Cosmetics Merchandising Makeover

It's no surprise that manufacturers of skincare and cosmetic brands are worried about sustaining their youthful good looks. On the surface, things are still picture perfect. Sales in the $20 billion U.S. retail cosmetic industry remain strong. With teens and tweens having access to more disposable income than ever before and baby boomers interested in defying the effects of aging, there is always interest in new colors, new ingredients and new claims. Add to that another $25 billion in sales outside the United States, and manufacturers have an ever-growing number of markets for their products.But underneath that flawless foundation are some pimples. For every new line of colors, natural products and trend-defining brands, it seems there is another new place for consumers to buy skincare and cosmetic goods. Discounters such as Romeoville, Ill.-based Ulta 3 have become a major source of cosmetics for discount shoppers as well as those hooked on premium lines. And Gartner Group Interactive, a Stamford, Conn.-based research firm, predicts that the ease with which 16- to 22-year-olds order online will result in a larger percentage of beauty goods being bought via the Net, at the expense of the bricks-and-mortar stores.Indeed, cosmetic manufacturers and retailers alike are now seeing a wrinkle or two thanks to specialty Internet sites like www.beautyjungle.com, www.eve.com and www.cosmeticmall.com, from online merchandisers like www.drugstore.com and even from the Internet arms of the manufacturers themselves. On these Web sites, consumers can buy what they want, what they've heard touted on "The View" or what they've seen in the latest issue of Elle without ever leaving home. That means, of course, that they're never tempted to try new products off of a display. Add to those pressures an ever-increasing number of new brands, resulting in less space for existing lines in cosmetic departments and a movement by retailers toward restructuring their in-store display programs."The past year has seen a proliferation of new brands," says Geri Doyle, executive director of marketing for Prescriptives, one of the brands owned by Estee Lauder Inc, New York. "In certain retail environments that means spaces are getting tighter."Manufacturers say that they're seeing space dwindle, in part because more brands mean more displays have to fit in an increasingly expensive piece of real estate. But as few retailers have exclusive deals with specific brands, different retailers increasingly carry the exact same things as their competitors. In one suburban mall, for example, three anchor department stores can offer the exact same brands -- and promotions -- in their cosmetic departments. In order to get consumers to make purchase at their cash register, rather than the store next door or the store (or manufacturer) online, retailers are taking more control over their space, dictating how much room manufacturers have for P-O-P and how they can -- and cannot -- use it."At Bloomie's on 59th [in New York], they no longer have ledges in the cosmetic department. That was an enormous opportunity for us that was eliminated through a store redesign," says Debbi Camarota, executive director of visual merchandising for Estee Lauder, the company's eponymous brand. "And cosmetic windows are getting smaller. We used to have their windows on Lexington Avenue."But experts say these trends have not made P-O-P obsolete. In fact, manufacturers say that an effective in-store merchandising strategy that is coordinated with other advertising efforts (both on- and offline) is essential for getting new customers into stores and encouraging them to buy products once they're there. And, just as there's a foundation color for every skin tone, industry insiders say there's no one-size-fits-all approach for P-O-P."What we really have to do is work n a retailer-by-retailer basis, and design specific collateral for them," Camarota says.Shrinking Retail SpaceForemost among the shifts Camarota and others have seen is the decrease in space that manufacturers have to devote to P-O-P. Many retailers have limited the size of countertop displays to less than 8 inches by 11 inches, and no longer accept ceiling banners. Estee Lauder has responded by focusing on its tester units, playing up the product, the tester and the graphics that are associated with magazine advertising that consumers may have already seen."We have to do more with minimal architecture, so the product becomes the focus," Camarota says. "We always had consistency with national ads, but now it is more important than ever."Earlier this year, Coty Beauty (the recently renamed Coty Inc., based out of New York) launched Rimmel, a hip value line already established in London, exclusively in Wal-Mart stores in the United States. As Coty entered the Rimmel deal with the Bentonville, Ark.-based discounter, Wal-Mart unveiled its new "millennium wall," a store-designed cosmetic area that gives the retailer, not the manufacturer, control over the cosmetic section's visuals.Tom Donovan, director of display development for Coty, says he's had to work with Wal-Mart to get approval for the brand's display plans. He says he experienced a similar process when designing the in-store displays for sporting goods stores for the company's new Adidas fragrance. The Wal-Mart model features standard, uniform fixtures with trays and spaces for the manufacturers to insert graphics and information about the brand. The change has not been particularly oppressive for the Rimmel brand, Donovan says, because he knew of the upcoming P-O-P limitations before its launch. But for a brand with an established image, like Coty's wildly successful and well-displayed Healing Gardens line, the company had to think of ways to incorporate its signature wood and other natural elements into a standardized fixture.Donovan says manufacturers with relatively new lines, such as Oil of Olay and Neutrogena, will bear the brunt of the Wal-Mart redesign, as those brands already purchased P-O-P displays which they likely had planned to amortize over a several-year period."A brand like Revlon has a recognizable logo, but part of what is recognizable are those black cubes. Once you take the black cubes away, they are going to have to find other ways to tell the story of the product line to set themselves apart," Donovan explains.Open-Sell ExpandsDonovan predicts that the open-sell philosophy of merchandising will continue to be a driving force in P-O-P, as consumers will still need to be able to test, sample and see products as display units become more uniform. Donovan thinks other mass merchants, including Target and CVS, are testing similar programs to standardize cosmetic wall displays.However, the retail sea change affects not only in-store displays, but also special promotions on the class level. Not many years ago, Camarota says, a major manufacturer could expect to coordinate one promotion per month with a department store retailer. Now, in order to create their own point of differentiation, retailers are designing their own promotions and "picking and choosing" promotions from manufacturers. Camarota says one in-store promotion per season is all a manufacturer can reasonably expect in the current business climate.Last fall, Estee Lauder chose to use its promotion opportunity for the launch of its new Dazzling fragrance and Go Pout lipcolor, and next year Camarota expects the 15th anniversary of the Beautiful fragrance to get a lot of storewide coverage.Internally, Estee Lauder spent much of its Go Pout promotional planning time thinking of ways to create a congruous message in a limited amount of space. The result was strong tie-ins with billboards, outdoor advertising on bus shelters and other marketing. Gone are the big launch parties, replaced by references to company Web sites with lists of store locations, and catalogs and magazine ads with URLs and other information that will get new customers to come into the stores, where they'll be greeted by a more compact and information-packed P-O-P display.Indeed, according to a study conducted by Port Washington, N.Y.-based market researcher The NPD Group Inc., 70% of advertisements in the country's top 50 magazines in the first quarter of 2000 used URLs or e-mail addresses to steer consumers to Web sites."In-store displays are very important to a new launch, but in modern merchandising, it is not the end-all, be-all. Yes, it is very important to have as many visual opportunities as we can in-store, but we also have to do what we can do outside the retail environment," Camarota says.Estee Lauder is thinking of taking a beauty tip from sister brand Clinique, which has opened freestanding kiosks in several malls and locations like London's Heathrow airport. The kiosks help answer questions, offer samples and provide more information than an on-counter P-O-P display, while also directing the consumer into the traditional retail stores for a wider range of products.Coordinating ArtworkA primary task when working in-store is keeping up the theme of coordinated graphics. Both Estee Lauder and Coty executives say they need consumers to make the connection between an ad they saw in a magazine and the P-O-P they pass on their way to the housewares aisle. For brands with spokes-models, that means using celebrity faces on counter displays, like Estee Lauder's use of Elizabeth Hurley on in-store displays as well as out. For brands with a lifestyle image, it means using graphics and copy that uniformly explain the attributes of the line on P-O-P and in media outlets.Despite the shrinking space and new obstacles, smaller cosmetics firms still see P-O-P as the primary way to build brand awareness.Natural cosmetic maker Burt's Bees Inc., Raleigh-Durham, N.C., has an almost cult-like following and has more than doubled its sales in the past year. With $21 million in annual revenue, Burt's Bees is far smaller than New York-based Revlon Inc. or New York-based Maybelline Inc., but last month the brand unveiled its most aggressive P-O-P effort to date at the Atlanta gift show: a metal, freestanding display designed to accommodate its lip balm, as well as larger skincare products, and its new color cosmetics line to be launched in 2001.In the past, Burt's Bees derived in-store inspiration from the candy aisle, because the company's tins of lip balm and other goods were small and had the potential to get lost on the shelf in the same way as a pack of gum."Personal care displays did not fit our image of the company. We are not glamorous. We prefer to think of ourselves as grass roots," says Roxanne Quimby, company president.But now that Quimby has set her sights on expanding beyond specialty gift stores and health food stores, she looked for inspiration from the cosmetic leaders - specifically Maybelline and Calvin Klein -- to design her company's new P-O-P."Stores tended to put our hair treatment with other hair treatments, breaking up the line. We felt it was stronger when united visually," she says.The result is a display that can hold 12 to 18 SKUs from the 150 SKU line. The previous temporary displays used to get dog-eared and thrown away. By creating a metal display that can still handle the corrugated boxes many Burt's Bees products are shipped in, Quimby hopes to forge different relationships with retailers. "This is a bigger commitment because it is not a disposable unit. It is built to last a lot longer, so it is more of a long-term commitment from the retailer, and that is what we are trying to do," she says.Quimby plans to work out any kinks in the new P-O-P displays (which will be augmented by the brand hiring its own sales staff) in its current markets: upscale grocery, health food stores and specialty shops. Once it's perfected, she thinks it will be the perfect introduction for the brand to enter department stores, mass merchants and other mainstream retailers."This is a self-contained unit. Our feeling is that we have to make it almost turnkey. These stores are not staffed well enough for the floor person to do it. It has to be all ready to go," she says.As Burt's Bees expands into more traditional cosmetic products including additional lipsticks and lip pencils, concealer, tinted moisturizer and blush, Quimby also acknowledges that in-store merchandising has to help the consumer as much as the retailer if it is going to be successful."One of the reasons we really had to work on this display is that we had to think about how we were going to represent this as a unified piece. There are so many, many colors out there. How do you keep it all organized in an environment when you don't have someone helping you at the counter?" Quimby asks.And even those cosmetic companies with a counter salesforce to help answer questions agree that P-O-P displays have to be approachable and instructive, particularly as more and more consumers prefer to test and sample products on their own, rather than be intimidated at the make-up counter. Prescriptives' Decker says, "at any time when a customer is encouraged to touch and apply the actual product, we are much closer to a sale."Agrees Coty's Donovan: "The open-sell type of concept is really the opportunity to tell the story of the product line and set yourself apart."

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