NEW YORK — For attendees at last year’s National Association of Chain Drug Store’s Annual Meeting, Coty Inc. was the talk of the conference, as retailers awaited to hear the firm’s plans for the then newly acquired Del Laboratories beauty portfolio.
For many, it was their first glimpse of Mary van Praag in her role as senior vice president of sales for Coty Beauty. Top-tier retail executives were anxious to learn how Coty would integrate Del’s cosmetics business, particularly the Sally Hansen brand. As retail executives gather in Palm Beach for this year’s conference, van Praag hopes to show how the firm delivered on last year’s agenda.
“We promised to reinvigorate and reinvent the business,” said von Praag during an interview on Wednesday, a few days prior to the start of the NACDS Annual Meeting. “We know we have powerful brands. The piece we are reinvigorating is where it’s all happening: retail.”
Coty Inc.’s total company sales — post the Del acquisition — are near $4 billion. On the mass side of its business, Coty Beauty saw sales grow 3.6 percent to $556 million for the latest 52-week period, said the company. Coty executives point out that increase was accomplished without products in rapidly growing segments, such as skin and hair care.
In the year since Coty began integrating Del, the company has fortified its presence at mass and launched products which have created what van Praag calls “bright spots” in challenging times. The company’s recent success, includes Sally Hansen Insta-Dri nail color and Rimmel London’s Stay Matte foundation, Kiss & Stay Lipgloss and Sexy Curves Mascara. In fragrance, recent hits include the Tim McGraw scent, which was the number-one men’s fragrance introduction in 2008, according to Coty; Celine Dion Sensational; Playboy for men, which will expand distribution to Wal-Mart, and Halle by Halle Berry, which is projected to reach $23 million in retail sales and to be Coty Beauty’s biggest female fragrance launch since Celine Dion.
To keep the momentum going, launches on deck include Sally Hansen Hi-Definition nail color, inspired by brightly hued iPods, and an upcoming McGraw fragrance called Southern Blend that aims to attract younger men to the franchise.
Also in development is a nail care product, slated to be launched next spring, that Coty is billing as “the biggest nail color launch ever.” The mystery lacquer is expected to reap well over $25 million in first-year retail sales.
Rimmel London continues to be the fastest-growing mass color brand for the third year in a row, with global sales exceeding $700 million, said David Russell, vice president of sales strategy for cosmetics.
But beyond new product introductions, Coty is primed to commit elbow grease and money to reinvent the shopping environment at a pivotal time for mass market stores.
“The trends are in our favor,” van Praag said, noting that cost-conscious shoppers will continue to buy beauty, but are migrating to mass in search of value.
Armed with both sales data and consumer research, Coty is out to help make the mass market shopping environment more compelling. “The category is still strong and women are still shopping,” said van Praag. “We need to work with our retail partners on the environment and adjacencies.” Retailers appear willing, despite the effort it will take to rip up and reformat stores. Drugstore chains, such as CVS Pharmacy, have already initiated efforts to improve the mass beauty experience, and Walgreens plans to shine a brighter spotlight on beauty in an upcoming prototype.
Coty will present to retailers its solutions in two key areas, namely the nail wall — which the company is dubbing Color and Care to reflect the myriad products in the department — and the fragrance section, where Coty is the mass market leader.
With the acquisition of Del’s flagship brand Sally Hansen, Coty propelled itself to the leadership position in nail care with a 43 percent share in nail enamel. Russell noted that Sally Hansen sells 115 bottles of nail lacquer every minute.
Despite its brand equity, women do struggle with finding certain Sally Hansen products, and with navigating the nail care wall, which also encompasses foot care, implements and makeup brushes, eye lashes, artificial lashes and nails, and even depilatories in some chains. Coty researched how women shop the department and has devised a blueprint, under the Color and Care header, for merchandising the space to build more robust sales in the category. Along the wall, product categories are organized by blocks, with color in the first position, removers under that and foot care nearby. Makeup brushes and acrylic nails are toward the end. “That is how women shop the department,” said Russell. He said the category has some areas that are overspaced and others, like color, that require more footage.
The time is right to reformat the department, as women rethink beauty rituals and visit salons less, noted Russell, who cited industry data that indicates 45 percent of women surveyed have curbed visits to spas and salons.
The drive to save money also is encouraging women to migrate from department stores to the mass market, and that presents ample reason to spruce up the fragrance environment, said Coty. The company is determined to get fragrances out from lock and key.
Coty estimates that collectively mass retailers are losing upward of $100 million in sales by securing scents behind glass. The key to reinventing fragrance shopping at mass, said John Burgfechtel, vice president of sales strategy for fragrance, is sampling, signage and allowing customers to see both the bottle and outer carton. Putting fragrance behind glass makes it almost disappear from consumers’ sight. For instance, Coty research found that 40 percent of those polled claim they did not know the category was available at mass. “We want to take the opportunity to surprise them,” said Burgfechtel.
Retail buyers seem sold on open sell, but top management is still troubled by the cost of pilferage, said executives. Coty’s research maintains that the estimated sales lift of 25 to 30 percent of an open-sell fragrance department more than offsets the expected 11 percent increase of theft. A number of chains, including Target, Kohl’s and Sears, have achieved positive results by opening fragrance displays and adding testers, said executives.
Coty’s commitment to building the business was fortified with the recent naming of Renato Semerari as president of the Coty Beauty division. He’ll manage all Coty brands available in mass distribution in the Americas, Europe, Asia and the Middle East. Among his key responsibilities, Semerari will seek new business ventures and collaborations, as well as oversee the continued development and expansion of the Coty Beauty portfolio. He will also serve as a member of Coty’s Executive Committee. The U.S. operations continue to be led by George Cleary.