Philip Shearer, chief executive officer of the Paris-based Clarins Group, took an even-handed view in pointing out some industry strengths while highlighting lapses and suggesting how to put some troubled categories back on track.
This story first appeared in the June 11, 2010 issue of WWD. Subscribe Today.
Overall, he saw no reason for alarm. “The fundamentals are very, very healthy,” he began. “We’ve got a population that’s growing around the world; there are more lips to paint. The population is aging, which in general is pretty good, at least for some categories of what we sell,” he continued. “Purchasing power is going up. However, there are problems. “We in the industry all have specific roles to fulfill, a job to do, so let’s just do it,” he said in conclusion. He illustrated this point with three case studies.
Two of them were minuses — fragrance in the U.S. and skin care in Europe — and one big plus — makeup in North America.
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Turning to the sadly familiar story of the American fragrance market, he flashed NPD Group statistics showing that the $2.8 billion business of 1997 had shrunk by 12 percent to $2.5 billion by 2009.
Fragrances have been overpromoted, he suggested, while there has been more reliance on advertising and cutting the cost of the product. The result: “The product is not as good as it used to be.” As one possible solution, he pointed to Clarins’ iconoclastic approach in launching Angel in 1990 with the goal of capturing only 2 percent of the market because that is all that was needed to be a leader. Investment was funneled into the product, instead of the marketing.
On the bright side, makeup in the U.S. has thrived, with sales jumping from $1.8 billion in 1997 to $3.1 billion in 2009, according to NPD. Specifically, Shearer mentioned the stellar success of MAC Cosmetics, which, he implied, was spurred by a return to basics of focusing “on service, focus on people. The notion of productivity has evolved to service first and productivity will come along.” He added, “People don’t buy the channel,” he said. “They buy a product and the service that goes with it.”
Turning to Europe and zeroing in on the skin care category in France, Shearer illustrated how the product category has been gradually eroded over the last two years in the prestige channel of perfumeries. Those perfumeries, he suggested, have been eclipsed by pharmacies, which stepped into the service gap created by the lapses of the selective channel. “The pharmacies took over, and what is selective just disappeared,” Shearer noted.
As an alternative to this, he offered another technique pioneered by Clarins, which is the Clarins Skin Spas built inside department stores in the U.K. Consumers pay for services and the transaction “enables us to demonstrate our expertise.”
He credited the British retailers for their cooperation. “They understood early in the game that a brand is not just one thing you can do on a shelf or advertise the hell out of,” he said. “People need to understand why and how they are going to apply products. That’s how you create value for your consumers.”