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Critical Mass: Prestige Elbows Its Way In

NEW YORK — At a time when major brands such as Revlon and Max Factor are scrambling for shelf space, a smaller contender is gaining footage in several major chains.<br><br>Prestige Cosmetics, based in Deerfield Beach, Fla., now occupies prime...

NEW YORK — At a time when major brands such as Revlon and Max Factor are scrambling for shelf space, a smaller contender is gaining footage in several major chains.

Prestige Cosmetics, based in Deerfield Beach, Fla., now occupies prime real estate in all 3,818 Walgreens stores across the country. The brand is also being used by regional powerhouses such as May’s and Kinney Drug to differentiate their stores from competitors. And New York’s number one drug chain, Duane Reade, has just upped the footage in all of its stores. Prestige is now sold in close to 11,000 doors.

The firm has impressive sales figures to match its expanded distribution. Even without distribution in majors CVS and Eckerd, Prestige now has a 1.2 percent share of the chain drug cosmetics business, according to Information Resources Inc., for the four weeks ended June 24.

Today’s marketplace is brutally competitive — punctuated with guaranteed-sales promises and hard-line policies on returns. The nature of the business has made it virtually impossible for brands, especially those not advertised, to crack into tightly controlled planograms.

Although many fledgling companies have secured promotional space, few have the honor of permanent homes. Recently, several niche color cosmetics companies have been forced out of business by the tough economic climate, while others have had their shelf space sliced.

With that as a backdrop, Prestige has managed to survive and flourish. Executive vice president Tom Winarick credits Prestige’s staying power to several factors. “Today, you have a softening economy and there is a huge gap in the market for retail price selection,” he explained. Budget brands have crept up in pricing to almost $3, while Cover Girl and Maybelline are stretching beyond $6. Prestige fits snugly in between with prices mostly under $6, he said. With a current emphasis on productivity, Winarick said Prestige yields one of the highest gross margins per return on investment in the business. Prestige is typically among the best-producing brands in cosmetics, buyers concurred.

The small size of the company also means it can react with alacrity to new trends. For example, Prestige recently repackaged its products — a feat that takes years for major suppliers, but was accomplished in a seamless fashion at Prestige, said buyers. The company is also quick to jump onto new trends such as longwear lip color. “And finally, we are a company that is dependable and that’s important in today’s business,” said Winarick. Retailers agreed that Prestige has an impressive on-time shipping record and a good report on its new fixtures.

In addition to selling under Prestige, the company is a major supplier and contract filler for several private label collections. Prestige has a major international presence, especially in Western European countries. Industry sources estimate the company has wholesale sales of $40 million to $50 million.

Prestige grew out of a wholesale hairbrush and salon accessory distributorship. The company first got retail distribution at a time when chains were clamoring for European pencil products. Prestige originally competed against Nat Robbins and Lord & Berry — two companies gobbled up and weakened thanks to acquisitions.

That cleared the way for Prestige, which many retailers now look to as an upscale, yet value-priced brand with on-trend launches. New items Prestige unwrapped at a recent trade show included a Vinylwear lip gloss and nail combination, eye and lip palettes, a Heavy Metal eye shadow duo, a brow grooming collection, a bronzer and Lip Concentrate, a highly pigmented long-lasting lip color. “Lip Concentrate is getting the most attention of the new items,” said Winarick of the lip item, which will ship in January. The suggested retail is $5.95.

Prestige has grown without major advertising. However, Winarick said a print ad campaign is being readied for 2003. The budget was not released.