Lauder’s BeautyBank in Deal With HSN

BeautyBank hopes to bring a whole new meaning to the phrase "only available through this special TV offer."

BeautyBank hopes to bring a whole new meaning to the phrase “only available through this special TV offer.”

This story first appeared in the March 6, 2008 issue of WWD.  Subscribe Today.

The subsidiary of the Estée Lauder Cos. Inc. has signed a deal with Home Shopping Network, an operating business of IAC Retailing, to create a beauty brand that will be exclusive to the shopping channel. It is expected to launch in July.

“BeautyBank’s mission as the entrepreneurial think tank division of Lauder is to seek out new customers and new distribution opportunities in alternative channels,” said Jane Hudis, founder and president of BeautyBank. “We believe that we have a perfect opportunity to do that by partnering with HSN.”

Since its inception in 2004, the BeautyBank division has created the Flirt!, Good Skin, American Beauty, Grassroots and Daisy Fuentes Beauty lines available at Kohl’s department stores, and has collaborated with Coach to launch the women’s fragrance sold exclusively in Coach retail stores. Several of the BeautyBank lines sold in Kohl’s stores domestically also are being distributed internationally.

Selling on TV is nothing new for Lauder, which has sold Prescriptives and a number of its other mainstream brands on QVC for the past several years, or for the industry. But Hudis said, “This is the first of its kind deal between a prestige beauty company and a TV retailer, as we are developing an upscale line solely for HSN.”

In December 2006, HSN teamed up with Sephora, which put a slew of its marquee brands on the air.

Hudis declined to give many details about the proprietary HSN products, except that the brand will “utilize strong visual elements, paired with innovating demonstration techniques, and will incorporate proprietary BeautyBank technology and ingredients. For this channel, products have to be story-rich and visual, which we took on as our challenge. It will at first be a limited stockkeeping unit brand, but it will evolve over time.”

Mindy Grossman, chief executive officer of IAC Retailing, an arm of Barry Diller’s InterActive Corp., said she sees the BeautyBank partnership as a continuing piece of the channel’s evolution.

“Beauty, as a category, has undergone a transformation since I joined the company about two years ago,” she said, adding that, at the time, much of the channel’s business was done in mature skin care products. “When I got here, the business was narrow on brands, and most of the brands were not prestige. Over the last 14 months, we’ve concentrated on revamping our portfolio and positioning ourselves as an aspirational beauty destination with great stories and great products. Our aim is to offer both best-of-category brands as well as exclusive products not only on TV, but also on hsn.com.”

To that end, HSN began partnering with Sephora — with both the retailer’s house line and brands now available to HSN shoppers such as Bliss, Cargo, Dior and Clarins — and has added upward of 40 beauty brands in the last year, Grossman said. In total, the retailer now offers about 75 beauty brands — and more will be added, she said.

“Beauty is the most demonstrable category in our business and it lends itself particularly well to our multichannel assets, which include TV, online, podcasts and assorted multimedia,” added Grossman. “It is also one of our fastest-growing segments. We truly believe in new media and this deal is a creative opportunity to leverage that.”

Another strategic move under Grossman’s watch has been a partnership with fashion retailer Scoop, which has given the channel access to brands such as Seven For All Mankind.

“We’re in 90 million homes, just with TV, every day,” Grossman said, adding that 80 percent of HSN shoppers are women, ranging in age from 25 to 54, with an average household income topping $60,000. “We can have tremendous business in the beauty category and others by paying attention to great products, as well as offering a balance between education, inspiration and entertainment as we’re selling them.”

IAC Retailing reported sales of about $3 billion in 2007, and Lauder reported net sales of approximately $7 billion in fiscal year 2007. Grossman said HSN is the fourth-largest cable network in the U.S. and its Web site ranks in the top 30 of the top 500 Internet retailers.

While neither Hudis nor Grossman would discuss sales projections, industry sources estimated that the beauty brand would do upward of $15 million in retail sales yearly.

And speaking of sales, one part of Grossman’s selling strategy for the new beauty brand is to promote it in the packages of other HSN products. “We ship 35 million packages a year, and that is a great promotional vehicle,” she said. “We look at our platform as a 360-degree business and focus our efforts on promoting the best products in a number of different, sometimes nontraditional, ways.”

Meanwhile, BeautyBank has been globalizing its brands. As a first step, Good Skin Labs was created as a subbrand devoted to offering high-performance skin care. The first offspring was a $39.50 Tri-Aktiline Instant Deep Wrinkle Filler. According to Hudis, it “blew out” at Kohl’s, paving the way for an international launch. The one sku line was rolled out across Sephora’s 536-door pan-European chain, where it ranks number one in the treatment category. Then the product was introduced in the Cosmed pharmacy in Taiwan, sold on Direct TV in Korea and introduced in Boots The Chemists in the U.K., Hudis noted that Good Skin Labs has more products in the pipeline. One addition has been Eyliplex-2, a day and night eye cream.

“It really is a global brand,” she noted, adding that as an experiment, American Beauty, Flirt! and Good Skin will be launched in May in a limited number of doors in Target in Australia. As for the original Kohl’s business, Hudis said that it remains “on plan,” which is gratifying considering “the tough retail environment” that now grips the market. “So we are pleased,” she said, pointing to the Tri-Aktiline success.