Retailers Hash Out Reinvention Strategies

EVIAN, France — All the world may be a stage, but the problem with retail is that there’s not enough theater. Bucking the beauty downturn, however, are a handful of stores that are enticing scores of shoppers and eliciting rave reviews....

EVIAN, France — All the world may be a stage, but the problem with retail is that there’s not enough theater. Bucking the beauty downturn, however, are a handful of stores that are enticing scores of shoppers and eliciting rave reviews.

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

Their secret?

Innovation, entertainment and continual reinvention. That was the consensus reached during The Strategy of Niche Retailing, the second panel conducted at the recent WWD CEO Summit. The panel was led by John Demsey, president of MAC Cosmetics, and its participants were Robin Coe-Hutshing, owner and director of the Los Angeles-based Fred Segal Essentials; Jo Horgan, owner and managing director of the Melbourne, Australia-based Mecca Cosmetics; Nicky Kinnaird, founder and owner of the London-based Space NK Apothecary, Ltd., and David Riddiford, buying and merchandising director of London’s Selfridge’s.

“There is a culture of conservatism around the world, especially since 9/11, that says we ought to retrench and be more careful with our business,” said Riddiford. “Maybe now is the time to display a bit more confidence and try to break out of it more like a phoenix rising from the ashes, and create a bit more color and a bit more excitement.”

Riddiford practices what he preaches: Selfridge’s is in the midst of reinventing itself. While the effort has largely focused on fashion thus far, the store is now turning its sights toward beauty. “If you look at what we’ve been doing in men’s and women’s apparel, we’ve actively been discontinuing classic brands in the last two years,” he said,”brands that have been cash cows for our business; because if we want to reposition Selfridge’s, we have to kill some of our favorite children in order to move customers on.”

And beauty, despite accounting for 11 percent, or $70.5 million of overall sales (and “a significantly higher part of our profit,”) will be no different, promises Riddiford. “I worry we may be about to have some similar conversations with some of the more classic beauty brands, brands who feel they have a God-given right to own department store space,” he said. “There are some brands who are reinventing themselves and some who are talking about reinventing themselves but are not doing it.”

Indeed, reinvention — and creating in-store excitement — was a recurring theme of the panel. “My job is as an editor,” said Coe-Hutshing, whose store remains at the forefront of beauty retailing 18 years after opening. “The minute I stop doing that, I see my business stagnate immediately. The concept is of complete change and reinvention on a constant basis.”

“The marketplace is changing and evolving at a rapid pace,” agreed Kinnaird. “At the end of the day, the customer is evolving even faster, so we’re all playing catch-up and trying to work out how to really give them the satisfaction they’re seeking.”

Service is the key area of differentiation for independent retailers, and each panel member said their business has successfully differentiated itself in its market with a two-pronged service approach. The first aspect involves sales assistants who are equally knowledgeable about the store’s entire product lineup; the second centers around offering actual services, such as nail services, day-spa services or educational seminars, which the retailers use to cement customer loyalty.

Mecca, for example, recently launched in-store nail bars — a concept that hadn’t yet hit the Australian market despite its success in the U.S. and U.K. “If I had to choose one way in which we’ve increased our footfall, it’s Mecca Manicure,” said Horgan. “It’s seen as fashion, it’s seen as high service, and it’s a great way to be able to pop into the store on a weekly basis. It’s allowed us to continue to build that relationship with our customer and to build their loyalty.” Horgan’s strategy seems to be working: Mecca’s same-store growth is “plus-30” for the last two years.

For its part, Space NK opened Spa NK in October 2000, a 4,500-square-foot full-service day spa.

Fred Segal Essentials’ Coe-Hutshing frequently hosts educational events for customers, such as a recent seminar with dermatologists and product developers, about hot topics such as Botox.

Meanwhile, when asked if Selfridge’s would ever consider offering Botox in its stores, Riddiford didn’t rule out the possibility. “If there is a demand for experience, for services, for products, for entertainment, we’ll be looking to see if we can satisfy that demand in a way that’s contemporary and exciting and radical,” he said. “I don’t think there should be any barriers to experiences or products in a store such as ours.”

Selfridge’s is also completely focused on creating an entertaining retail experience to differentiate itself from the competition. In a market where price-based promotions rule, “we’re trying to move away from a discount driven, midseason operation,” said Riddiford. “We believe it’s important to have powerful, positive promotional activity, and in the past two years we’ve made the decision to invest a huge amount of our marketing budget into monthlong promotional activities during May, traditionally a relatively quiet period.” This year, the store staged a Bollywood extravaganza, an homage to the Bombay film industry complete with “color, music, glamour, celebrity.” The result, said Riddiford: “The street was mobbed.”