Neil Fiske foresees a sea change in the beauty business over the next five years.
To grow—and, indeed, survive—in the evolving beauty landscape, it's necessary to look at the competitive field in a new way, said Neil Fiske, chief executive officer of Bath & Body Works.
"The beauty landscape, when you put it all together, is pretty exciting," said Fiske. "Total consumption, properly defined, is growing about two times the economy. New channels are growing rapidly. You have the direct channel, whether it's infomercials, QVC; you have the Internet, you have door to door—Body Shop at Home is an example—growing double-digit rates in the U.S., eBay. You have proliferation and growth of the specialty channel, lots of boutiques. And you have the offmall channel, which is experiencing very strong growth rates."
Fiske, who used his theory of affordable luxury to reposition Bath & Body Works— and launched the chain's new flagship format— is not afraid to practice what he preaches, having teamed with brands such as C.O. Bigelow, L'Occitane, Dr. Patricia Wexler and American Girl.
"The next five years in beauty retailing will unleash more innovation, more change, more radical transformation than in the previous 30," said Fiske, pointing out that spas and cosmetic surgery are among the growth areas that can be leveraged. "I think our constraints to growth are largely self-imposed. [In] the conventional view of the beauty market, you have body care, hair care, color, and it's chopped up into the little channels of distribution—mass, direct, specialty—and it's about $45 billion (?35 billion/£24.2 billion). And for a long time, most of us have probably been looking at the industry, one way or the other, like this. The problem is, if this is the way we look at the beauty business, we're not going to grow. If you look at it over time, measured the same way, the conventional view of the beauty market has grown 2% to 3% per year, not adjusting for inflation. After inflation, flat or negative over a five- or six-year time period. We are lagging [behind] the growth of the overall economy."
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