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Dr. Mettler’s Retail Prescription

EVIAN, France — If the American department store truly is in an intensive care unit, do not fear. Dr. Mettler is here, and he has a cure. <br><br>Basically it boils down to better-edited assortments, a broadening of the customer base, heightened...

EVIAN, France — If the American department store truly is in an intensive care unit, do not fear. Dr. Mettler is here, and he has a cure.

Basically it boils down to better-edited assortments, a broadening of the customer base, heightened service and demonstration, more traffic-generating events, enhancement of a store’s personality and further exploitation of three key merchandising opportunities — men’s, large-sized women’s fashion and teens.

Following his speech, Mettler, who is the chairman and CEO of Macy’s West division of Federated Department Stores, was praised by Estée Lauder chairman Leonard A. Lauder as “probably the most original and most dynamic thinker in the entire U.S. cosmetics industry and perhaps in the world.”

Mettler observed: “During the last 10 years, department stores have experienced an overall decline in share of sales due to industry consolidation; increased competition from value players on the one hand and specialty stores on the other, and the aging of our customer base and the real fact that we have not attracted the younger customers to the department store channel. So our challenge has been and continues to be to convince existing department store customers to do more of their shopping with us, increasing the share of wallet, but also, more importantly, attracting new customers to the channel.”

Mettler admitted that this last objective will not be easy, since “it requires us to make significant improvement in the shopping experience. Department stores are creating a cacophony of sight and sound; there is simply too much merchandise with too little that is new or unique or even interesting.” Noting that “we have concentrated too much in the pricing proposition, distorting it out of context and accelerating an already deflationary cycle. As a result, we have been selling the same number of units of merchandise, yet producing less volume.”

Mettler pointed out that last year’s business was hit hard by the recession and the tragedy of Sept. 11, but “half our sales drop was attributable to lower prices.” So productivity is an issue, particularly in cosmetics.

He noted that the core customer has aged, stagnating sales of some major beauty brands. So the store strategy has been to “reach out to a younger generation both for growth and to generate newness and excitement.” Not many of them, however, are used to shopping in department stores. “Now our challenge is to get them in the door and convert them to loyal shoppers,” Mettler said, asserting that at Macy’s West, the youthful Trend and Artistry brands have grown tenfold in five years, doubling in the last two years and expected to jump another 30 percent this year.

This story first appeared in the July 19, 2002 issue of WWD.  Subscribe Today.

So the merchandise not only has to be playful and trendy but the environment is important. “Our cosmetics departments continue to be intimidating and confusing,” Mettler charged, “and our customers won’t stand for it.”

Sometimes consumers want to help themselves — and here open sell units have been the hot ticket — and other times they expect service, with a smile and efficiency. “They will not tolerate being dissed,” he added. “That’s being disregarded, disrespected or dismissed.” Open sell made the “dis” factor a non-issue by inviting customers to touch and play with products on their own. The drawback, however, is that the format can overwhelm the customer with choices. When confronted with four or five products that she likes equally, the customer ends up walking away from all of them.

So what’s better than open sell is open demonstration with a beauty adviser taking the sensory experience to a new level. “The customer is not just touching the product, but she is being touched as well; it provides a pampering experience,” he said. “It allows a beauty adviser to educate customers and helps them establish product credibility. And credibility is critical to the productivity challenge.”

Mettler noted that his experience with the new makeup artist and trendy brands coupled with the advent of open sell merchandising units “tells us that success in the beauty department today requires a shift in selling techniques and selling strategy, where once the gift-with-purchase was the engine that moved product all year long, it is now service, animation, personality, interaction and events.”

Stores must do a better job of educating sales associates, in addition to recruiting and retaining top-grade people. The importance of the human bond was driven home after Sept. 11, when it was discovered that Shiseido performed at elevated levels in the aftermath of the disaster. Customers construed the brand’s generous service as a sign of genuine caring. “So it suggests more powerfully that it’s who, not what, that is selling. Care of the customer is a feeling, an ethic,” Mettler said, adding that “our departments need to feel like an oasis of pleasure in an otherwise stressful world.”

Turning to opportunities, Mettler pointed to the men’s market, and that one of the keys is recruiting more nonintimidating beauty advisers. “Men don’t want to approach a counter or experiment with products without encouragement,” he said. “We need to be more interactive and we need to create more events.”

Another huge opportunity is the large-size fashion customer. While these consumers have been reluctant to venture into the cosmetics department, the store has successfully established beauty outposts in the fashion areas.

While the teen and youth brands represent the store’s strongest growth area, Mettler sees the flattened out baby- boomer markets yielding new fruit. “With baby boomers spending $400 a pop on Botox injections,” he observed, “the cosmeceutical business clearly represents an opportunity for new brands and for the life cycle solutions within existing brands.”

Mettler quoted Thomas Moore, author of the bestseller “Care of the Soul,” and suggested that beauty products also may figure into the feeding of one’s soul. “After all, what does the sale of books, music and candles and greeting cards tell us?” he asked. “It tells us that people are looking for a connection, they’re looking for relief, they’re looking for a little bit of fun, they’re looking for diversion and they’re looking for something deeper, something that helps them express their spirit and connect to the beauty of life. And can’t this department provide this experience? Which leads me to wonder if the barriers to growth are not more psychological than they are economic.”

He continued: “The retail industry and the beauty industry have been guilty of endless repetition. We’ve taken what worked and made it larger and larger and larger, but in doing so, we have forgotten the value of experimentation. We need to be testing new approaches, perhaps in smaller markets, and if they work, let’s figure out how to roll them out.”