LAUDER’S TEST CASE: A FREESTANDING SPA AS FORUM FOR IDEAS

Byline: Jenny B. Fine

NEW YORK — Estee Lauder will open its first freestanding spa in September.
It will be the company’s second freestanding retail venture in as many years. The first, a store in Las Vegas, opened in 1995.
The spa is scheduled to open in the Americana shopping center in Manhasset, N.Y. It will measure about 5,500 square feet, with 3,400 square feet given over to the spa and 1,700 square feet used for retail sales. There will be five facial rooms, two body treatment rooms, four manicure stations and three pedicure stations.
Facials will range in price from $35 for a Teen Facial, which purports to help control acne breakouts, to $80 for a 4-Phase Hydrating Facial; body treatments start at $35 for a Sea Salt Body Wrap and rise to $65 for an aromatherapeutic body massage. A traditional manicure will be $17, a pedicure, $35.
First-year sales are estimated by industry sources to exceed $2 million, although Lauder executives declined to comment on that figure.
“We are really catering to the prestige, higher end of the market,” said Robin Burns, president and chief executive officer of Estee Lauder USA and Canada. “I want a full-fledged facility that delivers beyond expectations. I don’t want to do cabines or two treatment rooms.”
But the new store and spa does not mean the company is intent on becoming a retailer, Burns insisted.
Rather, it is intended to act as a laboratory for Lauder’s spa business, much as its first U.S. store does on the merchandising front. That store, measuring 2,100 square feet, opened in Las Vegas in February 1995 and did a first-year volume of some $3 million.
“This is not a signal that this is the second of many [freestanding stores],” said Burns. “We’re not looking to compete with department stores. This is another laboratory for us.
“The spas we currently have are in department stores, and we are always looking for ways to make them state of the art,” she continued. “This will give us the opportunity to use this spa in that manner, and we’ll take what we learn there to our other spas around the country.”
Lauder has done just that with merchandising techniques first tested in the Las Vegas store, translating them into a format that suits department and specialty stores.
One example is the company’s foray into the open-sell, store-within-a-store layout, which has thus far been installed in three Lauder doors — Macy’s in Paramus, N.J.; Saks Fifth Avenue in Orlando, Fla., and Eaton’s in Toronto.
“Most department stores historically have merchandised products in showcases, and consumers today are telling us they want easier access to the products,” Burns said. “Las Vegas was our first attempt at addressing the issue — and what we’ve learned there, we’ve taken on the road.”
The company is hoping to garner equal insight into the spa business with the opening of the Manhasset location.
Currently, Lauder operates eight spas in the U.S.: Bloomingdale’s 59th Street flagship, as well as units in Riverside Square, N.J.; Short Hills, N.J., and Tyson’s, Va.; Dayton’s in Southdale, Minn.; Neiman Marcus at Northpark in Dallas; Marshall Field’s at Old Orchard in Chicago, and Hudson’s in Troy, Mich.
In addition, a 3,000-square-foot unit is scheduled to open in May at Neiman Marcus in Beverly Hills, while a 4,000-square-foot Lauder spa will open in Toronto’s Holt Renfrew next fall.
Industry sources estimated that each spa pulls in between $1 million and $2 million annually, with spa services accounting for about 60 percent of the volume.
Burns declined to comment on the figures, but did say that “in the right place and done in the right way, the [spa] business is one that is healthy and important.”
Lauder is aiming for an upscale, luxury positioning with its spas, which Burns said made the Americana shopping center an ideal location.
Located in an affluent Long Island suburb of New York, the mall includes such designer boutiques as Giorgio Armani, Ralph Lauren and Louis Vuitton. It has no department or specialty stores, which Burns said should insure that the new store doesn’t cannibalize sales from the company’s existing doors.
“There won’t be any cannibalization because there are no department stores in the mall, and there will be no gift-with-purchases or launches,” Burns said. “We need a laboratory, and I didn’t want it to be all the way across the country. It’s easier to manage if it’s closer.”

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