ESTEE LAUDER PLANS A NEW 'LABORATORY': A STORE IN LAS VEGAS

Byline: Pete Born

NEW YORK--Estee Lauder USA, whose department store share leads the prestige cosmetics industry, is ready to experiment with its own store in this country.
Lauder will open a 2,100-square-foot freestanding store in Las Vegas in early January. The store will serve as a laboratory for new merchandising ideas and there are no plans for a second store at this point, according to the company.
The Las Vegas shop will be in The Forum Shops, an upscale mall area,
and it will be stocked with the full range of Lauder-brand color cosmetics, skin care and fragrances.
The company provided no sales projections, but sources estimate the Las Vegas store could do $1.5 million in its first year.
The Estée Lauder Cos., the parent firm, has already opened Lauder stores in Eastern Europe, beginning with one in Budapest in 1989. There is also a freestanding unit in Warsaw, and another will open in Prague late next month. Lauder also has a boutique inside the GUM department store in Moscow.
But this will be the first Lauder store inside the U.S., a development that has long been a lively subject within the cosmetics industry. During the late Eighties and early Nineties, when a number of major department store organizations were in financial meltdown, several cosmetics companies toyed with the idea of opening their own stores.
Lauder did more than think about it, opening shops for its fledgling Origins division, along with its mainstay department store business.
Lauder's U.S. division, with estimated sales of $650 million, retained its dominant retail position. In 1993, the division gained a tenth of a percentage point in department store market share, bringing its total to 19.8 percent, according to a survey conducted by Allan Mottus & Associates.
Robin Burns, president and chief executive officer of Estee Lauder USA, said there are no plans now for a second store, and she made it clear that the Las Vegas store is not a pilot for a Lauder chain. "This is not a concept to roll out across the U.S.," she said.
Burns described the new store as more of a retail laboratory for conducting merchandising experiments, the results of which could be applied to Lauder's stores overseas.
"We do have plans to open more stores internationally, and it is easier to test and to see how to do things here than in Moscow, which isn't exactly a frequent flyer destination," she said.
As for the choice of Las Vegas for a location, Burns said the area offers heavy traffic and a diverse consumer base--gamblers, tourists and residents. It also has plenty of retailing, she added, noting that Neiman Marcus, Bullock's, Saks Fifth Avenue and Dillard Department Stores all have branches in the area.
Andrew Shore, security analyst at PaineWebber, also sees the new store's long-term value as a laboratory.
"It's a merchandising testing vehicle," Shore said, adding that the question of a rollout is moot. "If it isn't successful, there's not much of an issue. If it is successful, then there will be a question of whether to go on to the next level."
Allan Mottus, management consultant, said having one's own store provides freedom and flexibility.
"If they get a brainstorm, they can try out the idea quickly, or they can try something else," Mottus said. "One of the problems with the department store category is the static nature of it."

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