Byline: Soren Larson

NEW YORK — As the turn of the century looms, the beauty industry is busy forecasting what fundamental shifts are likely to take place after the year 2000 — and planning strategies to roll with the changes.
As top executives from all corners of the business convene in Boca Raton, Fla., beginning Feb. 27 for the Cosmetic, Toiletry and Fragrance Association’s annual meeting, discussions will range from how to use the Internet to the best marketing techniques for reaching Chinese consumers.
But most conversations will touch on one issue: survival.
Department stores are facing stiff challenges. Alternative retail outlets like QVC and specialty chains like Gap have been siphoning sales. An intensified focus on new products has led to a preponderance of short-term strategies.
And the increased expense involved in promoting department store brands has produced dire questions regarding profitability.
As Robert Brady, president of Parfums Givenchy, put it: “The business is not growing in terms of units, which is resulting in intensified market share wars, which in turn leads to the increased costs of simply doing business.”
Nevertheless, prestige vendors are sticking by their traditional class of trade.
“We still have the opportunity to increase the items we sell per customer, and by improving the environment in which we sell our products, we have the opportunity to increase the productivity of our current distribution channel,” said Robin Burns, president of Estee Lauder USA and Canada. “That doesn’t mean we won’t explore alternatives, but we feel there is a tremendous opportunity within existing channels.”
In the mass market, manufacturers predicted that diversity will rule the business.
While the big have been getting bigger of late — with L’Oreal’s purchase of Maybelline only one of several moves — those firms that occupy the nooks and crannies of the industry are determined to be around in the year 2000. And they’ll have plenty of niches to fill.
Marc Pritchard, president and general manager of Procter & Gamble Cosmetics, predicted “an explosion of self-expression.”
“We have only seen the tip of the iceberg,” he said. “Demand for color products will keep going up. There will really be no rules about how people express themselves. Color will go beyond lips and nails. We’re seeing a lot of color on the eyes and the face in Japan already.”
Speaking of Japan, international expansion is still one of the hottest and most prescient topics, with more and more eyes turning to Asia, South America and other markets that haven’t begun to near their potential.
Last year, American firms last year sold a record $2.8 billion worth of fragrances, lip, eye and facial care products and toiletries worldwide, up about 10 percent from 1995, the previous pacesetting year.
“We’re taking the U.S. model and applying it internationally,” said George Fellows, Revlon’s chief executive officer and president. “America has the lead in technology as well as a unique vision of beauty.”
Back in the U.S., the NPD Group entered the ranks of those tracking the prestige cosmetics market when it launched its BeautyTrends program in January of last year. Now, the Port Washington, N.Y.-based firm has finished compiling its figures for all of 1996, analyzing the fragrance and makeup business in over 1,000 department and specialty store doors.
Starting on page 16 is a sampling of the results; as is the case year after year, Estee Lauder, Lancome and Clinique — a.k.a. The Big Three — turned out to be the dominant forces in color cosmetics.
Perhaps some things won’t be so different by the year 2000.