“People have always been beauty’s biggest strength,” said Elizabeth Morello Eckhardt, senior vice president and general merchandise manager for beauty for Macy’s West. “I think, though, they are still our biggest challenge.”

But despite the challenges, said Morello Eckhardt, “I think there has never been a more exciting time in this industry. There are movements and trends in beauty that suggest we are entering a new phase, a time when cultural and creative changes are coming together to create a wealth of new opportunities. It is not business as usual, but it is a great time to be a retailer.”

She didn’t downplay the shock waves of the seismic shifts in the retail world, particularly Federated Department Stores’ integration of May Department Stores, however. “You all know there’s been a profound and likely permanent shift going on in retailing,” she said. “Consolidation, new entrants and a migration to the ends of the market spectrum have radically altered the competitive landscape. We only have to look at what has happened on Union Square in San Francisco where Macy’s West is headquartered to know this. Not long ago the square was populated by I. Magnin, Joseph Magnin, Liberty House, City of Paris, Saks [Fifth Avenue] and Neiman Marcus. Now there’s Saks, Neiman Marcus and Macy’s. But those famous names didn’t just disappear — they were replaced by interesting new retailers who brought something fresh to the business. Sephora, Lush, H&M, Forever 21, to name a few. This same process of weeding out tired formats has been going on in other consumer areas, as well.”

Macy’s West has been forced to update itself, she said. “A while ago, people would’ve told you that Macy’s didn’t get it, that we would be among the failures in retailing. They would’ve said that you can’t compete in the middle and that a department store as a concept and a category is dead. Well, retail is not dead, department stores aren’t dead, Macy’s and Federated certainly aren’t dead. In fact, we’re growing. We’re growing because we challenge ourselves constantly to find new ways to meet the consumer’s changing needs and preferences.”

While today’s consumer has myriad retail and product choices — and many consumers shop in more than one channel for beauty — the good news is that women love to shop for beauty, said Morello Eckhardt. “NPD reports that women are purchasing beauty products more frequently than they were five years ago, with 15 percent of women saying they’re purchasing more fragrance, 22 percent increasing their makeup purchases and 40 percent increasing their skin care purchases. And the news gets even better. It offers opportunity for everyone — 40 percent of women say they do not have a favorite beauty brand. And about 50 percent say they do not have a favorite store for their beauty purchases.”

This story first appeared in the May 26, 2006 issue of WWD. Subscribe Today.

Even better, in Morello’s view, is the fact that consumers are willing to pay the price for products they love. “A recent survey of luxury shoppers found that while a majority of affluent customers made their last luxury purchase on sale or at a discount, their fragrance and beauty purchases were made at regular price. Top retail prices for premium face products have doubled compared to five years ago.”

Consumers have redefined what beauty means to them — expanding the category’s definition to include wellness, ingestibles, spas and services, among other items — and it’s critical for retailers to pay attention to that. “They’re all beauty choices and [the consumer] likes them under one roof,” she said. “And we’ve learned that it’s OK to have a mix of big established brands and small brands on the selling floor. Both can thrive. What is important is balance so that one doesn’t overshadow the other.”

Service is another key area, said Morello Eckhardt, pointing out that it can’t be “business as usual.” She explained, “We enlisted the help of our vendor partners in the training and development of our people in one format. The response we’ve got to the training program tells us that we’ve tapped a real need. We see our customers wanting newness and excitement across all categories,” said Morello Eckhardt. “In fact, she’s so attracted to newness, she’s turned the fragrance business into a ready-to-wear business.” But despite consumers’ supposed yen for newness, surveys have shown that they dislike clutter, she said.

“What does better look like? It starts with the service piece. Being able to get her in the chair and listening to her. Better also means being in stock. With the systems that we have today, we should never be out of stock and disappoint the customer. Having what she wants when she walks in the door is the most critical way to build and keep her trust. Better means new, innovative, concise point of sale, visual and marketing. And what does better look like from the vendor perspective? Faster innovation. We can’t be fast enough.”