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Douglas Gears Up to Reopen Stores in Italy Amid Uncertainties

The ceo of the perfumery chain's Italian division lamented a lack of financial support and guidelines from institutions.

MILAN — “I’m not contesting the closure of stores but how this was managed,” said Fabio Pampani, chief executive officer of Douglas Italia.

The perfumery chain, which has a large presence throughout the country with 530 doors, is gearing up to reopen its stores “hopefully on May 4,” when the national lockdown is expected to be lifted. But despite the deadline getting closer, the executive lamented the lack of financial support and guidelines throughout the past six weeks from the Italian government.

“I’m really very surprised and disappointed by how the situation was handled. The problem is that no one is realizing that retail here represents 1.2 million people, who are not working since early March, haven’t seen a euro so far and still don’t know when they will,” Pampani said.

The executive highlighted that the measures introduced on March 16 by the government’s “Cure Italy” decree are still not effective, including the “cassa integrazione” wage support measure. “I don’t talk for hearsay, I have 4,000 employees to whom I will anticipate part of their 14th-month salary just so that they can have some money for their current needs,” he said, adding that Douglas also introduced health insurance against COVID-19 for all its workforce for the rest of the year.

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“It’s also time to understand that companies and employees are in this together…so helping a company today means helping its people, and helping a worker means helping a company,” continued Pampani, urging the institutions not only to act fast but also to be transparent and honest about when the injection of money will be effective.

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“I’m lucky to work for an international firm, we are in 19 countries and every week I talk with our international board. In the other countries, governments acted differently: Two days after the respective lockdowns, some citizens had immediate wage support while payments for stores’ rentals were frozen….Here companies are doing the best they can but today they can’t substitute the government anymore,” he said.

Douglas’ stores have been closed since March 11, but “the crisis in terms of sales started back around Feb. 20. During those weeks, sales were more than halved because customers were already afraid of going out,” recalled Pampani.

Asked for an estimate of how the retail shutdown could impact the annual performance of the company, the executive said that considering the closure of two to three months, at least 25 percent of sales won’t be able to be recovered. “I hope to be wrong, but from the moment we will reopen to the release of a vaccine – which will indicate that we won’t have the problem of social distancing any more – we will lose from 30 to 50 percent of revenues compared to previous years,” he noted. At the end of September 2019, the Italian division of the German beauty retailer registered revenues of 428 million euros, level with the figures for the same period in 2018. Adjusted earnings before interest, taxes, depreciation and amortization grew 6 percent to 41.4 million euros.

To cushion the effects of a two-month stop in retail operations, Douglas enhanced its e-commerce channel. According to Pampani, online sales doubled compared to the pre-COVID-19 scenario, when they accounted for only 5 percent of total sales. “So we are talking about something small in value…and that doesn’t absolutely counter the loss of the brick-and-mortar channel,” he underscored.

Best-performing products online included personal hygiene basics such as shampoos and shower gels, as well as “all the essentials to ensure continuity in the beauty routine,” comprising at-home hair dyes and epilation tools. Skin care boomed, especially sales of moisturizing hand creams in light of the elevated consumption of sanitizing gels; makeup products performed on average, while sales of fragrances declined “as their usage is more linked to going out,” noted Pampani.

To better meet the new demands of consumers, Douglas has expanded its online assortment, introducing 5,000 new references in the past couple of months. “Not only did we add products we didn’t have but we widened the categories we had. For instance, if before we had only a type of razor or hair dryer, now we have four because of the increasing demand,” he said.

In addition to its e-commerce, the retailer launched a series of initiatives to increase links with its customers, including the implementation of phone services. “We picked eight of our best beauty advisers to provide consultations, tips and to sell products via phone calls and WhatsApp messages. This approach proved to be of great help especially for those consumers who are not familiar with digital tools, including the more adult ones.”

To further engage with customers confined in their homes, Douglas Italia released a series of beauty tutorials on its web site and Instagram account to guide the audience through practices that were usually performed by aestheticians and hair dressers. Topics range from epilation, hair dyeing and gel nail polish removal for women to shaving and grooming tips for men.

Tutorials released by Douglas Italia.
Tutorials released by Douglas Italia. Courtesy Photo

“All these initiatives are performing so well that we are thinking of continuing them even when we will reopen the stores. We will integrate them because the customer has changed and she won’t return to be the one she was before. She got accustomed to the digital world and familiar with distant relationships and even when we won’t have the current limitations, I believe she will continue to behave this way,” said Pampani, who also forecasts that e-commerce “will never compensate the sales of physical retail but will grow a lot, even more rapidly than before because there’s a new awareness and people are more confident in using it compared to before.”

As a result, to enable consumers to shop through different channels, depending on their mood and current fears, and further widen the product assortment are top priorities in the executive’s agenda once the company will resume all its operations.

“Customers are getting familiar with different products now. For instance, the most sold, non-food product last week has been the hair dye, as thousands of women tried to dye their hair at home for the first time. And if these people decide to continue to do so in the future, because they discovered it’s cheaper and not that bad, we will have to introduce hair-dyeing products in all our stores and with a wider assortment, while before the crisis just some of our doors and the e-commerce had this category.”

Yet there are still many variables on how the retailer will resume its brick-and-mortar activity, ranging revisiting the store layout to the new behaviors sales assistants will need to adopt.

“We have no official indication, just hearsay. I urged our category’s representatives to pressure the government on this because we will have to adapt our business model and that can’t be done overnight,” Pampani said.

In particular, Italy’s regional fragmentation in terms of safety measures represents a crucial obstacle for businesses, as many limitations differ from city to city. These include the use of sanitary masks — which at the moment is mandatory only in some regions — or of thermo-scanners at the entrance of stores, the advised security distance and the allowable number of customers, among others.

“For instance, if the use of masks becomes mandatory on a national scale, I will have to find 4,000 masks per day or about 100,000 per month. I’m looking for these, but it’s not easy to find such quantities on the market right now…I’m not even asking for help, but just to know in advance how I should proceed,” Pampani said.

The executive also expressed concern about the services Douglas would be able to offer. In particular, about 45 flagships in Italy feature a Beauty Lounge area providing face and body treatments, nail services, makeup sessions and custom consultations on skin care and makeup products and routines.

“We’re waiting for health authorities to tell us how we should behave on these aspects, because doing a manicure is different than doing a massage and I don’t believe we will be able to resume all services immediately…but I have 200 aestheticians waiting to understand if they will be able to work or not in two weeks,” he said.

In general, Pampani expects services to suffer until the release of a vaccine, as consumers will still be afraid of human contact. Travel limitations will additionally impact sales, especially in the stores located in tourist areas, while trend-wise, sales of lipsticks are expected to drop because of the use of sanitary masks.

In this scenario, Douglas is also reconsidering its budgets. “Of course, we will keep the investments where needed, so at the moment on e-commerce and the digital, which are fueling the business. We will rethink store openings, also because investing money to launch new doors when workers’ situation is the current one is not ethical. Plus, we will need to understand how consumers’ behavior will change, so we will have to invest according to their demands,” Pampani said. For instance, budgets for in-store events are likely to be re-allocated to strengthen sanitary measures to safeguard both employees and customers, while the rollout of the new interior concept the company debuted in February has been suspended.

“Until the vaccine, we will live in another world. Only after it will be released, we will finally see a renaissance, just like how it happened after wars,” concluded Pampani.