For the first time in memory, prestige beauty retailers seem to be breathing easy as their businesses head into the holiday crunch. And the numbers, for once, justify a bit of optimism.
This story first appeared in the November 19, 2010 issue of WWD. Subscribe Today.
According to Karen Grant, vice president and global industry analyst at The NPD Group, sales of total prestige beauty in U.S. department stores are now 3 percent ahead of where they were at this time last year. If the trend continues, that percentage could climb higher by yearend. Last year at this time, prestige beauty was floundering at 7 percent down, meaning that there has been a 10 percent positive swing.
Grant noted that skin care sales have been growing by high-single digits, and sometimes double, every month for virtually the last year. Across the board, treatment launches have been strong, led by the Clinique division of the Estée Lauder Cos. Inc. “The manufacturers and retailers took a lesson from what happened in the past, and pulled out all the stops,” she said.
Makeup, which was in the hole, has been on a roll since Mother’s Day, spurred by artistry brands like MAC Cosmetics, which “has been on fire,” and also the designer labels. “Chanel is having an awesome year,” she added. Color cosmetics suffered declines in 2008 and 2009, while skin care was still in the plus column in 2008.
Now the entire portfolio of color brands has turned up. The lipstick category is on its way to enjoying its first positive year in nearly a decade. The fragrance category is now flat for the first time in three or four years, after starting the year with negative numbers. She cited the sparkplug launches of Chance Eau Tendre and Gucci Guilty on the women’s side and Ralph Lauren’s Big Pony, Marc Jacobs’ Bang and Bleu de Chanel on the men’s. Since December traditionally generates 30 percent of the fragrance year in sales, “if it continues the trend, it could be up even higher.”
Grant had previously said during an Oct. 14 Cosmetic Executive Women panel discussion that department stores were the hardest hit in the recession and “have recovered the most, and fastest,” While Internet and specialty beauty sales are also doing well, chain stores, which did relatively well during the recession, are now facing more of a challenge, Grant added. “Consumers are going to where they can get the greatest newness and excitement in the category, she said.
“We’re firing on multiple cylinders,” said Howard Kreitzman, vice president and divisional manager of cosmetics and fragrances at Bloomingdale’s. “We expect to achieve or exceed plan for the year 2010.” He refrained from making a prediction, saying only “we are on solider ground than we have been in a while.”
Kreitzman noted the most strength of this fall’s business has been in high-end skin care and color cosmetics, “but the fragrance business has also been performing well — on the plus side.” Chanel has performed well, particularly its new men’s launch Bleu de Chanel. Another standout has been Bulgari Man. “In women’s fragrances, there has not been abundance of newness,” he noted, but there are hot spots, such as Gucci Guilty, which Kreitzman described as “very well done.”
Saks Fifth Avenue has made gains this fall by playing to its strength — high-end skin care — as well as its lifestyle fragrance brands, such as Bond, Creed and By Kilian. “The fragrance business has been very strong,” said Wendy Gottfried, vice president and divisional merchandise manager of fragrances and intimate apparel. “We are meeting our expectations and are optimistic for the holidays,” she said. She declined to specify the details of the fourth-quarter plan, saying only that the stores expects to achieve a sales increase. Moreover, there has been a rebound in regular business. “The launches continue to be strong,” she said, “in addition to a more consistent development of day-to-day business.”
Saks has had strong skin care launches this fall, among them La Prairie Antiaging Neck Cream, LaMer Eye Balm Intense and Chanel Sublimage Concentrate. On the fragrance side, the store scored with exclusives like Bond’s Washington Square Park and Love Chloé. Like at other retailers, Bleu de Chanel and Gucci Guilty were outstanding, and Jo Malone’s English Pear & Freesia did well. Gottfried added that “the whole lash and brow category is very strong.”
Another bright spot for Saks has been the continuing strength in fragrance gift sets, with a slight increase in unit sales. Gottfried said Saks is making a stronger presentation, such as putting up clearer signage announcing gift items under a certain dollar amount, for key items among the holiday gift sets.
At Sephora this week, Margarita Arriagada, senior vice president of merchandising, said, “We’re optimistic about the holidays and feel that we’re going into them with our best foot forward.” she noted, “It has been a good year, and holiday business is tracking very well already.”
Arriagada said that several brands exclusive to Sephora that launched this year have enjoyed strong sales. “We launched Tarina Tarantino’s color collection and Tokidoki’s, as well as Brazilian Peel skin care, and all have been strong. We also launched Paco Rabanne’s Lady Million women’s scent [with the 1 Million men’s version] exclusively in the U.S., and it has fared very well.”
Turning to color cosmetics, Arriagada said, “We’re seeing strong sales with palettes from Too Faced and Urban Decay, as well as our Sephora brand. Bobbi Brown just reentered the retailer’s doors three weeks ago, and lipstick is another bright spot, she said. “Make Up for Ever, another line exclusive to us, has been very strong in lipstick. Skin care — most notably, antiaging products “across the board” — is a bright spot.
In hair care, tools and styling products are strong.“We launched Bumble and bumble in 50 stores, and the response has been fantastic,” said Arriagada. “Sultra’s Bombshell, a curling iron which uses Japanese Kyocera ceramic technology, has also been flying.”
So far this fall at Barneys New York, Frédéric Malle’s collection of scents composed by major perfumers has been a standout. His home fragrance entry has been “very strong,” noted Bettina O’Neill, vice president and divisional merchandise manager for cosmetics and fragrance at Barneys New York. A highlight of the fine fragrance line has been the new scent Portrait of a Lady.
Several of Byredo’s scent’s have been doing well, as have LeLabo’s, which did a scent for Barneys’ Chicago store. O’Neill also cited the Odin, L’Artisan and Serge Lutens fragrance brands, which have been doing “really well.
“Our fragrance business has been in double-digit increase,” O’Neill said. “We’ve been quite pleased. We expect that to continue.”
While the retailer usually shies away from doing promotional business, Barneys began carrying a limited quantity of high-end sets. A promotional concept from holiday last year has been discontinued and this year, the emphasis has been on events.
Patricia Saxby, vice president and divisional merchandise manager of cosmetics and fragrances at Bergdorf Goodman, expects the fall fragrance business “to be very strong.”
Front-runners early on include Clive Christian “C” for Men and Woman, Creed Aventus, Chantecaille Petales, By Kilian’s Love and Tears, Absolue Pour le Soir by Francis Kurkdjian, Jo Malone English Pear & Freesia, and Bleu de Chanel.
“This fall, we are going to highlight our best-selling and most exclusive collections in prime locations throughout the store,” said Saxby. “We are confident that the early strong trend will continue and the season will exceed our expectations.”
Meanwhile on the Upper East Side of Manhattan, Nicky Kinnaird, founder of Space NK, is doing a soft opening today for her 19th store in the U.S., including shop-in-shops at Bloomingdale’s. The new store, located at 968 Lexington Avenue and containing 900 square feet of selling space, stocks more than tightly edited 60 brands, primarily in skin care and makeup.
Kinnaird noted that U.S. business has been registering double-digit gains this year and she is expecting the strength to continue through the holidays. While skin care is not traditionally considered a holiday gift item, that attitude is rapidly changing, particularly when it comes to gift sets. Kinnaird pointed out that some customers like to customize and create their own sets, especially when groups of women get together and share. “People are going to give luxury products,” she said.
During a recent CEW roundtable, Macy’s group vice president and divisional merchandise manager Nancy Schmidt named MAC’s Venomous Villains fall collection and Chanel’s Rouge Coco lipstick collection as examples of launches that resonated. “If [consumers] have an emotional connection to something, they are going to come in and buy it,” said Schmidt, who said Chanel’s lip launch worked because Macy’s beauty advisors were sent samples of the product in rosy shade, Mademoiselle, which they wore at the counter. “The response was pretty incredible,” said Schmidt.
Fragrance sales at Macy’s are also on the rise thanks to strong fall launches from brands like Chanel and Gucci, shared Schmidt. “There is some life coming back around to fragrance.”