Weak economic conditions in the U.S. have caused the department store share of the beauty market to decline 2 percent from 2003 levels, according to new research by Kline & Co.

This story first appeared in the December 17, 2009 issue of WWD. Subscribe Today.

“The decline has prompted both marketers and retailers to actively engage customers with purchase incentives, loyalty programs and even direct sales,” the firm stated. “Brands like Lancôme, Estée Lauder and Clarins have stepped up marketing directly to customers with online enticements like bonus gifts and free shipping with purchase.”

Additionally, the direct sales retail channel has emerged as the fastest-growing channel globally, posting an 8.6 percent rise in sales, thanks to “stellar” growth in developing countries, Kline noted.

“Savvy brands are employing a mix of complementary channels, including online sales, catalogues and social networking to maximize their reach and target consumers in the format that’s most comfortable for them,” stated Karen Doskow, industry manager for consumer products research at Kline.

Through novel approaches, such as YouTube videos that show how to apply products and interactive try-before-you-buy applications for the PC and iPhone, Kline stated, brand marketers hope to diversify their customer base by going direct to the consumer.

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