BW Confidential - Issue #13 - March/April 2013 - (Page 64)

Market watch: US Specialty stores Retail special Specialty stores continue to expand and pull in more consumers in the US. We analyze the strategies of the major chains by Alex Wynne S pecialty stores have transformed the US prestige beauty retail landscape since their arrival in the late 1990s, providing an alternative to the department store and attracting younger consumers. When Sephora entered the US in 1998, department stores controlled around 90% of the prestige beauty space, according to industry analyst and editor of The Informationist Allan Mottus. That figure, he claims, has now dropped to around 55%. Euromonitor states that specialty stores now account for 6.5% of the total beauty market in the US. “Consumers like that there is a no-pressure environment and that they can play with products. They also like the idea of shopping across brands,” NPD vice president and global beauty industry analyst Karen Grant explains. Industry players see the channel as a positive addition. “It is a way of recruiting additional customers we didn’t touch before,” Clarins North America president and ceo Jonathan Zrihen comments. “Sephora has been a nice new way of growing our consumer base.“ The strength of the specialty store channel, especially in the make-up segment, was a driving force behind L’Oréal’s recent acquisition of Urban Decay. Adding the brand to its portfolio will allow the group to gain greater market share in these outlets. “Our make-up artist brands are fantastic, but they tend to be in the generalist or designer arena,” L’Oréal USA Luxe division president Carol Hamilton comments. “For us, the segment of young make-up specialist brands was wide-open territory.” Sephora on the up-and-up While various players have tried to enter the space, the bulk of the specialty store market is held by two retailers: Sephora and Ulta. Sephora saw sales of around $3bn last year in the US, according to industry sources. While the company initially struggled to recruit leading prestige brands in the US, this is no longer the 64 s The US’s two main specialty stores are Sephora (top), with around 300 stores, and Ulta (bottom), which operates 537 outlets case, as brands realize they cannot afford to ignore what is now the second-largest prestige beauty retail player in the US, after departmentstore heavyweight Macy’s. “They’ve made “ Now that Sephora is a strong player in make-up, I’m sure they will focus more on skincare and fragrance ” Clarins North America president and ceo Jonathan Zrihen tremendous progress given how it was eight or 10 years ago,” Clarins’ Zrihen says. “They’re getting the brands now, and they’re starting to see in their top 10 a reflection of what is the top 10 in beauty.” And if a sign of its success in recruiting the majors were needed, it could perhaps be found in the fact that department-store stalwart Estée Lauder launched in 25 of its doors in 2012. To attract bigger brands, Sephora has begun to focus more on brand signage, according to WSL Strategic Retail ceo Wendy Liebmann. “The brand is now much more dominant, with stronger signage than in the original US models. In the past year, it’s become more obvious,” she says. Regarding its relationship with Sephora, Thia Breen, group president North America for Estée Lauder Companies, comments: “They work with us on how the gondola looks. It’s very important that we tell our story; we don’t have a beauty advisor there, so it’s important to be able to tell the consumer what our bestsellers are, what’s new […] it’s not just product on shelf.” Until recently, Sephora’s strength was mainly March-April 2013 - N°13 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #13 - March/April 2013

Cover
Comment
Contents
Update
- Brand & retail news recap
- Companies on the move
Take note Market facts, figures & trends
Best of BW Highlights from our e-publication
Launches The latest in fragrance, skincare & make-up
Interview Natura Cosméticos evp José Vicente Marino
Insight: Make-up
- Category overview
- The latest trends
- Social media
- Retail viewpoint
- Retail case studies
- Increasing usage
Retail
- European perfumeries
- Store concepts
Digital Mobile strategies and brand case studies
Strategy spotlight Trends to inspire
Market watch: US
- Country overview
- Department stores
- Specialty stores
- Industry viewpoint
Emerging markets Company profile: Jequiti
Radar A profile of six up-and-coming beauty brands
Travel retail: Brazilian travelers
- Overview
- Passenger profiles
Packaging Designs for travel retail
Last word The Beauty Company’s Alisa Marie Beyer on new ways to converse with consumers

BW Confidential - Issue #13 - March/April 2013