MILAN — The Italian economy may be uninspiring to many businesses, but in the cosmetics sector there are still believers.
For one, the Estée Lauder Cos. Inc. is forging confidently ahead, banking on consumer response to carefully crafted customer-service initiatives. This month, the company’s Smashbox brand is boosting its Italian distribution, in partnership with Leading Luxury Group, the country’s dominant cosmetics retailer and parent company to the La Gardenia and Limoni perfumery chains.
“I believe that emphasizing growth and opportunity, as well as optimism, in a country such as Italy, is very important right now,” said Edoardo Bernardi, chief executive officer and general director of Lauder’s Italian branch, at a presentation Oct. 15. He noted that in Italy, Lauder’s sales were up by 7 to 9 percent from July to September of this year, due partly to a sharp focus on improving consumers’ store experience. These figures contrast with Italy’s 1.2 percent drop in domestic consumption of beauty products from 2012 to 2013, cited in trade association Cosmetica Italia’s 2014 report. With local consumption down, many Italian businesses have beefed up their exports to survive: In 2009, 25.3 percent of Italian cosmetics were exported, but by 2013, that figure had reached 34.2 percent.
LLG, founded in 2013 and run by the Orlando Italy private equity firm, covers more than half the Italian perfumery market.
Until recently, the high-end La Gardenia had an exclusive on Smashbox products, which were available at the chain’s roughly 170 doors in Italy. However, with the extension of the exclusive to Limoni, Smashbox will now reach 90 additional doors nationally by the end of the month, averaging three new sales points per day, said Alessandro Dedé, Lauder’s chief financial officer in Italy and the director of the country’s Smashbox division.
Just less than half of Smashbox’s sales stem from the U.S. market, he said, noting that in Europe, Denmark was the brand’s top performer. Other key areas include Russia and France, but Smashbox executives believe Italy has the potential to be a major sales driver. Since nearly 30 percent of Smashbox’s sales derive from primers, Dedé said introducing Italian women to the product was an important goal.
“A majority of women have never used a primer, but once they try it they continue using it,” he said. “It’s a need they didn’t know they had.”
Limoni, which is controlled both by Orlando Italy and the Bridgepoint private equity firm, has had a turbulent few years, with the arrest of several former executives in 2012 on charges of tax evasion and embezzlement, and a drop in turnover due to market downturn. In April, about three quarters of Limoni’s workforce — at 308 of its approximately 400 doors — was put on a reduced-hours work plan negotiated with local unions and expected to last through mid-2015.
LLG, however, appears to be positioning the chain for a major comeback: Limoni’s Milan flagship on Corso Buenos Aires, a prime shopping thoroughfare, revealed a dramatic makeover Sept. 12, inviting customers to explore four floors renovated in a more upscale style, using materials such as marble and steel. Perfume is now stocked on the lowest level, makeup on the ground floor, skin-care products on the first level upstairs and finally, on the top floor, a new beauty lounge accounts for half of the store’s 4,305 square feet.
The lounge offers free makeup, hair, nail and eyebrow consultations, as well as face treatments, to shoppers who sign up for the Limoni Experience card. While customers are not required to make purchases to enjoy the lounge’s services, the thinking is that “our business is built on store traffic,” said LLG’s ceo Fabio Pampani.
Other Limoni stores in select Italian cities will soon replicate the new flagship model, he noted, citing Rome and Parma as good candidates and adding that LLG is actively training staff to provide more hands-on customer service.