Byline: Faye Brookman

Niche cosmetics brands have been thriving by filling voids in both the prestige and mass markets. Although major players have stepped up efforts to provide their own cutting-edge colors and technologies, specialty lines will also be more nimble in getting hot items to the market.
These were the themes sounded by a panel of niche makeup marketers. Many had come from inauspicious debuts to become trendsetters in the color industry, which has been a booming category of late.
Grant Berry, president and chief executive officer of Lord & Berry, discussed the genesis of niche names in the mass market.
“I had started a company called Pirate Cosmetics in the Eighties and doors were slammed on me. It was ahead of its time,” said Berry. Then, in the Nineties, the door was opened to a new breed of pencils lines, including Lord & Berry and Prestige.
“The niche lines have added a new dimension to the face of mass market cosmetics,” he said, noting that niche brands in the mass arena often bring 20 percent to 30 percent lower prices than brands such as Revlon.
Propelling sales of niche brands is the fact they attract new shoppers to drugstores.
“Niche brands have brought incremental business, and there’s crossover from class to mass,” Berry said. “We have department store shoppers going out of their way to go into a drugstore to buy our products because of the value.”
Berry thinks smaller brands can weather stepped-up challenges from major players. “There’s plenty of room to establish niche as a permanent portion of the business. The niche players are here to stay,” he proclaimed.
Echoing his comments, Tom Winarick, executive vice president of Prestige Cosmetics, discussed how niche marketers address a very specific audience. He also pointed out parallels to the early days of powerhouse brands such as Estee Lauder.
“Niche marketers also supply products in areas the big players may deem too small,” Winarick said, explaining that Prestige got its start by filling a niche in the American market for mass market pencils. “Today, Prestige has evolved into a full, 250-stockkeeping-unit brand.”
Winarick said niche players are the first to bring new colors to the market, often serving as a test marketer for leading brands.
“Niche brands also bring diversity to the sameness of the category. Numbers show the growth of cosmetics overall has been slowed, but the growth of niche brands has been nothing short of phenomenal because the consumer is ravenous for new,” he said.
He pointed out that niche brands can help stave off the migration of shoppers into specialty and apparel stores, which are adding more beauty products. “Our consumers are out there and ready to buy,” he said, suggesting that retailers strive to create the right environment to nurture niche brand sales.
Howard Katkov, president and ceo of Sassaby, which makes Jane cosmetics, took an opportunity to argue that his brand isn’t really a niche player.
“Since the introduction of Jane, our company has been characterized as one of the niche players that pioneered this market. It is a term that has bothered me,” he said.
Katkov doesn’t see the field divided by the big players and the niche players. “Rather, I see it governed by the rule makers and the rule breakers.”
He described the rule breakers as those who keep the majors on their toes.
“With our nimbleness and quickness, we provide the role of keeping the category fresh. We are willing to bet the franchise,” he said.
Success is not based on the size of the company, but movement at the cash register. “The truth is simple: slow-turning brands cannot hide behind glamour and image,” Katkov said.
What makes a brand successful, he continued, are strong relationships, the ability to service accounts, category distinction and product innovation.
“Finally, you need to be well capitalized. You need a strong financial partner,” he said. “And so who is Jane if not a niche player? She is a mini major, one with characteristics of the rule makers, but still in her heart a risk taker.”
William Lauder, president of Origins Natural Resources, explained why the term “niche” no longer means small.
“Entrepreneurs snuck into what looked like a tiny slice, and the tiny little slice was not an attractive enough piece of the pie to be attractive to the big marketers,” he said. “They came in and took a slice and it is now a good piece of the pie.”
Niche marketing, he reasoned, is also about reaching customers in fresh ways. For instance, many of the prestige makeup artist brands are introduced to shoppers via personal appearances and makeovers.
“I would argue that is not about being packaged in black,” he said, making reference to a running joke at the conference about all makeup artist lines looking similar.
“[Makeup artists] train associates to a much higher level, people who touch customers, than do the non-niche players,” he said.
Vincent Longo, ceo of Vincent Longo New York, discussed how he developed a line that could stand out against an already strong group of makeup lines in department stores.
“The most crucial thing was to differentiate my name from all others. I looked at pricing, placement, promotion, personality and product,” he said.
He opted for prestige pricing and placement in very exclusive accounts as a point of differentiation. His other hallmarks include being able to translate fashion colors and textures into products.
Finally, despite a lack of deep-pocketed backers, Longo has created proprietary formulas such as Water Canvass System, a cream to powder foundation.
Longo realizes any new launch will face great challenges. However, the niche discussion highlighted how fickle shoppers can be and how the need for newness drives sales.
Said Lauder, “I believe the customer is fundamentally fickle. No brand can keep customers without creating something new. It is different when it is a 20-ton gorilla creating something new versus a small company where the ‘something new’ is half the company.”

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