By  on December 2, 1994

MOUNT POCONO, Pa. -- Ames Department Stores Inc. is back in love with beauty.

Three years ago, Ames grew fascinated with housewares, toys and other hard lines and decided to deemphasize cosmetics, since the category didn't fit into the new focus. Beauty products were shoved into the health and beauty aids department.

In June, however, the discount retailer -- the nation's fifth largest, with sales last year in excess of $2.2 billion -- had a change of heart, following the appointment of Joe Ettore as president and chief executive officer. Ettore is a strong believer in the profit potential of cosmetics, apparel and related soft lines. A man with a reputation as a wizard with fashion merchandise, he helped rejuvenate Jamesway in Secaucus, N.J., and Stuarts Department Stores in Franklin, Mass.

In both cases, Ettore steered the chains out of financial trouble by emphasizing higher-gross-margin businesses.

Now the chain is charging back into beauty. Ames unveiled its blueprint for the cosmetics category in a 72,000-square-foot store here, Nov. 14.

It is the company's first new store in four years, and the design reflects the chain's new direction since battling back from Chapter 11 in December 1992.

Sources estimated that the store -- which concentrates on apparel, jewelry and beauty -- could produce first-year sales as high as $20 million, more than double the $7.2 million the average Ames store does.

Beauty's share is expected to approach 2 percent of total sales, which is a significant improvement over the 1 percent the category usually does.

Ames executives declined comment on the estimates.

In the new format, cosmetics takes center stage at the store entrance, near jewelry and in front of apparel. Bold graphics in posters hanging from the ceiling say, "A+ Value," making it easier for shoppers to see the department.

"We wanted to get it out and in front of people," said Ettore. "If we're going after apparel, cosmetics is a natural marriage."

The fashion tie between apparel and cosmetics encouraged Ames to site beauty near jewelry and clothing, rather than link it with health and beauty aids, as do rivals Wal-Mart Stores and Kmart Corp.Older Ames stores had put a tiny peg selection of cosmetics near health and beauty aids.

Ettore considers beauty a player in his plan to bolster soft lines volume. He said an upgraded beauty selection had already been rolled out to 100 Ames stores. Those units were a test, encouraging Ames to go forward with its full-blown presentation in the Mount Pocono prototype.

The chain will begin remodeling existing stores and plans new units in 1995.

The beauty department is not arranged in the traditional mass market manner, with one long peg wall. Instead, shorter, freestanding wall units hold cosmetics with pegboard packaging. Each has a display area on the end of the aisle, so customers walking through the cosmetics department are exposed to more merchandise.

Instead of bunching pegged cosmetics together, the department displays brands separately, putting a manufacturer's items together, when possible. For example, Del Laboratories' Naturistics bath and body lines are housed with Del Laboratories' Sally Hansen nail care.

The mass manufacturers displayed on separate units include Max Factor, Almay, Revlon and Wet 'n' Wild.

Linette from Lia Cosmetics in Webster, N.Y., gets a full end cap.

Ames is the only retailer to merchandise the line like this, as a local exclusive to give the chain an edge over the competition.

There is a large professional nail care display with merchandise from LaJoie, Nailene and Jonel. The top of the fixture houses necessities such as nail polish remover.

Ames has taken an aggressive stand with fragrances. There are big displays of fragrances from Coty Inc., such as Longing and Vanilla Fields.

To promote the opening of the prototype, men's and women's mass-market fragrances were discounted 25 percent.

Coty representatives were in the store, handing out samples, and a Revlon demonstrator distributed samples of blush, mascara, lipstick and fragrances. A glass case holds prestige scents, including Christian Dior's Dune, Yves Saint Laurent's Opium, Elizabeth Arden's Red Door and Elizabeth Taylor's Passion.

In addition to their location in cosmetics, fragrances were given five aisles of shelving in a swing department devoted to holiday gift merchandise.Upscale bath lines and bath baskets from Alwin Inc. of Pompano Beach, Fla., were also displayed in this seasonal area.

Cosmetics vendors setting up the department were impressed with the dedication to beauty.

The store, built on the site of a former Ames that had burned down, has a traffic pattern designed to draw customers through the entire unit. A lighting system, according to Ettore, was created so there would be "no dark valleys where there isn't light on products." Shadowy areas are a typical problem in discount areas.

Ames has tried to make the store easier to shop. There are 13 customer assistance phones. A service area, where customers can ship parcels via UPS, also offers gift wrapping and delivery. The company is going after customers who are 55 and older with its 55 Gold program, offering a 10 percent discount on Tuesdays.

This small town in the Poconos is the type of site Ames wants; the chain has been dubbed "the Wal-Mart of the East" because it dominates many tiny markets where there is little threat from national competition. Wal-Mart, however, has started to move in on Ames's turf in the Northeast.

As part of his plan to build a $1 billion beauty empire in three to five years, Thomas V. Bonoma, chief executive officer of Renaissance Cosmetics Inc., has unveiled a new nail color line called Pro Nail Lacquer.

Pro Nail Lacquer is from Cosmar Corp., a nail-care firm based in Huntington Beach, Calif., that Bonoma acquired in September. Bonoma's Renaissance also owns the marketing and distribution rights to several fragrances formerly distributed by Houbigant Inc.

Cosmar distributes its LaJoie brand of artificial nail products through chain drug and discount stores. According to Bonoma, Cosmar's lines produce 41 percent of all artificial nail product sales in drugstores and 30 percent in discount stores.

Artificial nails account for about 29 percent of the $600 million nail care industry. The 45 colors in the Pro Nail Lacquer line were created by Promostyl of France. Merchandise will be shipped to stores in March.

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