand with the idea this “excitement” would “halo” into excitement for the mass business.
Confusion between the two lines would be minimal, predicted Woffington, since the prestige shopper “wants a level of service; she wants what she is used to in prestige, and she will know the difference between the two ranges. Just like in fashion” where designers create lines specifically for lower-tier retailers such as H&M.
To make sure shoppers know Fekkai will soon enter a drugstore near them, Fekkai has partnered with retailers such as Target to use their scan data to find out who is already buying into the category, spending $15 and higher on hair care. These customers are set to receive direct mailers just prior to launch which have been designed to “introduce” the shopper to the Fekkai brand, complete with a customized foldout card that features black-and-white photography of Fekkai, product imagery and a company biography. The mailers are so targeted that women who tend to buy items for color-treated hair will receive packettes of Technician Color Care; those who tend to buy items to help with volume will receive samples of Full Volume, and so on.
In response to Sephora’s decision to discontinue the line, Woffington said, “We respect Sephora’s decision and remain intensely committed to the prestige channel.” She reiterated “all new innovation, design and services” will launch into prestige outlets and the brand’s most important goal “is to satisfy the Fekkai consumer.” Frédéric Fekkai said he is pleased with the new broader distribution, as he himself is part of how the New World shops.
“I love to go to Target and Whole Foods, as well as Hermès. I’m very excited to go broader and bring an upscale experience,” he said.
Fekkai is also sold at Nordstrom, Bloomingdale’s and Lord & Taylor for a total of about $25 million in the prestige channel overall, experts said.
Industry watcher Allan Mottus has mixed opinions on the expansion, saying “at this stage, you don’t know who belongs where. Prestige is dying a lousy death, so to start bridging yourself out is not a bad move. Salons are not noted for retail anyway.” However, he contented, “They are looking to operate a high-end business in a promotional discounter, such as Target. It doesn’t make sense.”
Another industry watcher said, “If history repeats itself, Fekkai will turn out like Nexxus, which now is like a commodity brand. At the end of the day, the retailer had to cut out major items and proven items in their pro hair sets, like the Sexy Hair and Shapers brands.”
However, Wendy Liebmann, ceo and co-founder of WSL Strategic Retail, saw the entry as the sign of the times, one that reflects how women shop.
“It is incredibly relevant,” said Liebmann of the move. “One of the biggest things we are seeing is how brands have to follow the shopper, who at this point doesn’t see prestige or mass anymore. She just wants to know if she can get the brand legitimately. When you see this going on, it’s about creating a world in which shoppers have more access.”