Category Report: Cosmetics

Cosmetics is a tough category. For many women, the products are as much of an everyday need as toothpaste, yet the personal significance of beauty means consumers shop the category with a longing for luxury. In other words, these shoppers need help ... and service sells.Whether it's a beauty consultant at a department store, or an interactive display at a drugstore, women use the retail environment to aid in their pursuit of beauty. In turn, retailers must grow with consumers. The once-lofty department store counters are bringing automation into the mix while drugstores are trying to pump up their luxe appeal. The ever-present merchandising wall has seen its changes as well, as marketers fight to keep their brands on top by providing service sans service people. Thanks to a new auto-vending kiosk, it's now as easy in some places to get a $40 bottle of skincare solution as a frosty can of Coke. Indulge MeAmong experts and cosmetics marketers, the consensus is that more cosmetics companies are gearing their displays and in-store experiences toward a feel of indulgence for shoppers. Some stores are even employing beauty consultants, a strategy that is paying off in increased sales and brand loyalty.According to Alison Chaltas, a principal in Southport, CT-based Interscope LLC, a sales and marketing firm specializing in building brands at retail, companies are taking four distinct actions to capitalize on the service trend: creating a kinder, gentler environment around cosmetics; offering more prestigious-feeling products; writing in-store and packaging messaging around "treating yourself"; and dedicating store efforts, whether human- or technology-powered, to making shoppers feel pampered."It's all about service," agrees Roberta Weiss, senior vice president of marketing for Biotherm USA in New York. Biotherm has two independent stores in California and sells its products throughout the United States at Bath & Body Works, Sephora and Ulta locations. "Complimentary services, such as Biotherm's skin check-ups, express facials and color coaching, make a customer feel that she is getting useful knowledge with every product."New York-based M.A.C. Cosmetics also uses in-store service to indulge consumers. "Our brand is all about makeup artistry," says Tim Tareco, vice president of global visual merchandising. Its freestanding stores and department store counters are staffed with trained M.A.C. makeup artists. "For us, it's really all about teaching people how to apply makeup.""From a pampering experience, the main thing is making sure there's enough testing and playing areas for the products," says Leo Reyzis, vice president of marketing for Art of Beauty Systems Inc., Bedford Heights, OH. "Sensory perception is key whether it's color or fragrance-based cosmetics. For us, it's very important to make sure we have proper testing units, and proper play and testing stations so the client can make an educated decision."Jim Detwiler, executive director of package development and merchandising for Chanel Inc., New York, also sees testing products as a way to treat shoppers. "[We try to be] as approachable as possible with our graphic presentation and our accessibility to the products, the touch, feel and try [part of shopping]." Chanel endeavors to become more consumer-friendly by having a "very positive, very modern, yet very Chanel image," in addition to having more testers available at retail, he says.Even at the mass market level, companies bring a more pampered feel to their displays and product lines. "Walk into any drugstore today and you'll see the very long, straight, sterile cosmetics wall has gone to soft coloring, soft lighting and a more kiosk-y feel with aisle interrupters and sometimes even cosmeticians," says Chaltas.For example, Revlon Inc., New York, offers shoppers a total package encompassing eyes, face, lips and nails. "When a woman approaches the wall, she has the full gamut of color she needs for her particular skin tone and hair color," says Roger Schur, Revlon's director of merchandising procurement. "We try to educate the customer at the wall to make it easier to understand what products to buy." Revlon now groups items together by skin tone, not by product, so that a woman can see at a glance what she needs for her eyes, face, lips and nails in one spot. "So if she buys a lipstick, she immediately knows what eye shadow to use, what lip liner, what foundation," says Schur.The Personal TouchMany cosmetic companies still rely on the person-to-person experience to sell their products, although that experience has undergone a metamorphosis of its own. "More and more [beauty consultant] employees in retail establishments are a much more savvy and educated group," says Art of Beauty's Reyzis. "I think if you want your products to do well and your customer's experience to be positive, [as a company] you need to make sure that all the employees are very well-versed and trained in your product line." Art of Beauty provides extensive in-store training and also sends people to work special promotional events and product demonstrations. Biotherm's Weiss sees the person-to-person experience as "an opportunity to differentiate ourselves through the increased personal service and a pampering experience."Chanel also relies on beauty consultants to help shoppers pick the right products. "Today, we're much more service-oriented," says Detwiler. "We're spending an immense amount of money on training our consultants."But despite the positive results garnered by on-site beauty consultants, department stores are cutting back on the number of personnel who staff the beauty counters. "Quite frankly, it's an effort to be more cost-effective," says Chaltas. "Many stores carry one salesperson across many counters. In the department stores, there's less person-to-person assistance and in the mass merchandisers and drugstores, everyone is experimenting with how to insert more cosmeticians or beauty experts."Most department stores staff the beauty counters with in-store personnel, while a few companies like M.A.C. and Clinique provide company employees to work the counters. Cosmetics companies like Chanel and Art of Beauty use department store staff supplemented by company counter managers, who provide training and support for events. To counter not having regular staff at the retail level, Burt's Bees conducts hundreds of weekly seminars at retail locations throughout the country, such as Mass General, CVS and Walgreens. A seminar schedule is posted on its website. "Our consumer is very passionate and loyal," says Allison Lane, senior manager of marketing services for Burt's Bees, headquartered in Durham, NC. "We make it a top priority to deepen our relationship with our consumers by listening to them and giving them what they want."Techno CosmeticsAs a way to connect with consumers of all ages and backgrounds, more cosmetics companies are turning to technology in the form of interactive displays, robotic kiosks and in-store mini-computers. "With the media and retail environment changing so fast, it's really going to be interesting to see how technology will evolve," says George Ledes, president and CEO of Cosmetic World and Beauty Fashion magazines in New York. "How [technology and retail] will interact and interface is going to be interesting. The P-O-P could be your iPod, perhaps, broadcasting all sorts of information and displays. The demarcation lines are not as firm as they once were between displays and technology.""Small interactive displays hold great promise," says Tim Girvin, principal with Girvin Inc., a Seattle-based company that works with retailers and brands. "The key is to create quickly perceived content that is captivating."For example, Biotherm incorporates "new hand-held diagnostic tools that function like mini-computers," says Weiss. "These can specifically analyze skin and recommend product solutions that are just right for each customer based on specific needs."Zoom Systems in San Francisco has taken technology to a new level with its robotic stores. These 28-square-foot kiosks -- the first ones debuted in March 2005 -- provide consumers with up to 100 different products via a graphic user interface touchscreen. Shoppers select the product they want by utilizing the touchscreen, pay for it, and then see a robotic arm retrieve and deliver their purchase, similar to a vending machine."We're not here to replace retail -- it's just an added service to consumers," says Laura Lum, Zoom's vice president of brand development and marketing.Zoom kiosks are placed in hotels, airports and malls. The Zoom model educates consumers on the product line and gives a unique experience. "We're capitalizing on what's happening with the Internet," she says. "People are getting very comfortable with technology -- self-check-in at airports, self-check-out at retailers. It's very interesting to see how consumers have grabbed onto Zoom kiosks."Zoom kiosks for the Proactiv skincare brand launched in April 2006 and have "been a huge success," says Lum. The Proactiv Zoom store picks up all of Proactiv's branding, colors and infomercials. "It's like a huge billboard for them with the company's celebrities and user interface picking up Proactiv's own assets. It's like a living, breathing, moving thing." One-stop ShoppingZoom kiosks capitalize on a consumer trend toward convenience, as seen in growing one-stop shopping locations such as Target and Wal-Mart. Experts and cosmetics manufacturers say these big-box retailers have changed the face of cosmetics P-O-P in several ways. "They have broadened the product line and started to create a more upscale offering," says Interscope's Chaltas. "They've made glamorous, beauty-oriented products more accessible and also put price pressure on the high-end companies.""I think it's been a very big plus for our industry to have these mass retail establishments get into the cosmetics business for the simple reason that they have a lot of expertise in the retail environment and they bring a lot of fun and innovative ideas through packaging and merchandising that translates well into the higher-end retail environment," says Art of Beauty's Reyzis. "But I definitely think there's still a perceptual and quality difference for the consumer when they buy in a mass retail versus a boutique environment."One drawback for companies placing product in Target, Wal-Mart or Walgreens is that these retailers require vendors to conform to a universal wall merchandising system. "They have their own merchandising system, which is the same in all stores for all vendors," says Revlon's Schur. This means that cosmetics companies have to be especially creative to differentiate their product lines from their competitors'. "We don't love it, but we do the best we can with our graphic treatment within the confines of their particular merchandising system," he says.The ubiquitous cosmetics wall as seen in supermarkets, drugstores and other mass merchants has undergone a face lift, too. "Stores are real estate, and the wall is very efficient real estate," says Chaltas. "The challenge with the wall is that it's hard to shop and can feel overwhelming."Some of the recent ways retailers and manufacturers try to engage shoppers at the wall has been to add more color, softer lighting, aisle interrupters and kiosks. In addition, more companies place holiday, seasonal and promotional displays near the wall.Revlon, which also owns Almay, has adapted its line to be more wall-friendly by moving toward more hook-and-hang products as opposed to plastic bins. Schur says this reduces both Revlon's costs and the retailer's reset costs, which often translates into more footage for Revlon.Eye-popping P-O-PThese days, even established brands such as Chanel require a fresh look to capture today's shopper."I think we used to be a little cold, a little stark," says Chanel's Detwiler. "If you think of Chanel, it's black, white and gold. Over the past three to five years, we've gone to more four-color process graphics, a more color-driven presentation to lighten up appearances." To that end, Chanel has streamlined its P-O-P displays with a lighter, whiter, brighter presentation using clear acrylics."Acrylics seem to be the flavor of the month for P-O-P displays," says Joe DeLise III, vice president of promotional purchasing at Lancome USA in New York. "However, they are not the most conducive for many of the chemicals, such as alcohol, utilized in many of the products, but new types of treatments for protecting these material types are becoming available."To communicate its natural ingredients to consumers, Burt's Bees clearly labels its products with a "natural bar" to alert shoppers as to "the exact percentage of natural ingredients used in that specific product," says Lane. "We also use post-consumer recycled materials in order to deliver on our commitment to the environment."Another aspect of designing cosmetics P-O-P revolves around what the display will convey to consumers. This, too, has shifted from products to storytelling. "[When designing P-O-P], think about your story," recommends Girvin. "Who you are, what you stand for, how this philosophy has guided you -- and then, what does this look like? The [P-O-P] should be coherent with colors, uses of typography, language and imagery. If all of these elements are clearly realized, then you are somewhere down the road of making sense to consumers."M.A.C. Cosmetics uses "retail animation" to promote its color stories, says Tareco. "We try to bring some kind of live animation to the color stories to invite customers to come in and experience an environment around the color collection we've designed." To achieve its look, M.A.C. uses a lot of steel in the back forms and acrylics as base materials.Revlon also has updated its look, changing the logo from gold to red but keeping the trademark black wall. "We try to beef it up with graphic treatment," says Schur. "The main gist is to educate the consumer, but it's a fine line between too much text and too little. We do a mix of graphics and copy."For its Almay brand, Revlon redesigned the entire look, frame lighting the whole wall section this year with side, top and bottom graphics in white. "At least 50% of the stores have the lighted version; the other stores have the same display without the backlight," says Schur. "Historically, the P-O-P display has been a way to get shelf space in the retail environment," says Reyzis. "It's specifically changing for us. When we create a P-O-P display, we're trying to convey a story about the product. For example, if we're selling quality, the P-O-P has to convey that quality."

Category Report: Cosmetics

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