Last year, the retail world was rocked with a series of high-level executive changes that look set to significantly reshape the beauty landscape.
First up, in April, Nordstrom veteran Gemma Lionello replaced Laurie Black, who retired, as executive vice president and general merchandise manager of cosmetics. That was followed by the July announcement that former U.S. Cellular chief Mary Dillon was named chief executive officer of Ulta Beauty; shortly thereafter came the news that Marigay McKee would depart her post as chief merchant of Harrods in London to become the president of Saks. In October, Calvin McDonald was named president and ceo of Sephora Americas, replacing David Suliteanu, who is returning to his entrepreneurial roots as ceo of Kendo Brands, an LVMH-owned brand-creation incubator. Weeks later, Bloomingdale’s announced that its legendary chairman and ceo, Michael Gould, who held the post for 22 years, would retire, to be replaced by Tony Spring on Feb. 1.
All this change, say those in the know, is good. “It brings a shot of adrenaline to the industry,” says Carol Hamilton, president of L’Oréal Luxe USA, “as well as new thoughts and ideas about how to keep growing the luxury business. The luxury beauty business is extremely healthy. We should be able to accelerate that growth,” she adds. “They’ll be able to enjoy a very dynamic market.”
While new to their current posts, each executive is well ensconced in retailing, and many of them have ample experience in beauty, which industry watchers say gives them a running start. “What’s exciting about all of this is that we’ve got people for the most part who have the core beauty experience, but who may bring a different sensibility to luxury retail,” says Wendy Liebmann, ceo of WSL Strategic Retail. “What we’ve seen from the holidays, the flow of 2013 and looking forward, is that for us to be able to grow the luxury business we need to start to think about it differently.”
WSL’s most recent How America Shops MegaTrends study reports that even affluent shoppers are very conscious about what they are spending and where they are spending it. “The shopper is saying, ‘I don’t need everything. I am going to spend a lot on the things, brands and experiences that are really important to me, but I don’t have to throw money at everything,’” Liebmann explains. She believes that retail executives need to look at the consumer through a different lens. “They have to understand that, as it was in the old days, it is truly about building a relationship with their shopper,” she says. “It’s about building a very intimate relationship with them because they have so many places to go. Unless retailers intimately know them, shoppers will be with them one day and gone the next.”
A number of beauty-industry executives expressed confidence in the incoming leadership. Many anticipate they’ll work to advance the successes of their predecessors, while bringing a more modern approach to the store experience and customer retention.
Bloomingdale’s Spring, for instance, is lauded for his deep understanding of the business, and is renowned for checking in with sales associates at the beauty counters to get a pulse on sales trends.
“He’s been almost born and brought up through the Bloomingdale’s ranks. He’s not only received the DNA of the company. He’s been the dispenser of DNA,” says Arnold Aronson, managing director of retail strategies at Kurt Salmon. “Tony learned by example and then grew to become the partner of Mike [Gould]. They could probably finish each other sentences.”
More of the same is a good thing in the case of Bloomingdale’s, in Aronson’s view. “Bloomingdale’s will never suffer for [a lack of] creativity or for being noticeably first,” he says.
An executive who recently met with Spring says he’s keen on modernizing Bloomingdale’s, and that those efforts will ultimately benefit its branch stores.
“What I really appreciate about Tony is that he is a very humble guy, who is always interested in learning,” says Jonathan Zrihen, president and ceo of Clarins Groupe Americas. “You can see the consistency of his approach.”
He notes that both Spring and Nordstrom’s Lionello have spent the bulk of their careers at their respective companies. “When you’ve been at a company that long, everything you do is for the long term. They know they can make a difference, but they want to do it with respect,” he says.
Zrihen recalls that when he mentioned to Lionello that he planned to visit Nordstrom’s Mission Viejo, Calif., store to see the new beauty concept there, she arranged to meet him to give him a personal tour, flying in from Seattle for several hours expressly for that purpose.
All eyes are also on Marigay McKee, the former chief merchant of Harrods who Hudson’s Bay Co. recruited to reenergize Saks Fifth Avenue. McKee brings vast beauty experience, and is expected to put her stamp on the beauty department.
“We’ve had a long-standing relationship with Marigay. She understands luxury brands,” says Thia Breen, a group president of the Estée Lauder Cos. who oversees the North America region, nodding to McKee’s overhaul of Harrods’ beauty halls.
In fact, her international experience is just what’s needed to enliven U.S. retail, says Paco Underhill, founding president of Envirosell. “The more international experience you have at the top, the more muscle you have to invest around the globe. Harrods is a store that recognizes that probably the majority of its sales are attributable to offshore tourists.” Hudson’s Bay does have designs on bringing the Saks nameplate to Canada with as many as seven stores over the next several years, including two in Toronto in 2015 and 2016.
The challenge for McKee, says Liebmann, will be to bring her merchant’s view to a far bigger and more-complex operation. It’s the same challenge her U.S. retailing peers face: How to bring the pulse, spirit and the creativity of the flagship to stores across the chain.
“They have to upgrade,” says Liebmann. “The [consumer] expectation is that they’ll get the same experience and the best experience. [A store] may not have all the bells and whistles [of the flagship] but it has to look like the current concept. Retailers have to ask, ‘How many stores do I need?’ It’s not about, ‘Do I have enough traffic in that market?’ It’s, ‘Can I afford to make the store in that market look like it should?’” she says, adding that Nordstrom and Sephora are looking to upgrade their stores across the country and other retailers have to follow suit. “It’s a basic requirement,” says Liebmann, who anticipates retailers will also be taking a closer look at emerging categories, including premium hair care, to bring some vitality and additional sales.
Hamilton agrees. “Retailers have to continue to modernize the luxury beauty segment…. Every retailer has to embrace the DNA of its format—whether counter based or assisted open-sell—and do it better,” she says. “The best thing we can do is to update the look of the store and bring the branch stores up along with it. To me, when Bloomingdale’s redid its flagship store in 2009 it heralded the end of the recession. It’s important to have a store-design schedule, and not just in New York City.”
As the beauty industry continues to undergo a metamorphosis to better reflect modern shopping habits, the promise of change that the new executives bring is a development that will doubtless be closely followed. Says Liebmann, “It’s a time at retail when there are some new faces that are going to have a real impact over the next few years.”