By  on June 15, 2007

Five of the most-watched retailers reveal how they tackle beauty's five most pressing issues. The trailblazers on our panel discuss how they create compelling shopping experiences, what their product mix says about their stores and why exclusives are more important than ever before.

Howard Kreitzman
vice president
cosmetics and fragrances

Deborah Walters
senior vice president, gmm
cosmetics and fragrances
Saks Fifth Avenue

Allen Burke
director of beauty merchandising

Nicky Kinnaird
president and creative director
Pace NK

Cheryl Mahoney
vice president of merchandising for beauty care
CVS Pharmacy

When it comes to beauty, what do you want to be known for, and what steps are you taking to give customers an experiential, rather than transactional, shopping environment?

HK/Bloomingdale’s: What is most important to us is that we offer the brands that our customers want to buy that are consistent with the upscale nature of the rest of Bloomingdale’s assortment. And we want to provide the opportunity to buy those brands from the most knowledgeable sales associates in the world. Sales associates are the only way we can differentiate ourselves. We all sell the same flavor of ice cream. In terms of experience, the high-cost answer is the way that we build our store. I just returned from California where we opened South Coast Plaza. The store has personalized installations for each of the [beauty] brands. Having an environment that is inviting and aesthetically pleasing is part of the experience. The other part is that we are very strongly focused on events. There is nothing that gets the customer’s attention like something going on. We want to have an event happening in every store, every single day. And that’s very hard to do.

DW/Saks Fifth Avenue: We provide our customers with the best brands in beauty and in the most inviting and gracious shopping environment. We are focused on training to ensure that our associates have in-depth product knowledge and can thus provide the very best in personalized
service. We encourage our associates to familiarize themselves with the customers so that we can best service them. Many of our Saks Fifth Avenue locations have a highly advanced point-of-sale clienteling system that allows us great visibility into our customer’s preferences, which makes all the difference. In addition, Saks Fifth Avenue has a strong calendar of not-to-be-missed, highly personalized events, including by-appointment spa-facials, master classes with skilled makeup artists and public appearances.

AB/QVC: Our vision is to be the beauty channel, which we define as the place where you meet the top experts and see the best brands and the hottest items. The customer sees products demonstrated by authorities they really trust. They see the most current technology and scientific breakthroughs. That’s a compelling vision, and we are delivering on it better every day. We have incredible respect for our customers. We’ve done a little digging into it and we know that our customers read all the magazines and do a lot of shopping with [our] competitors.

NK/Space NK: We are recognized for our carefully-edited product selection sourced from all over the world and our unbiased, highly trained expert advisers and makeup artists. We all love to be in the know about the best products and how to use them, get tips from the experts and discover the inspirations behind the concepts and fragrances. We bring tips, trends and product suggestions
to our customers through informative, open-forum seminars [hosted by] experts in the field. We also do catalogue mailings to directly service the customer.

CM/CVS: We want to be known as an innovator in beauty. We strive to “reinvent” the drugstore beauty experience for our customers. We offer an enhanced in-store environment that is easy to shop. We do this through our store format with lower shelves so she can see over them and navigate the store, as well as by back-lighting on our shelves to give a more upscale feeling. We also have shelf-talkers to call out specific products, which focus on educating her about product benefits. We focus on her experience through the service she gets in the store—including by having 1,000 beauty advisers by the end of 2007 and by educating our store employees about our beauty products and offerings.

What are you doing to retain your customers?

HK: We are doing a better job today on this subject than we were five years ago, and I would imagine not nearly as good a job as we will do five years from now. It is a very difficult subject because it’s tough to get the beauty adviser to call the customer. Whether she uses a high-tech computer system or index cards, the real key to customer service is that someone has to pick up the phone and call the customer. That is a real challenge. The privacy laws are not nearly as much of an obstacle as the spirit of beauty advisers to go do it. You have to ask for the customer’s permission to call, and you can’t get the contact info from another department. We do a fairly good job of communicating to our customers about our big events, but there’s a lot of opportunity for one-on-one contact.

DW: We continue to source and launch the best and newest products across all categories. Our goal is to introduce unique and differentiated concepts in both products and events. In addition, the new POS clienteling system has once again given us a great platform in which to service our clientele in a very proactive and personalized way.

AB: The customers’ expectations are going up a little bit every day, and they were high to begin with. We have a core belief that the customer holds you to a very high standard in terms of the basics. They better get precisely what we show them on air promptly, intact, and it better do for them what it said it would do on the air. We work hard every day to make sure that is what we are delivering on. There’s no spin of the day here. We are sort of famous for not having a club, which a lot of retailers have put in place to hold onto a customer base. We try to retain customers simply on the merits of our products and service. Period.

NK: We want to ensure that we stay connected to our customer.We have created seasonal catalogue mailings, regular e-blasts introducing innovation, intimate events in the store, as well as personal appearances and educational seminars with experts in their respective fields. Seminars focus on seasonal makeup application, color cosmetics for professional women and summer beauty, as well as tips on skin preparation and body protection. We will be initiating same-day delivery service in our New York stores to meet the demand of our busy customers and bring Space NK to them when they are too busy to come to us [Space NK’s first Manhattan store opens this month at 99 Greene Street].

CM: Our ExtraCare [membership card] program builds incredible loyalty with our customers. New updates to the program—including ExtraBucks Now, which offers an immediate payout when a purchase is made—has gotten a very positive response from our customers. We are also in the process of enhancing our Web site to reflect the in-store beauty experience. And again, expanding the beauty adviser program and communicating with our employees about our beauty offerings is a bigger focus for us now than ever before.

What should beauty brands be doing to better meet the needs of your customers?

HK: The beauty industry does a better job of understanding what their consumers want and providing it to them than just about any other industry I’ve been in. On the product side, the brands are very aggressive within both the treatment segment and product innovation. What could we do better? I think it all goes back to the quality and training of the people.

DW: We encourage our partners to continue to focus on training, education and technology. Saks Fifth Avenue aggressively brings new and differentiated products and concepts to our customers.

AB: It’s all about product innovation. Our customer is an avid beauty shopper and she wants to see something that she hasn’t seen before. Nine years ago, we showed her mineral powder foundations for the first time. The beauty of the QVC model is that we are still selling the same Bare Escentuals mineral foundation that we did then. So when you do show them something that is different and great, they get it immediately. They see us an incubator for new product concepts.

NK: It would be advantageous to spend more time out in the field listening to the end user and to spend time developing truly innovative products rather than “me too” variants of other people’s ideas.

CM: We really want to enhance her in-store experience even further with [product] testers for key items and also provide trial-size products. So, this is something we continue to talk to our vendors about. We also are reinforcing the 100% CVS Beauty Guarantee so she feels comfortable trying new things without any risk.

What are you doing to make yourself a destination for skin care, fragrance and color cosmetics?

HK: It comes down to the right brands, the right presentation and the right people to assist the customers. In fragrance, we work hard to get as many exclusives as we can, including an exclusive window of time for the launch. Last fall, we launched the Juicy Couture fragrance exclusively
for three months. It was by far the most successful fragrance launch we’ve ever had and the brand is sustaining itself many months past the exclusive [period]. In our experience, fragrance brands that are in 400 to 500 doors are the ones we do the best with. The same is also true for color and treatment brands, including Bobbi Brown, Christian Dior and Laura Mercier. We are sensitive to our customers wanting brands that are special and unique across skin care, fragrance and color.

DW: Saks Fifth Avenue believes the multifaceted combination of our product specialists, makeup artists, personal appearances, events, service, selling exclusive and differentiated products, as well as a motivated store team, are essential in making Saks the destination for beauty.

AB: We can give them an experience that they can’t get other places. That’s what is going to make us a destination. Certainly color and treatment are two of our big three categories, but we would see hair care as the third. It’s a very good business for us. Not that fragrance isn’t important—it’s certainly growing. But hair care is a much more natural business for us because we can do what no other retailer can do and that’s demonstrate the products. It’s just a natural space for us.

NK: We vet everything for our customers and are highly selective about what we introduce to them. We do the legwork for them in overseas markets and they have come to rely on us for showcasing the most innovative and efficacious products.

CM: Our exclusive brands, like Skin Effects by Dr. Jeffrey Dover, make us a destination for beauty, especially skin care. Also, the expansion of our Healthy Skincare Centers [which carry European brands including Vichy and Avène] is something we know our customers are excited about. We now have over 300 centers that focus on the intersection of health and beauty. This is important because our customers think about skin care as a health as well as a beauty issue. For fragrance, we have top designer brands for great value. And for color, we carry products we know she wants through our research. We spend a lot of time finding the right mix of products, versus carrying too many products and having her feel overwhelmed. We also really let trends drive the in-store experience for color and we highlight trends through our displays and signage.

Are exclusives more important to your merchandising mix than they were one or two years ago? Why or why not?

HK: Absolutely. We’ve been successful in acquiring periods of exclusivity for fragrance launches. For other categories, exclusive products are valuable as long as the rest of the pieces are in place. Having an exclusive that no one has ever heard of is not necessarily a win. Also, the product development side of the beauty business is so expensive that brands have to get a return on their investment [with broader distribution]. But where we’ve worked with our partners to develop a period of exclusivity, we’ve been successful.

DW: Exclusives have been key to our strategy and success for many years. By virtue of who we are, a specialty retailer, our customer expects to find unique, exclusive and cutting-edge skin care and color cosmetics. Through our seasonal campaigns we create tremendous customer demand by editing and selecting the key must-have items each season. Saks Fifth Avenue takes a leadership position in the industry for product launches.

AB: Absolutely. We are going into a second phase of our growth. A lot of the retail landscape has changed in an enormous way. Even though a big part of what we do is to create demand for products, which positively impacts retail outlets, we’re seeing the need to have product that is only available at QVC in a significant number of the brand offerings. Exclusives have definitely risen to be of great importance in the last three or four years. What we stand for is a mix of brands that are well known in the U.S. and brands that are not known. That combination of the two is something that we will always be about.

NK: Exclusives are as important as ever to our merchandising mix. They allow us to work very closely with a supplier, helping to nurture and develop their brand, particularly in regard to product development, training, marketing and public relations.

CM: They are more important because they continue to be a way to differentiate ourselves and to build loyalty with customers. We really have been a leader with exclusives and we will continue to innovate in this area.

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