BORGHESE BANKS ON A RENAISSANCE
Byline: Alev Aktar
NEW YORK — After nearly two years of turmoil and several management changes, Princess Marcella Borghese is getting a head-to-toe makeover.
Under the direction of Teresa Townsend, the energetic president and chief executive officer for the Western Hemisphere, everything from the name of the company to products, packaging, advertising, promotional strategy, counter design and in-store service has been revamped.
If all goes well, the ambitious plan should start to pay off next year. After a slight dip in sales this year, an increase of 7 percent is projected for 1998, according to Townsend. This would raise the company’s U.S. retail sales to $72 million, she said. At its peak in the Eighties, Borghese’s volume here soared to $80 million annually.
The overhaul starts with the brand name, which has been shortened to Borghese, with the tag line Essential Italian Beauty. The new moniker is meant to reposition the brand as an Italian lifestyle line and make it sound “more approachable,” according to Townsend.
The second and perhaps more important change was Townsend’s decision to drop gift-with-purchase and purchase-with-purchase promotions in January. “Gifts represented 15 percent of our sales last year or $10 million [at retail], but we couldn’t compete with the big guys like Lauder and Lancome,” she observed. “We’re replacing the gift business with in-store events and innovative products.”
Despite the loss of gwp sales, she expects volume to dip just $500,000 this year to $67 million. New products and promotions are making up the difference.
Townsend has developed a new eight-step “hospitality” program that is being tested in 30 stores. The program, which is time-consuming for sales advisers, includes filling out “prescription charts” for color and treatment products that the customer can take home; offering the customer a free treatment; calling the customer the next day at home or work to make sure she was satisfied; setting up another service appointment and then calling to confirm the day.
“[With the new program], the average sale is $115,” noted Townsend, adding that with just 15 appointments, the beauty adviser can generate half of the following week’s business. She acknowledged that some beauty advisers are opposed to such labor-intensive measures, but she argued that they can make the calls during their down time and the extra effort is reflected in their higher sales.
Finally, the media budget is doubling next year to $4 million. With promotions and sampling, the company will spend $15 million. This year, the firm will invest approximately $13 million on print ads to back Fango Active Mud mask, Borghese’s “icon product,” as well as promotions and sampling for different lines.
The print visuals were shot by Italian photographer Ferdinando Scianna and they feature an Italian woman smiling in different settings. The campaign broke in the November issues of national magazines and uses the shortened brand name.
These decisions have been applauded by retailers, who in the past grumbled about late shipments, ineffective gwp programs and the confusing reversals in strategy following Revlon’s sale of the company, called Halston Borghese at the time, to Arab investors in 1991.
These problems were compounded by the arrival of makeup artist brands such as MAC Cosmetics, Bobbi Brown and Trish McEvoy, who grabbed market share and squeezed existing second-tier brands.
In January 1996 the company announced that a letter of intent had been signed by a group of investors to purchase Borghese. Two months later, negotiations collapsed, and the Saudi owners decided to hold onto the brand. They did, however, sell the Nautica and Halston fragrance brands to Paul Sebastian and French Fragrances, respectively.
During the on-again, off-again sale period, Ray Baliatico resigned as president and ceo of Halston Borghese International Ltd. His departure was followed by the resignation in mid-March 1996 of Sherry Baker, former president for North America of Halston Borghese.
Townsend, who had served as London-based president of Halston Borghese for Europe, the Mideast, Africa, Latin America and Canada arrived in November. She originally joined the company when Revlon sold it in 1992.
After all the upheaval, “retailers were feeling pretty low about the company,” admitted Townsend. “The talk of the brand being for sale made them feel uncomfortable.” To improve relations with stores, Townsend has spent the last 10 months touring the country, meeting with buyers and explaining the brand’s new philosophy.
Her efforts seem to have worked — merchants are now optimistic about the brand.
For Barbara Zinn Moore, senior vice president for cosmetics and fragrances at Macy’s East, the changes are already registering. “Our Borghese business has been growing,” she noted. “I think that Teresa’s decision to go away from gwp’s and concentrate on new product development and store events and customer service is the way to go for the brand. “Borghese has a very loyal customer,” she added. “But to grow, the company needs a new customer. With the national advertising, we can get a new customer.”
According to Jane Scott, vice president and divisional merchandise manager for cosmetics and fragrances at Bloomingdale’s, “the decision to run the business as a class act is a positive thing for the brand. We agree with their strategy; the events are productive, and we love them.”
On the product front, this month, Borghese introduced two lipstick lines, B Moisture and B Matte, as well as a coordinating Protettivo Nail Laquer range. The moisturizing lipstick formulation is available in 30 shades and priced at $22.50, while the matte texture is available in 10 shades retailing for $20 each. The new lip items should generate some $3.5 million at retail in the first four months, said Townsend.
The fast-drying nail polish, which is said to protect nails by preventing peeling, chipping and fading, comes in 22 shades priced at $13.50 each.
In the treatment category, two hand-moisturizing products — Spa Mani Moisture Restoring Gloves and Mani Vitale Time-Defying Hand Creme — will make their debut in November. The gloves have a patented polymer lining that infuses the skin with natural plant oils, Ceramide 3 and vitamin E acetate. They can be worn for 20 to 30 minutes at a time and are priced at $38.50. The moisturizing hand cream can be used alone or with the gloves, and it retails for $25.
Also in November, two facial moisturizers for dry skin will hit counters. Called Energia Skin Recovery Creme and Skin Recovery Fluide (oil free), the products contain microspheres to make wrinkles less noticeable, Ceramide 2 to moisturize and protect the skin, alpha- and beta-hydroxy acids to improve the texture and firmness of the skin, and other skin-rejuvenating ingredients.
Each one is priced at $47.50 for 1.7-ounces.
Then, in late December, Fango Delicato, a new mud mask targeted to women with normal to dry skin, debuts on counter. The mud will go for $30 for a 7-oz. tube and $55 for a 17.6-oz. jar. Together, the two Fango formulations should rack up about $4.3 million at retail in the U.S., according to Townsend.
Next April, Acqua Puro, a new skin care line for sensitive skin, will kick off, followed in May by the launch of moisturizing socks and foot cream.
The new Borghese treatment products will be packaged in glossy terra-cotta-colored boxes decorated with a matte grid design and beige lettering. Next year, the makeup will be repackaged in glossy anthracite boxes with a matte grid design. The London-based Michael Sheridan & Co. developed the new logo, containers, boxes and in-store collateral. The new graphics will be phased in for the remainder of the line by the end of next year.
Sheridan also designed the new open-sell counter, which combines rolling counters with walk-through areas. The mostly wooden structure has makeup stations, facial areas and huge blow-up visuals. It will be installed in key doors such as Bloomingdale’s on 59th street in New York, Macy’s Herald Square and Macy’s Union Square in San Francisco in the first half of next year.
Borghese’s sampling efforts have been widened to include all specialty items, or 15 products total, according to Townsend. Also, stores will send mailers to customers inviting them to pick up a complimentary box of three samples at the nearest Borghese counter.
Townsend has also developed several innovative in-store promotions, such as Lip Service, a “theatrical” event in which makeup artists perform makeovers using limited-edition lip products. “We believe we can do four times normal sales on a given day with this promotion,” she enthused.
The company has also signed its first fragrance distribution deal for Gai Mattiolo, the signature fragrance of the 28-year-old Roman women’s fashion designer. The scent is marketed by ICR in Europe; Borghese’s agreement concerns only the U.S. The scent will hit the U.S. in January — in time for Valentine’s Day.
Mattiolo’s signature scent, a fruity oriental, is packaged in a bottle decorated with hearts. It will roll out to about 850 doors by yearend. Borghese will back the scent with about $3.5 million worth of print and scented strips. The company is targeting retail sales of about $7.5 million.
With the additional business from Mattiolo, Borghese’s U.S. sales should rise 19 percent to $80 million at retail next year. (The other projection of $72 million does not include Mattiolo.)
Townsend concluded, “Gai Mattiolo is a good new name, and the fragrance will give beauty advisers more commission and increase dollar density at the counter.”