BW Confidential - Issue #3 - September 2010 - (Page 48)

Market watch: US Retailing analysis Call to action The economic downturn, changes in consumer behavior and the rise of new sales channels is pushing department stores to rethink their strategies by Laure Guilbault S retailers continue to battle slow in-store traffic, and the worst hit in beauty are department stores, which had problems well before the financial crisis. Department stores‘ share of the beauty market fell by 9% last year, giving them just 13% of the category, according to market-research company Kline & Company. (Conversely, mass merchants saw their share grow by 2% to 29% of the market.) The fact that unemployment remains high—9.5% in July—is not helping. “Disposable income in America has dropped, traffic in the stores is low and there are no impulse purchases,” says industry veteran Allan Mottus. However, although uncertain, department stores’ business is a little better than this time last year. Many stores cut staff in 2009 and despite worries about a double-dip recession, one source says that “these times of cuts are behind us”. Another executive reports that “the minute they began seeing an uptick in business, stores began buying more.” Some stores sought to react to the crisis beyond just destocking. Macy’s, for example, focused on moderate prices and exclusive merchandise The crisis may also accelerate department stores’ need for renewal. There have been U quite a few changes at some of the main stores in terms of redesign and assortment, such as the addition of exclusive and specialist brands. “Department stores have realized that beauty by itself is a traffic builder,” points out consultancy WSL Strategic Retail ceo Wendy Liebmann. “They’ve finally recognized they had to do something dramatic to get consumers back into the stores.” One of the most impressive makeovers was the overhaul at Bloomingdale’s 59th Street flagship in New York. The cosmetics department was enlarged by 410m2 (4,413ft2) to satisfaction are terrific. It may well be an allstores program,” notes Bloomingdale’s ceo Michael Gould. New thinking, new formats The store-in-store concept is a way for department stores to liven up their assortment without having to devote large spaces to each brand. It also helps modernize the store and appeal to consumers who want to test and buy in an open-sell format. The Sephora Inside format at JC Penney is working very well, and some say that this is a concept that major players like Macy’s should have embarked upon. Macy’s has, however, been innovating with its format. To capture younger consumers, the retailer introduced open-sell beauty concept, Impulse Beauty. Brands in this area are merchandised on black gondolas and include Smashbox, Laura Mercier and Philosophy. Saks Fifth Avenue, meanwhile, remodeled its cosmetics department and Lord & Taylor, whose beauty floor is still under construction, boasts a new sleek design. These innovations indicate that department stores are realizing that they need to put the buzz back into shopping. Yet it’s not just the crisis that has made them up their game. It’s also the major changes taking place in the retail landscape and increased competition from relatively new channels, such as the rise of Sephora, TV shopping and the internet. Gould explains: “What department stores offer is entertainment and service. If there is no service, places like Sephora and the internet will take a bigger share.” The rise of new channels These channels are taking a larger share. Sephora now boasts more than 270 stores in North America and has also become known as the place to find the latest trendy make-up and skincare brands. Other retailers, such as September 2010 - N°3 - BW Confidential “ Department stores have realized that beauty by itself is a traffic builder. They have finally recognized they had to do something dramatic to get consumers back into the stores WSL Strategic Retail ceo Wendy Liebmann US C&T market share by retail channel 2009 Channel % share % change 2009 09/08 Mass merchandisers Drugstores Food stores Department stores Specialty stores Direct sales Salons Source: Kline & Company 29 19 15 13 11 10 3 +2 0 +4 -9 -3 +2 -9 2,360m2 (25,402ft2) and suppliers were pushed to rethink the way they do their counters. One example is the Clinique counter, which offers a range of services (from short to long, to self-service) aimed at different shopper profiles. The store also opened the first styling bar with a full-service salon from haircare brand Bumble & Bumble. Another feature that is working well at the store is the Space NK shop-in-shops, which is currently in 11 Bloomingdale’s stores. “It is new, unique and the customer service and ” 48

Table of Contents for the Digital Edition of BW Confidential - Issue #3 - September 2010

Cover
Contents
Comment
Update
- Brand & retail news recap
- Digital digest
- 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
- O Boticário president Artur Grynbaum
Insight: luxury
- Category overview
- Pricing
- The internet
- Return to quality
Wellness
- The spa consumer
- Spa case studies
Retail
- New store concepts
Travel retail
- Inflight sales
Market watch: US
- Country overview
- Industry roundtable
- Retailing analysis
- Emerging retail channels
Radar
- Six up-and-coming beauty brands
Packaging trends
- Make-up innovations
Last word
- Inspiration&Creation founder Leïla Rochet-Podvin

BW Confidential - Issue #3 - September 2010

https://www.nxtbook.com/newpress/BWConfidential/Magazine17
https://www.nxtbook.com/newpress/BWConfidential/Magazine16
https://www.nxtbook.com/newpress/BWConfidential/Magazine15
https://www.nxtbook.com/newpress/BWConfidential/Magazine14
https://www.nxtbook.com/newpress/BWConfidential/Magazine13
https://www.nxtbook.com/newpress/BWConfidential/Magazine12
https://www.nxtbook.com/newpress/BWConfidential/Magazine11
https://www.nxtbook.com/newpress/BWConfidential/Magazine10
https://www.nxtbook.com/newpress/BWConfidential/Magazine09
https://www.nxtbook.com/newpress/BWConfidential/Magazine08
https://www.nxtbook.com/newpress/BWConfidential/Magazine07
https://www.nxtbook.com/newpress/BWConfidential/Magazine06
https://www.nxtbook.com/newpress/BWConfidential/Magazine05
https://www.nxtbook.com/newpress/BWConfidential/Magazine04
https://www.nxtbook.com/newpress/BWConfidential/Magazine03
https://www.nxtbook.com/newpress/BWConfidential/Magazine02
https://www.nxtbook.com/newpress/BWConfidential/Magazine01
https://www.nxtbookmedia.com