GUERLAIN BUILDING BIGGER U.S. PRESENCE

Byline: Jenny B. Fine

NEW YORK — When Patrick Waterfield became president of Guerlain’s U.S. division two years ago, his goal was simple: to expand the company’s market share here.
To achieve that, Waterfield increased the brand’s distribution and implemented an aggressive investment strategy — including new advertising, product launches and sales consultant training. The plan seems to be paying off. Although he refused to disclose numbers, Waterfield said the firm’s net sales increased about 20 percent last year in the U.S., while the American share of Guerlain’s global volume has increased just over 1 percent, to about 16 percent.
According to figures released by parent company LVMH Mot Hennessy Louis Vuitton, Guerlain’s worldwide wholesale volume was about $414.85 million (2.095 billion francs) in 1995, meaning sales in America were about $66 million.
To continue the momentum, the company is planning a fragrance launch in September — its first since the introduction of Samsara in 1989. Waterfield would not disclose the name, but said the women’s brand represents a “major departure for Guerlain in terms of positioning.” The scent will be targeted to women in their 20s, he said, rather than Guerlain’s core group of women 35 years old and up.
In addition, the company is planning cosmetics and treatment launches throughout the year, including a revamped range of the KissKiss lipsticks and coordinating nail colors and an addition to the OdAlys skin care line for sensitive skin.
Waterfield will also continue to amplify Guerlain’s advertising presence. Industry sources estimate the firm will spend about $25 million this year in the U.S., up from about $18 million last year and $6 million in 1994.
Retailers say Guerlain’s efforts to draw more customers to its counters is working.
“Our Guerlain business has been explosive. We’ve seen incredible growth,” said Allen Burke, divisional merchandise manager of Dayton’s, Hudson’s and Marshall Field’s. “[Waterfield] had a vision for developing color and treatment, and he’s really brought it to life.”
Burke cited Guerlain’s national ad campaign and its focus on sales consultant training as instrumental to its success.
“We’re extremely pleased with our Guerlain business. The increase in advertising has resulted in an increase in consumer awareness,” agreed John Stabenau, vice president and divisional merchandise manager at Neiman Marcus.
He noted that the store will add the full range of Guerlain products to three more doors by September, on top of the 17 that already carry the brand.
Guerlain’s 24 fragrances, particularly Shalimar and Samsara, account for about 75 percent of the company’s U.S. sales, noted Waterfield. Color cosmetics account for about 15 percent, up from 12 percent three years ago, and treatment comprises the remaining 10 percent, up from 3 percent in 1993, the latest year for which the company would provide figures. Waterfield hopes that treatment will eventually grow to generate about 20 percent of the business. Waterfield attributed the increased volume in cosmetics and skin care to more in-store boutiques, which are the only outlets to stock the two categories. While in 1994 the company had 32 of the boutiques — which also stock the full fragrance line — that number has increased to 65.
The firm sells its complete fragrance range in about 100 doors nationwide. Shalimar’s distribution is about 2,500 doors, with Samsara available in just under 2,000 doors.
Although Waterfield said he would like to see Guerlain’s U.S. volume double by the year 2000, he said he does not plan on opening a significant number of new doors.
“I want to increase our business through our existing distribution channels, so it’s a focus of the right products in the right store groups,” he said, noting that the company’s distribution “was designed to maximize the effectiveness of the advertising.”
Waterfield added that the firm is considering the possibility of opening freestanding boutiques in the U.S.
“We would love to have a Guerlain boutique in resort destinations with upmarket hotels where we do the operations and another partner provides the location,” Waterfield said, citing Hawaii, Miami and Las Vegas as possible markets.
Waterfield has also explored nontraditional methods of distribution, including selling via the television shopping channel QVC.
“We want to keep our eyes open for alternative channels of distribution. We’ve been on QVC a couple of times with Shalimar, and it was successful. We got a lot of good publicity and a lot of demand,” Waterfield said.
He noted, though, that the QVC sales represented well under 1 percent of the firm’s overall volume.
Guerlain’s men’s fragrances haven’t received either the monetary or promotional attention given to other parts of the business.
“We want to win on the women’s side first. We have very good men’s fragrances; however, we don’t do very much to support them because we want to put our money on the women’s brands,” Waterfield said. “But we keep forecasting the men’s brands to go down, and they don’t — they survive,” he added. “We’ve said to our retailers that other than sampling and putting the men’s scents on the counter with women’s, we can’t support them, and if you want to discontinue them, do so — but the retailers keep them.”
Waterfield expects the firm’s upcoming fragrance introduction to generate excitement for the entire brand, and considers it a plus to be launching during the fall season when a great many fragrances are scheduled to bow.
“If we weren’t in there with a new fragrance, it might be that much tougher to sustain our existing brands,” he said. “This keeps our name out there.”

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