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The beleaguered Sears is circling back into full-service beauty in a big way, following a costly and abrupt exit eight years ago.
This story first appeared in the August 28, 2009 issue of WWD. Subscribe Today.
Over the next two weekends, Sears Holdings Corp. will open 13 full-service beauty departments in select malls in Chicago, Los Angeles and New York in an attempt to right a ship that’s been listing for years. Sears Holdings lost $94 million in its most recent quarter.
Sears is the second major midtier national department store, following J.C. Penney, to reenter the beauty arena.
Sears has dipped in and out of cosmetics over the years, with the splashiest attempt being its Circle of Beauty concept that was yanked in 2001. Sears also was one of several midtier department stores slated to receive Avon’s retail line, called BeComing, but the direct seller abandoned the effort in 2003.
This time, Sears is stocking a variety of price points in a department staffed with vendor-trained consultants who will earn commissions. Among the brands are drugstore staples, including L’Oréal Paris and Cover Girl; a U.S. exclusive with Yves Rocher and Pure Organics, and a dash of prestige products, such as Calvin Klein color kits. An already well-developed fragrance department will be augmented with more direct-sourced prestige scents.
“Sears will be the only mass-based department store to exclusively offer an assortment of mass, specialty and prestige beauty brands,” said Andrea Goldner, divisional merchandise manager, Sears Beauty. She thinks the timing is right for such a mix, since many consumers are trading out of department stores to pinch pennies.
Wendy Liebmann, founder and chief executive officer of WSL Strategic Retail, said it is savvy for Sears to go the mass route and realize the difficulties in attracting prestige brands. “If you are going to step your well-manicured toe into beauty, mass is a good way to go and it’s at a good point, when you can’t find popular-priced cosmetics at a mall anymore.”
Malls used to house drugstores, but the need for drive-through pharmacy windows has driven most chains out of malls.
Sears’ research and consumer insights reveal its shoppers miss the category and want beauty choices. “More than 70 percent of our customers are purchasing in the food, drug and mass channels. Customers are telling us they want to buy [beauty] at Sears in a customer-focused setting,” said Goldner, who had been part of the Circle of Beauty team for Sears and who had also held beauty posts at Kmart. Sears and Kmart are both owned by Sears Holdings.
Sears hopes a pumped-up beauty assortment will attract younger consumers to its doors. The core Sears shopper is aged 35-plus, but expanded beauty could lure younger customers. “We want to increase our transactions and make better use of floor space and serve consumer needs from head to toe,” said Goldner.
“It is strategically smart for Sears to do this because they are under profit pressure and at the same time they want women to spend more time in their stores,” said Burt P. Flickinger 3rd, managing director for consulting firm Strategic Resource Group. “In these economic times women are reluctant to go to luxury stores where they know prices are marked up 100 percent.” He added that Sears has seen the success that national chains, such as CVS Pharmacy, have had with beauty and want their percent of the pie.
Industry consultant Allan Mottus agreed. “Everyone is looking for the magic elixir,” he said of efforts to get sales humming. “Sears has an in with the mass brands from Kmart and it is a small inventory risk,” Mottus said, referring to other categories, such as apparel.
But, the experts warn Sears must execute the strategy well beyond the 13 stores and ensure there is a commitment to beauty.
Sears has been testing some of the brands, such as L’Oréal Paris, in a store located in Costa Mesa, Calif., with success, according to L’Oréal executives. Sears hopes to have another 150 stores retrofitted with the beauty concept by 2010 with a goal of 400 by 2012. The company operates about 929 full-line Sears stores.
Existing Sears units sell mostly fragrances and bath products in a 1,500-square-foot section. The new department, located primarily on the main floor near accessories, is 3,000 square feet to accommodate expanded assortments. “Our new department has all the key pillars of beauty — color, skin care, fragrance, bath and health and wellness,” said Goldner. In her view, trained beauty advisers will separate Sears’ effort from drugstores and discount stores.
While she acknowledged that advances have been made in mass stores in terms of service, she pointed out the vendor-based training and commission pay basis for the Sears consultants is unique. Some industry sources likened Sears’ effort to a mall-based Ulta (without the salon), with the sales strategy of old-time drugstores where staff was trained by the vendors and earned promotional monies. Each store will have anywhere from four to six advisers, dressed in black smocks, with availability based on peak sales hours.
Liebmann said that in order for service to work, it must be top-notched or a great experience can be tarnished with a half-hearted approach. She said finding the right recipe for service has been challenging for mass merchants since it is an expensive proposition.
In conjunction with the in-store effort, Sears has expanded its beauty presence on sears.com. Goldner said sales online are soaring since the selection is not limited by shelf space. In the Sears beauty concept, there are kiosks where consumers can go online to choose from items not found in the store, including more than 3,000 fragrances listed on the Web site. Although many brands included in the space are traditional mass market lines, they are presented in an upscale fashion with illuminated fixtures and glass shelving. Sears is merging its own fixtures with vendors’ so that the marketing efforts suppliers invest in to establish brands is not lost on the consumers, Goldner explained.
Vendors are pleased with Sears’ efforts. “Sears has done a truly wonderful job positioning their new beauty center with some very select brands, unique merchandising and specialized marketing,” said Grant Berry, founder and ceo of Styli-Style, a brand in the new look. “Not only are we very excited to be a part of it, but we hope and think that they will be very successful with it.”
Christina Hane, spokeswomen for Yves Rocher, agreed and said Sears was the perfect place for Yves Rocher to test the waters in America again. And, Yves Rocher offers Sears an exclusive for its customers, added Goldner.
Styli-Style and Yves Rocher join brands such as Mineral Essence, L’Oréal, Cover Girl, Physicians Formula, Milani, Iman, Sally Hansen, Borghese nail, Rimmel, Lumene, Ahava, Burt’s Bees, Judith August, Retinol, Elizabeth Arden Green Tea and Naturally by Upper Canada in the mix. Sears is also eyeing developing the men’s category and is offering L’Oréal’s men’s items.
Goldner said there are opportunities for more brands, especially in skin care. In fragrances, Sears already has a “nice balance” of mass and midtier, she said, adding that Gwen Stefani’s Harajuku Lovers is currently launching. Sears is the second step for many celebrity fragrances and will be home to J.Lo’s My Glow, Paris Hilton’s Siren, Britney Spears’ Circus and Coty’s Faith Hill. Mottus said that like many other merchants, Sears will undoubtedly hope the look and service of the department will open doors with more premium vendors, too.
Also differentiating Sears from mass competition, said Goldner, will be gift with purchase and other events. For the opening, Sears will have free makeovers, sampling, gifts and a chance to win gift baskets. There will be a free cosmetic bag and brush set with any $25 cosmetics, fragrance or bath purchase and a $10 Sears Reward card with any $50 cosmetics, fragrance or bath purchase. Although there will be deals such as buy one get one free for the opening, most pricing will be manufacturers’ suggested retail.
“The challenge will be to see if Sears can reestablish itself as a destination for beauty,” said Liebmann, who explained Sears’ earlier tries failed because the retailer wasn’t known for beauty at that time. Circle of Beauty, for example, did not have a consumer awareness.
“Now they’ll have to make themselves an acceptable place to buy beauty amidst their big pushes such as appliances,” she concluded.
Penney’s continues to roll out Sephora units in many of its new and renovated stores. Last year, Myron E. “Mike” Ullman 3rd, chairman and ceo of J.C. Penney Co. Inc., said, without providing specifics, the Sephora shops generate sales as much as two-and-a-half times stronger than merchandise previously sold in the footprint now taken up by the beauty boutique.
Penney’s has outfitted roughly 120 stores with Sephora boutiques.