CHOEL'S AIM AT DIOR: MARKETING TEAMWORK, SHARPENED EFFICIENCY
Byline: Alev Aktar
PARIS--Maurice Roger is a hard act to follow, but Patrick Choel, the new president and chief executive officer of Parfums Christian Dior, isn't intimidated. Choel comes to Dior with 30 years of experience in the mass market and a reputation for getting down to business. Profits grew at a double-digit rate during his last stint at Chesebrough-Pond's in the U.S. "He's strong, he's tough, he's focused on the bottom line," noted one industry executive close to Chesebrough. "During his time, Chesebrough profit growth was substantial. When he left Unilever, it was a loss." No one questions Choel's management qualities, but Roger's departure begs the question: Who's going to do the fragrance marketing? This was unquestionably Roger's strongest suit. Most of his launches not only topped the $100 million mark, but they set trends. Poison turned heads in the Eighties with its powerful scent and name, Fahrenheit and Dune tapped into the search for serenity and Tendre Poison triggered a profusion of sibling scents. In one of his few interviews since he took over at Dior in April, Choel refused to compare himself with Roger. "First of all," he said, "I don't really know him, and second, it would be inappropriate." But Choel did say he intends to play a major role in marketing and that he is beefing up the marketing team. "I am a marketing person myself," he pointed out. "I have always been very involved. That's not going to change. However, we are going to work in teams, which maybe is a little different. When I came on board, there was no vice president of marketing. There was a light marketing structure. I am strengthening the area." Choel has already appointed Sabina Belli marketing director for new fragrances. Belli was previously at Giorgio Armani Parfums. He also named Thierry Dugny international marketing director for skin care and makeup. Dugny was formerly at the French mass market brand Bourjois. Choel has also set up a system of teams whereby the marketing division works in synergy with research and development, advertising, and the rest of the company--a management style that reflects his mass market experience. Another major change is in the chain of command. Instead of the international divisions reporting directly to Paris headquarters, the far-flung offices will report to three regional managers, in New York, Paris and Hong Kong. Robert Cankes, Dior's U.S. president, has been named regional managing director for North America. Stuart Simpson, former managing director in the U.K., is moving to Paris to become regional director for Europe, Africa and the Mideast. Michael Brillhart, previously executive vice president International of Elizabeth Arden, was hired for the job in the Far East. Meanwhile, Roger Forcier, former managing director of the Canadian subsidiary, has been named managing director of the U.K. affiliate. Choel is also streamlining the business. "We have to lower inventory through better purchasing, through lowering the number of stockkeeping units in the company--we don't always need the thousands of sku's that we have. Efficiency is an area where we can and will do more." While Choel declined to give a sales projection for this year, he said the company is targeting lower growth because the Dior Svelte anticellulite boom is dropping off. Last year, Dior's sales rose 13 percent to an estimated $1.04 billion (5.3 billion francs) at current exchange rates. The Svelte frenzy took Dior and the rest of the beauty industry by surprise--300,000 units reportedly flew out of Japanese stores in the first month after the April launch last year and the Paris department store Printemps was forced to limit customers to three bottles apiece after Japanese tourists snapped up 50 to 100 bottles at a time. "I would say it went too high too quickly because the size of the business in Japan just exploded to a point not expected," Choel said. "Our business right now in 1996 is slightly lower than in 1995, but it's still a major success. We used to have 100 percent market share [in Japan] and we don't anymore--but that's the nature of the game." On Thursday, LVMH Mot Hennessy Louis Vuitton, the luxury conglomerate that owns Parfums Christian Dior, posted a 10.4 percent drop in operating profits for the first half that it attributed in part to Dior's perfume activities. (See related story, page XX.) According to an LVMH spokeswoman, the dip was due to Dior's policy of closing doors in an effort to combat the gray market. The cuts in distribution are part of Dior's larger effort to keep a tight grip on image and on what happens to products. In a controversial move last year, Dior sent a letter to French retailers banning deep discounts--widely interpreted to mean anything over 15 percent. The strategy was adopted by other manufacturers, but many retailers argued that vendors don't have the right to set prices. Choel downplays the issue: "We have been acting quite strongly in order to prevent our product from being discounted to the point where it was damaging the image of the products and disturbing our worldwide pricing strategy. We have been very successful with that. Things have stabilized right now, and discounting is less of an issue, especially in France." Dior's priority markets are Southeast Asia and the U.S., according to Choel. "We will certainly not neglect Europe," he said, adding that Dior does half its volume there. His strategy in those two markets is to invest proportionally more in skin care than in fragrance in Japan, and the reverse in the States. "We are fine-tuning our investment and our strategy in [different] markets," he said. Problems with inconsistency that Dior had once suffered in the U.S. seem to be history. Choel says there has been a double-digit growth pattern over the past four years, and the company intends to make the most of heightened visibility from major launches and fashion activities in the coming months. After months of speculation, the house of Dior will name its new couture and ready-to-wear designer in October, replacing Gianfranco Ferre. Sources indicate it will be John Galliano, currently at Givenchy. Starting in December, a 50th anniversary Dior fashion retrospective will be staged at New York's Metropolitan Museum of Art. It will run through April. In addition, Dior has orchestrated a high-profile launch for Dolce Vita in the U.S., and Choel is targeting sales of $25 million at wholesale in this year's fourth quarter. "That's a very big number," he said. In Asia, where the emphasis is on skin care, Dior is planning line extensions in the Svelte range and possibly more skin-whitening products--one of its few brands developed specifically for one market. Furthermore, certain key launches are hitting Japan first. Rouge Incorruptible, a nontransfer lipstick in the form of a pen, for example, was launched in Japan before the rest of the world. Next year, Choel is planning major launches in all product categories. "Dior's strength is that we are very strong in what we call the four axes: fragrance, skin care, body care and color cosmetics. When we look at our competitors, most of the time they are strong in one area but not as strong in all four."
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