Marc Rey has a foot on Shiseido’s accelerator and an eye on the passing lane.
Known as a natural leader who prizes attributes like speed, agility and true innovation, Rey seems to have settled comfortably into his new role as president and chief executive officer of Shiseido Americas. While there may be a sense of momentum for change building under the leadership of Masahiko Uotani, president and ceo of parent Shiseido Co. Ltd. in Tokyo and the recruitment of a resourceful Rey in the U.S., the group, which now ranks fourth in the U.S. prestige market, is likely to face fierce competition in the Americas from the heavily armed front-runners Estée Lauder, L’Oréal and LVMH Moët Hennessy Louis Vuitton, all of which are well-entrenched.
Nevertheless, Rey seems determined to gain ground, primarily in makeup and the digital sector.
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While he steered clear of citing numbers, industry sources estimate that the entire group generated $1.5 billion in net sales for 2015 and could hit $2 billion by 2020. That includes all the revenue generated in North and South America by all the brands in the group, including not only the flagship Shiseido brand, but Nars Cosmetics, Bare Escentuals, Beauté Prestige International USA and Clé de Peau.
The key component of his strategy is to create centers of excellence in makeup and digital to accelerate growth of existing brands and pave the way for new ones, either created or acquired. These centers are part of a bold global strategy crafted by Uotani. The world has been divided up with centers not only in New York but a fragrance center in Paris with BPI and skin care (Shiseido brand and Clé de Peau) in Tokyo. These headquarters are located in regions where key brands are based and expertise is found.
Roughly 50 percent to 60 percent of Shiseido’s global volume is done outside of Japan, and of that foreign total, the Americas contributes the largest chunk of non-Japanese sales, or 33 percent.
The Shiseido group grew 8 percent in U.S. department and specialty stores in 2015, according to NPD. For the entire Americas business, the group is aiming for 6 percent organic growth this year, not counting acquisitions, according to industry sources.
Rey describes his mission first and foremost as “developing our footprint in the Americas, developing our businesses, developing our brands [and] developing our talents.”
Then, “I need to grow profitable sales,” he added.
Rey often mentions triggering a “step change” in increasing profits. He indicated that one area of investigation is the possible reduction of silos in which brands tend to operate. He also is intent on building the entire region, meaning primarily South America, where a lot of business is done through the travel retail channel. Shiseido has a subsidiary in Brazil, in addition to Canada, and he sees the chance for growth from Chile, Argentina, but mostly from Brazil and Mexico “Probably the biggest bet for us is going to be Mexico, where we have a lot of potential,” he said.
Looking north, Rey sees Canada, with its strong team, as a source of best practices. With Shiseido ranking fourth in skin care there, Nars placing fifth and a strong fragrance business, “It’s a market where we can test new things,” he said.
Developing best practices and unlocking innovation are other parts of Rey’s mission in creating and driving the centers of excellence in makeup and digital development.
“The centers of excellence are really centers of expertise,” he said, noting that makeup generates 46 percent of the American prestige category. But there will be a symbiotic relationship with the brands and assets, not a dominating role.
Rey pointed out that Shiseido has two highly successful brands in Bare Minerals of Bare Escentuals and Nars that are headquartered in the U.S. Bare Minerals, touted as running second to front-runner MAC Cosmetics, logged $441 million in retail sales in 2015, according to NPD. But according to industry sources, the brand pulled in another $300 million through its network of boutiques and direct selling channels that are not tracked. Nars grew 25 percent in the U.S., and Clé de Peau scored a 21 percent gain in U.S. retail sales.
So the center of excellence in makeup will act “as an accelerator of particles,” Rey said, explaining the center will be charged with helping make the brands “more successful, go faster, test new things. They are also going to create new brands and they also are going to have a point of view when we are looking at mergers and acquisition.” He continued, “They are going to accelerate the way we make those brands hot — opinion leaders, makeup artists — the whole thing. We are going to increase enormously the consumer intimacy and knowledge we have on the market and the shopper insight.”
Rey added that the center will also act as an incubator for fledgling brands that are too small to be housed in their own division. He maintains that in order to gain share in prestige makeup, “You need a portfolio of brands to cover all of the expectations.”
While there will be a dedicated staff, including a director hired perhaps within the next two months, the makeup center will leverage the learnings and expertise from the brands. The center will be staffed by maybe 100 people, he said, not all of them dedicated or full-time.
A step in the direction of creating centers will be taken May 6 when a ribbon-cutting will be staged in East Windsor, N.J., for the opening of the expanded research and development center, traditionally a strength for Shiseido. Called the Americas Innovation Center, the new facility will contain 22,000 square feet, compared with 6,600 square feet previously.
While Bare Minerals and Nars are cosmetics engines, the flagship Shiseido brand “needs to increase its footprint in makeup,” Rey said, noting that in general, color should generate one-third of a brand’s sales. “We are significantly below it,” he admitted, indicating that some fine-tuning is in order. “We probably can improve on the emotional side and improve the connection with younger consumers.”
Likewise, the fragrance business is solid but its footprint could be expanded.
Rey said he also feels that the group’s level of advertising needs to be stepped up. Shiseido is spending 10 percent of sales on media, according to industry sources. Prestige competitors are budgeting more than twice that amount. Rey vowed to double outlays in the next few years.
This list of intended moves fits a man who sees himself as a change agent. “I’m not very good at routine,” he said with a trace of modest humor. “But I’m pretty active when it’s a question of changing momentum.”
It has been said that he can be impatient when needed moves don’t happen quickly enough, but people who have worked with him in the past describe Rey as the man for challenges. “He has that natural leadership,” said Chantal Roos, cocreator of Roos & Roos Co., who put him in charge of the U.S. division of YSL Beauté before it was sold to L’Oréal. Rey became the first to turn a profit with the brand in America, Roos said, adding, “He had a vision.”
Jill Scalamandre, senior vice president of the Philosophy brand and Coty Prestige Skin Care, worked with Rey at his last job as president of Coty Prestige U.S. and regional vice president of Coty Prestige North America, and she praised his decisiveness. “He sees the issues like a laser and he empowers his team to solve the problem,” she said, noting, “He sees the solution but he doesn’t dictate how to get there.”