By  on October 16, 2009

Saks Fifth Avenue is retooling prestige beauty for the future.

The national specialty store chain recently finished redoing the counters of seven more brands on the main floor of its New York flagship, meaning 50 percent of the 65,000-square-foot main floor beauty department has been renovated. With the completion of phase two, Saks executives are now planning to start construction in the third and final phase in the spring.

The just-finished phase produced gleaming new counters for Bobbi Brown, La Mer and MAC Cosmetics, all owned by the Estée Lauder Cos. Inc.; La Prairie from Beiersdorf; SK-II of Procter & Gamble; and Laura Mercier and RéVive, both divisions of the Gurwitch Corp., which is owned by Alticor Inc. The new installations were designed to be roomier, more accessible and consumer friendly with a more animated, eye-catching use of branding concepts for the individual companies to express their identities. That includes the familiar La Mer aquarium with its school of fish, fed three times a week.

Sharon Collier, chief executive officer of Gurwitch Products, lauded Saks for opting for a more customized look for the new counters, which she described as a departure from “generic” dark wood decor of the past. “Saks is trying hard to maintain an upscale image but be more of the moment.”

The modern touch is especially evident at the RéVive counter, which, according to industry sources, is approaching $1 million in sales, making it the company’s most productive door in more than 300. Dr. Gregory Brown, the brand’s founder and chief creative officer, said the company is now reaching a critical mass. “We have the ability to be a global brand,” he said of the fledgling company whose sales have been estimated by industry sources at $35 million.

Counters are designed to accommodate those customers who either want to quickly pick up a product as a replenishment and go or those shoppers who want to browse and be catered to, even get a makeover. Lynne Florio, president of La Prairie Inc., agreed, “We can service the customer in a New York minute or treat her to a walk in spa.” Asked about the sales results for the first month, Florio replied, “I’m thrilled.” She added, “We’ve done better in September than in the rest of the year.”

A similar view came from the Estée Lauder Cos. Inc., where Maureen Case is global brand president of the Specialty Group, and oversees La Mer, Bobbi Brown and Jo Malone. La Mer and Bobbi Brown are among the most productive counters in the store and among the top accounts in the world for both brands. “We saw an immediate uptick in business,” Case said. La Mer has been in Saks since the brand’s inception, said Case, who added the brand is founded on service and luxury. She seconded Florio’s comment that the new counter design and location allows the brand to cater to shoppers who want to be either replenished or pampered.

A spokeswoman at P&G, said the new SK-II counter at Saks is “the only one that is designed for approachability and quick counseling.” She said the third priority is visibility. Brands with new counters have experienced sales improvements ranging from the single digits to 18 percentage points. Industry sources estimate the cost of renovation at $1,000 to $1,300 a square foot.

In addition, Saks has spent the last two years training the staff across the store on a point-of-sale computer system, which puts sales associates in touch with their customers, as a way of spurring sales through appointment selling. Also, the store has concentrated on training to improve the selling effort.

Ron Frasch, Saks’ president and chief merchandising officer, noted, “We have now put probably 95 percent of our sales associates through a training and development program to help them understand how to utilize this tool to build their business and build their relationship with the clients. It’s a tool that lets them plan their business, schedule appointments and e-mail their customers when they need to because it’s right at the POS station. “In some stores, like New York, we’ve always been blessed with a lot of traffic,” he continued. “In some stores we haven’t been blessed with as much traffic. But the entire selling organization is obsessed with both having appointment selling and measuring the results of it.”

He added the program is “more than just training on how to use the system. The training is on how to be an entrepreneur, how to build a business, how to have a business plan and then how to strategize to achieve your business plan.”

Frasch underscored the importance of the training as a major plank in the Saks strategy. “We could spend more capital fixing up stores; we could add this brand or add that brand. But for our company the differentiator is whether it’s in the cosmetic world or the shoe world, it doesn’t matter, it’s all about service.”

He also mentioned cosmetics and fragrances was the first market to embrace the new religion.

As Deborah Walters, senior vice president and general merchandise manager, remarked, “The service is the product.”

The beauty business is important to Saks. While store executives do not discuss sales, industry sources estimate cosmetics and fragrances generate 16 to 18 percent of overall store sales. The beauty volume for the Fifth Avenue flagship alone is estimated to be approaching $100 million.

Phase one of the renovation consisted of redoing the Dior and Guerlain counters last fall. In May, Chanel was redone, Armani Beauty was enlarged and Dolce & Gabbana was installed on the floor with the launch of the color cosmetics line. Saks has a national exclusive.

Walters pointed out the trick lies in finishing the entire department next year in a way which allows the brands to express their personalities while leaving some flexibility to add a new brand element. “With these new environments, we raise the level of exclusives and previews in product and events,” she said.

Frasch traced the history of building the beauty business at Saks through exclusives back to the Nineties when Rosemarie Bravo led the chain as chief executive officer. “She really established this company in a fantastic way for being respected for our ability to launch brands and to have exclusives and to be very aggressive.”

Walters pointed out that Bravo, along with GMM Steve Boch, built a fragrance dynamo that created “a trajectory onto the next category of skin care and beauty. [This led] to the evolution of the makeup artist [color] brands, the antiaging [creams], the whole antiaging movement.”

Walters, who succeeded Boch, said the perfumery base of the business morphed into a treatment business and now there is an evolutionary swing back to fragrance as a lifestyle segment “that’s been a point of difference for us.”

One of the departures taken in designing the new counters was to allow the vendors to express their brand identities more prominently. In the past, the selling floor was dominated by the wood-paneling decor. The compromise was pioneered in the third-floor designer ready-to-wear department, where the wood was used like a canopy surrounding the brand statement. “What we’re trying to do here is create the envelope,” Frasch said, adding that on a beauty floor, there are a lot of resources but a lack of branding. “It’s difficult to shop. It’s difficult to find the brands you love or to introduce a new brand or to make a statement with a brand that’s distinctive.”

In the distant past, stores in the luxury business routinely suppressed the identities of their vendors because “it was about the store, not the brands,” Frasch said.

“Now we have to make it about both,” he continued. “The element that we bring to it is hopefully a different service paradigm than our competitors, so it works better for our customer, hopefully elements of our total product offer that are either exclusive or unique…become the real differential.”

The potent combination comes from melding the personalities of the store with its brands, hence, the canopy effect. “We would never give that up,” he said adding every renovation project has also been part restoration. “We have our footprint and our DNA; we’re constantly making it a little more modern, a little more current, but we’re always retaining the history of the building.”

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