LVMH DEAL WITH DOUGLAS CHAIN MAKING OTHER SUPPLIERS UNEASY
PARIS — With another major retailer now linked to French luxury goods juggernaut LVMH Moet Hennessy Louis Vuitton, competing beauty vendors are again wondering what changes might be in store for their distribution channels.
As reported, LVMH is now tied to German perfumery chain Douglas International as the result of a deal announced Monday. Sephora, acquired by LVMH in July and one of France’s largest perfumery chains, now owns 30 percent of Douglas, and Douglas owns the same percent of Sephora.
Douglas has 190 stores in the Netherlands, Austria, France, Italy, Switzerland and the U.S., and has said it plans to open stores in Spain. It has almost 400 stores in Germany, but they are not included in the new arrangement.
LVMH could use a boost in its fragrance sector. While its first-half results, released Tuesday, were up 18 percent overall, the fragrance and beauty market has been at pains in recent years to revive lagging consumer interest.
The new position in Douglas is LVMH’s latest step to controlling as much of its distribution as possible — a campaign that gained momentum with the acquisition of DFS Group earlier this year.
For the moment, Douglas and Sephora say their new intimacy will not affect the look of their stores or their plans for opening new outlets.
The Douglas and Sephora stores will maintain separate development, said a spokeswoman for LVMH. The new arrangement, she said, is solely to “accelerate both chains’ international development.”
A Douglas spokesman in Hagen, Germany, said the new situation will have no impact on planned Douglas store openings in Italy, Switzerland, France or in Spain, where the company has a joint venture with Cortefiel.
“At present, Sephora stores will remain Sephora and Douglas stores, Douglas,” he said, echoing LVMH. “The Douglas store openings planned for 1997 have nothing to do with this cooperation.”
Nevertheless, the coziness between Europe’s two biggest perfumeries, and a major vendor, concerns at least one maker.
“Today we have more questions than answers,” said Jean-Pierre Caslety, general manager of Lancaster Group Germany in Wiesbaden. “We will have discussions with the Douglas management in Germany to see what their intentions are, and how they see their European business developing and what kind of synergies they expect.”
The new coordination could have an effect on Lancaster’s European development strategy insofar as Lancaster’s consumer target is “people who travel around Europe, and it’s important that we project a similar image and merchandising actions throughout [Europe],” said Caslety.
“For suddenly there’s a partition between the German and non-German business,” he added. “It’s clear that the French market is a difficult one, and this joint venture could give Douglas the opportunity to penetrate France faster. On the other side, Douglas is well-established in markets like Italy and Austria, where Sephora could profit from Douglas’s experience.”
For Dominic Douin, director of France for Rochas Gucci, the move is positive because, he said, it could further elevate the presence of French fragrance internationally.
“Maybe it will be good for LVMH fragrance, but I hope it will be good for all French fragrance,” he said. “Perhaps our brands will be better represented internationally. It’s mostly positive because the images of Sephora and Douglas are based in prestige and luxury.”
According to Caslety, Douglas Germany is having meetings with its vendors now “to ask questions and identify what the opportunities are.”
“In the long term, the key question is whether they expect to keep separate store names or concepts,” he said. “In the French market, leaving aside the Champs-Elysees Sephora [flagship], there’s not a lot of difference between the Douglas and Sephora stores.”