www.bwconfidential.com The inside view on the international beauty industry January 23-February 5, 2014 #86

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The buzz 2 Alphabet soup News roundup he perils of doing business in have been put Netwatch 6 Tunder the microscope, following Revlon’s decision to leave the country and L’Oréal’s announcement that it Beauty blogger review would stop selling Garnier there. This comes on top of data that shows that beauty’s growth was slower in 2013 Interview 8 than in previous years. The Beauty Box marketing & Other BRIC countries have also lost some of their sales director Breno Salek sparkle. India, for example, has been put on the back burner by a number of companies, due in part to too-slow Insight 10 development in retail over the years, while Brazil has seen Amazon’s Luxury Beauty store less buoyant growth over the past year. This has seen companies take a closer look at other regions and financial Store visit 13 analysts create new groupings of high-potential emerging markets. A popular Les Bellista by Nocibé, one is the CIVETS—Colombia, Indonesia, Vietnam, Egypt, Turkey (and depending Leers, on whether the S is included, South Africa). But even this collection of countries now has its critics, with some saying the markets covered by the acronym have little in common, and that due to political strife, Egypt is not currently a focus for most businesses. Now, the latest grouping that analysts say represent the best places to invest is MINT—Mexico, Indonesia, Nigeria and Turkey. So, despite worries over China, emerging markets have not by any means fallen out of fashion. And for most in the industry, this is still probably where most of the growth will come from in the future. Meet the BW Confidential team at: Oonagh Phillips Editor in Chief l Elements Showcase, New York, February 4-6 [email protected] l PCD Paris, February 5-6 l Duty Free Show of the Americas, Orlando, March 9-12 l Make Up in Seoul, March 13-14 l Mondial Spa Beauté, Paris, March 15-17 l Esxence, Milan, March 20-23

CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIA CONFIDENTIA L L The buzz Strategy News roundup ventures with Coty in 2005, LVMH in 2011 and Yves Rocher in ‘market2013. It strategist’ says further for the Asianplan is an effort industry. to move the companyand cementingitspartnerships withbrandsintheregion.Luxasiasaysrepositioning beyond the status of distributorpart of a S$9mto what (US$7.04m) it calls repositioning a Singapore-based beautydistributorLuxasia is to focus plan on aimed joint at ventures reinforcing and M&A,its businessas in Asia $35m inincrementalsalestoitsresults2013onaproforma basis. disclosed, butIFFsaidthattheAromoroperationswouldhave representedaround of specialtyingredientsforfragrancesandflavors.Terms the transactionwerenot US-based IFF has acquired Aromor Flavors and Fragrances, an Israeli manufacturerminority shareinthecompany. to be worth around $160m. In 2011,E.l.f. investment is said tofirm have TSG hired Consumer investment US-based budgetmake-upbrande.l.f.Cosmeticsisforsale,accordingtopressreports. Partners bank took Financo a to sell the company, which is said he called the “champion” of thesome year, divisions and the hadluxury performed division. extremelymarket and well, so gainedincluding market the shareactivesatisfaction and cosmetics reinforced of arm,having our which position.”grown in all Agon divisions explained and that all regions.the markettogrowthisyear. We progressed faster than thethan the market,” he commented.[…]. He declinedWe are determined however, toto specifyoutperformmarket. how the fast“We market arehe expectsapproaching and grow one this cosmeticsand new a halfyear sector timeswith confidence,tofaster grow in 2014determinationAt hisNewYear’saddresstothepress,L’Oréal ceo and Jean that Paul theand Agon Frenchambition said group he expectswill perform the better than the The strategy involves a focus on joint ventures. The company already set up joint Talking about 2013, Agon said that the group had seen a “good year”. “We have the Stay informedwithourdailynewsheadlinesonbwconfidential.com n n n n n n n At aglance... n n

Perfume Holdingappointsnewceo Jane LaudernamedheadofClinique Nocibé opensstoreforprivate-labelbrand(seep.13) Printemps opensnewstoreinParis Macy’s tocut2,500jobs Arden salesfallinfirsthalf Luxasia repositionscompany E.l.f. Cosmeticssaidtobeupforsale L’Oréal’s Agonpredictsgrowthfor2014 www.bwconfidential.com -January 23-February 5,2014#86 -Page 2

n MarketingDirector:NicolasLeclerc AlexWynne,RenataAshcar,MayuSaini, www.bwconfidential.com printmagazine(4issues):€499orUS$699 1 year:electronicpublication(20issues)+ Subscriptions [email protected] Raphaëlle Choël,CorinneBlanché Tina Clark,LouiseDury, Contributors: [email protected] Deputy Editor:AlissaDemorest [email protected] Editorial Director:OonaghPhillips Publisher: NicolasGrob ISSN: 2104-3302 Fax: +33(0)153010979 Tel: +33(0)174634961 [email protected] 92600 AsnièressurSeine,France 4 avenuedelaMarne BW Confidential permission isstrictlyprohibited. Reproduction inwholeorpartwithout Copyright ©2014.Allrightsreserved. 513 746297RCSNanterre BW ConfidentialispublishedbyNoonMedia [email protected] Advertising [email protected]

News roundup

n n n joint ventures will be announced this year and that it is also exploring potential mergers and acquisitions. The new strategy also involves the regional implementation of SAP A1, building new distribution channels, the creation of a new logo, and a revamped website. In addition to strengthening its business, the repositioning is intended to attract The buzz potential employees.

Beauté Prestige International (BPI) is to distribute Ferragamo Parfums in Canada from this year. Ferragamo Parfums has been sold in Canada since 1998. In 2013, Ferragamo signed up with BPI for the distribution of its products in the US.

US-based beauty company Living Proof has signed a global joint venture with Canada-based Valeant Pharmaceuticals International to develop, distribute and sell aesthetic dermatology products. The transaction is worth more than $75m, according to Living Proof. Some 60% of profits will go to Living Proof and the remainder to Valeant. The first product, to launch in March, will be based on Living Proof’s proprietary, polymer film technology, Strateris, which claims to reshape the skin’s appearance through a breathable and flexible film.

Austria-based luxury glass packaging specialist Stölze Glass Group has acquired glassworks company Verreries de Masnières and decoration specialist Bormioli Rocco Valorisation from Italy’s Bormioli Rocco group. Both are located in northern France.

Results Beauty company Elizabeth Arden is forecasting net sales of between $415m and $418m for the second fiscal quarter of 2014, a 12-13% drop compared to last year’s revenue of $467.9m for the period. For the first half of the fiscal year, net sales from the Arden brand rose by around 2%, while its fragrance sales fell by 10%. In US department stores, sales of the Arden brand were up by 4%. (Arden embarked on a repositioning of its namesake brand in 2012). Net sales of the group’s business in North America were down by 9% and international sales decreased by 1%. Elizabeth Arden chairman, president and ceo E. Scott Beattie said that sales were hit by increased promotional and discounting activity on a global scale, in addition to lower sales during the holidays in mass retail in North America. “While we are disappointed with these results, we made the strategic decision in the second quarter not to participate fully in the heavy promotional and discounted environment,” Beattie explained in a statement. The company expects fiscal 2014 net sales to be below the previously forecast range of between +3 and +5%.

Consumer-goods group Beiersdorf (BDF) reported 2013 sales of €6.14bn, up 1.7% over 2012, according to preliminary figures. Organic sales for the period were up 7.2% due to the strength of the euro. BDF’s Consumer Business Segment, comprised of the Nivea, Eucerin and La Prairie brands, saw sales rise by 1.1% to €5.10bn. Last year, the division saw growth in Western Europe for the first time since 2008, and sales in Latin America were strong, driven by Brazil. China also showed a significant sales increase. n n n

www.bwconfidential.com - January 23-February 5, 2014 #86 - Page 3 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIA CONFIDENTIA L L The buzz Retail People News roundup n Nigeria (FAAN). sign a10-yearconcessionagreementwiththeFederalAirport Authorityof in Nigeria.Thecompanypartneredwithinvestmentandconsulting firmNovignisto Swiss travelretailerDufryDutyFree is to open three duty free stores in two airports sells nine brands, including Dior, Chanel, La Mer, Estée Lauder, Sisley and Lancôme. 2,600m famous Louvre museum gives the Carrouselretailer accessdu Louvre to ashopping strong flowcomplexFrench departmentstorePrintemps opened of tourists.in its Paris, first France. new store The instore’s 32 years location in the beside the implementing amoreefficientmodelthatincludesstronge-commercecomponent. fulfillment and new stores. Theremain news wasat aroundseen as 175,000, a positive as itsigncosts will that byadd $100mthe jobs retailer annually,in online is beginningoperations,US-based departmentstoreMacy’s will this cut direct-to-consumer year.2,500 Thejobs retailer and close said five that stores its headcountto reduce will still chairman. Palixwillfocusonhelpingthesite“becomeatrueglobalplayer.” last year. The site’s current ceoPalix and ceo. co-founder Palix stepped Aaron Chatterleydown fromUK-based beautye-commercesiteFeelunique has thenamedwill position becomeformer deputyofClarins president executive Clarins Joël Fragrance Group Most recentlymdofDieselItaly,PacepreviouslyheadedupCoty’sItaliansubsidiary. Italian companyPerfumeHolding has named Dino Pace ceo, replacing Enrico Ceccato. president, directorandregionalceooffoodgroupHeinz’sASEANregion. Sheri McCoyandwilljointhecompany’sexecutivecommittee.Mostrecently,Patelwas and president, Asia Pacific Region, US-based direct-salescompanyAvonhasappointedNileshPatelseniorvicepresident effective February 2014. Patel will report to Avon ceo Clinique in2013asmdBenelux,afterspending13yearsatL’Oréal. and Darphin.CliniquealsonamedBorisJanicekmdofthebrandinFrance.joined and Designer Fragrances division,Stephane has been de lanamed Faverie, svp and currently globalLauder gmsvp of wasand Origins, formerlyglobal Ojongeneral global managerpresident of andthe generalgroup’s managerAramis of Origins, Ojon and Darphin. 800m It isdividedintotwolevels:1,800m Murtala MuhammedInternational Airport,Lagosandtwoduty-freeshops,totalling85m (915ft Azikiwe International Airport, Abuja. Dufry willoperatea380m Printemps wasacquiredbyQatar-basedinvestmentgroupDivine Investmentsin2013. The retailer invested €25m in the store, which is smaller than its other outlets at has named Jane Lauder global president of Clinique. Estée LauderCompanieshasnamedJaneglobalpresidentofClinique. 2 2 (8,611ft ), facing the first class lounge and VIP lounge in the departure hall of the Nnamdi ), facingthefirstclasslounge and VIPloungeinthedeparturehallofNnamdi 2 (27,986ft 2 ) onthemezzaninelevel.Thebeautysectioncovers200m 2 ), and is described as a concept store with a focus on luxury brands. ), andisdescribedasaconceptstorewithfocusonluxury brands. 2 (4,090ft 2 (19,375ft 2 ) duty free shop in the departure lounge area of n 2 ) of selling space on the ground floor and ) ofsellingspaceonthegroundfloorand www.bwconfidential.com -January 23-February 5,2014#86 -Page 4 2 (2,153ft 2

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News roundup

Launches

n n n Coty Prestige brand Calvin Klein is expanding its Euphoria franchise with a women’s scent called Endless Euphoria. Described as a fruity floral, it was composed by IFF’s Bruno Jovanovic, in collaboration with Ann Gottlieb. The fragrance will launch The buzz in global markets in March. It will retail at $49 (40ml EdP), $69 (75ml EdP) and $89 (125ml EdP).

Yves Saint Laurent (L’Oréal) is to launch a new skincare range in the premium segment, called Or Rouge, in March. The three-sku range comprises a cream that is said to smooth lines, improve firmness and reduce brown spots, priced at €325 for 50ml; an eye cream costing €165 for 15ml and a lotion retailing at €125 for 100ml. The line’s star ingredient is saffron, whose stamen is said to be rich in glycans. The range comes with a spatula for applying the product and massaging the skin. This is Yves Saint Laurent’s second major skincare range under L’Oréal after Forever Youth Liberator, which was launched in 2012. The brand is focusing on building skincare in Asia. Data Digital investment in China among mass personal-care brands is insufficient, according to a new report by L2 Think Tank. The company reported that P&G spent Rmb378.7m ($62.6m), Unilever Rmb258m ($42.6m) and L’Oréal Rmb234.27m ($38.7m) on digital advertising in China in 2012. This is despite personal-care’s share of sales through e-commerce in China being four times greater than in mature markets. The researcher says that brands need to improve their game in digital. • Although 78% of the brands the company covers sell through branded stores on Chinese online platform Tmall, just over half of their brand sites link to Tmall for purchase. • Some 92% of brands have a presence on social media platform Weibo, but just half are present on mobile messaging and payment platform WeChat. Fewer than 25% are active on Renren, Kaixin, Qzone, Douban and other emerging social media platforms. • Although 44% of Chinese consumers base their purchasing decision on the opinions of others, just 7% of sites feature user reviews. • One in five brand sites do not offer any customer service option. • In L2’s Digital IQ ranking for personal- care brands in China, P&G’s Olay came in at number one, followed by L’Oréal Paris and Rejoice (P&G). n Make-up CONFIDENTIAL Beauty insight Facts, figures, trends & innovations

CONFIDENTIAL Netwatch China, , Korea Market watch CONFIDENTIAL Insight: skincare Interview Travel retail:Asia CONFIDENTIA

L Ever’s No14. Eye ShadowinGoldenOrchid,BenefitLollitint,andMakeUpfor Caviar Stick Eye Colour in lavender,to match Elizabeth the trend. Arden Beauty Beautiful productswho arenotonlypickingupfashionitems,butalso cosmetics include Laura Mercier a fuschiawithpurpleandpinkundertones,hasexcitedbloggers, News ofPantone’snewcolortheyear,RadiantOrchid, bloggers recommend using water-free recommendations includebasicmoisturizersfrombrandslikeAvène,VaselineandNivea.Some cleansers in cold weather,to reviewfacialskincareproductsforuseinextremelycoldweather. Thesuch most as Pond’spopular Cold Cream. The recentcoldfrontthatbatteredtheeasternseaboardinUShaspromptedanumberofwriters boost skin’s moisture content. Foundation (pictured).Theitemissaidtoprovidetranslucentcoverage,smoothfinelinesand with the ‘no-foundation’ look gatheringprominent inspringcollections.The‘lessismore’trend has also steam,been strong as with in USmake-up, brandnourishing, Dr Perricone’s glossy Noshine Foundation have beenA hostofnewlipglossesandbalms featuring featured non-sticky, on the blogs, creamy with formulas pink, peachthat leaveand nude a shades Beauty bloggerreview BW Confidential BW CONFIDENTIAL what’s tocome? What’s changedand Luxury insight Market watch:US Interview Packaging CONFIDENTIA L trends andnewopportunities An analysisofmarket data, Fragrance Interview Packaging report Market watch Travel retailspecial

insight

reportsonwhatthebloggersaresayingaboutbeauty Color makes acomeback Make-up insight Market watch Interview Travel retail Packaging Distribution atalltheindustry’s majorinternational events In-depth coverag eoftheglobalbeautymarket Luxe Pack Monaco • Beyond Beauty Paris • TFWA Asia Pacific Singapore Florence Make Pacific UpinParis •HBA GlobalExpoNew FragranzeYork... Pitti Asia Shanghai Pack • Luxe • Paris TFWA Beauté Kong Spa Mondial York• New Hong • Showcase Elements Asia Paris Cosmoprof • Beauty York New Beyond Pack Luxe • Monaco Pack Milan Luxe Esxence • Moscow Intercharm • Orlando Americas the of Show Free Duty ParisCosmetics Cosmoprof In • Shanghai Expo Beauty ParisChina Worldwide• Bologna PCD • Dubai East Middle World Beauty • Cannes Exhibition World ...TFWA Figures, retailinitiatives&trends Skincare insight Market watch:China Interview Travel retail How prestige is set to develop How prestigeissettodevelop Insight: Haircare Market watch:TheUS Interview Packaging

Boost yourinternationalbusinesswithBWConfidential Data, trends&retailerviews Fragrance insight Interview Market watch Travel retail Packaging What’s nextforthecategory? Make-up Interview Market watch Travel retail Packaging insight What’s nextforthecategory? Skincare insight Interview Market watch:China Travel retail:Asia Trends, opportunities&challenges Insight: Fragrance Creation Packaging Middle East Market watch: Interview Digital focus

[email protected] Ups, downs&newdirections Insight: Fragrance Interview South EastAsia Market watch Travel retail Packaging

What’s instorefor2013? Make-up insight Market watch:US Interview Travel retail Packaging

The views expressed in this section are those of bloggers and do not represent the opinions of BW Confidential The Art of Excellence Art for Art’s sake, and the best of the international overview of Artistic Perfumery finds, for this sixth edition of Esxence – The Scent of Excellence, a perfect frame inside the Triennale di Milano, which hosts one of the most important museum dedicated to design in the world. From March 20th to 23rd, 2014, this new location will welcome the visitors of the Artistic Perfumery’s Event, for a new unmissable appointment, that, every year, confirms the mission of the initiative towards the promotion of the Art of Perfume. A prestigious exhibition area, with the presence of some of the most important brands of this world, combined with a rich events and meetings calendar for operators and enthusiasts. Esxence’s committment towards new talents, after the contest dedicated to new maitre parfumeur, is confirmed thanks to the competition for perfume bottle designers, in order to complete the creation The Art Perfumery’s Event of the official fragrance of Esxence “The Scent of Esxence”. 20th - 23rd March 2014 LA TRIENNALE DI MILANO www.esxence.com The Beauty Box marketing & sales director Breno Salek Outside the retail box

Interview Brazil-based Grupo Boticário launched The Beauty Box retail concept in 2012, combining foreign prestige brands, local players and its own private-label line. Marketing and sales director Bruno Salek tells BW Confidential about its performance and its strategy for the future

What was the strategy behind launching The Beauty Box and introducing third-party brands to the concept? Foreign brands are not well distributed in Brazil, so the main idea was to fill this gap. We created a store with a welcoming atmosphere and a different concept. For example, Brazilian women have to go to three or more stores if they want to buy a full range of products, so we decided to sell 10 categories, which is not common in Brazilian retail. Another point of difference was to have a pyramid structure of different types of brands, The opening of new from high-end to more accessible lines. The main blockbuster brands are important for stores requires a huge our reputation, but we also have more entry-level brands, with popular local players like “ Granado and Phebo, which help drive traffic. Finally, we have our own-label products investment; however, that help us create awareness. Having products in the high to low price range facilitates the consumer experience: they can now shop in one store and find their favorite imported I see potential for fragrance and a local soap in the same place. Overall, imported products represent around more than 200 stores 70% of our revenue. in Brazil in the next Is there a problem convincing foreign prestige brands to be listed at the 10 years store, given that they are sold alongside cheaper, local brands? The initial reaction from suppliers was very positive; O Boticário is the biggest Brazilian retailer in beauty, which means brands trust our know-how. At the same time, the The Beauty Box marketing & business is not conventional, given the categories we aimed to have and the different sales director Breno Salek price ranges. We needed to introduce the idea first to the most important global players. I ” think they are now betting on us and we are looking for success together in the market.

How has The Beauty Box performed so far? After one year, we have exceeded our sales forecasts. We closed 2013 with 16 stores and a strong e-commerce operation and have learned a lot. The combination of high- and The Beauty Box low-priced brands is working well. We have top-10 brands like Dior, Lancôme, Carolina l Number of stores: 16 Herrera, and more mass brands like Revlon and Granado, so the concept of mixing them l No of openings was well accepted. The market share of make-up, accessories and haircare is above planned 2014: 20 expectations, but skincare and fragrance still need to increase, which is a challenge for us. l On offer: Retail in Brazil has a very high staff turnover, so we need to improve on hiring and 60 brands in 10 categories retaining better sales teams, which is a structural challenge in retail. We also have some l Assortment: logistic issues to manage, which is not easy, considering that we have around 50 suppliers 70% imported brands for e-commerce and an average of 35 for retail. n n n (in terms of revenues)

www.bwconfidential.com - January 23-February 5, 2014 #86 - Page 8 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL The Beauty Box marketing & sales director Breno Salek

n n n What do you think you need to do to improve the concept? In terms of the store look, we have already made some adjustments. For example, we now have more visual merchandising and we also lowered the height of some shelves. We want the brand expression to be at its best at the point of sale. Other functional aspects, like stock rotation, are also on the agenda. Interview What are the plans for future development of The Beauty Box? For 2014, we plan to open 20 more stores and we’ll go to two new cities: Brasilia and Rio de Janeiro. Today we are in São Paulo, Curitiba and Belo Horizonte and we want to Having products in remain close to our operation, geographically speaking. Our strategy is to look for markets “the high-to-low price where we see longevity for the business. Opening new stores requires a huge investment; however, I see potential for more than 200 stores in the next 10 years in Brazil. Everything range facilitates the will depend on the macro-economic situation, growth in shopping centers, investment in consumer experience: infrastructure and GDP growth. they can now shop Analysts have said that the concept is a reaction to ’s entry into the in one store and find market. How can you differentiate the concept from Sephora? The Beauty Box idea was mapped out before Sephora [came to the market]. Our concept both their favorite is very different and the value proposition is unique. A competitor like Sephora is a positive imported fragrance thing, as it is a great benchmark. and a local soap How is the e-commerce side of the business performing? Our e-commerce operation has been running for seven months and is among our top three points of sale in terms of revenue. It has been an excellent learning experience and The Beauty Box marketing & sales director Breno Salek thanks to the channel, our consumer base is increasing. I am very satisfied with online results, and for Brazil this is a very important channel. We have a strong social media ” presence, with more than one million Facebook fans and 20,000 Instagram followers.

How do you see retail developing in Brazil? I see retail consolidation increasing, with new brands arriving, and shopping center groups consolidating. The retail scene will become more professional and mature. We can already see this with the entrance of new players like Yves Rocher and The Body Shop that recently bought the Emporio Body Store. Companies are investing in Brazil.

Is there any cannibalization with Grupo Boticário’s other retail concepts? I don’t see this happening, even where we have similar prices. Boticário is a very well established brand for consumers.

What is your outlook for 2014 for Brazil? I see brands increasing their launches and the fight for consumers becoming increasingly fierce, but the market will continue to see double-digit growth. Wages are increasing and investments are being made in the s The Beauty Box had 16 stores at the end of 2013 and plans to country, which will reverberate for some years to come. n open 20 new doors this year

www.bwconfidential.com - January 23-February 5, 2014 #86 - Page 9 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Insight

Amazon’s Luxury Beauty store Moving to the next level BW Confidential analyzes online retailer Amazon’s luxury beauty store business, which launched at the end of last year

mazon’s decision to open a dedicated luxury beauty store last October was Anot entirely unexpected. The US-based operator has ambitions to be the world’s biggest retailer, and so its penetration into the luxury market seemed inevitable, while also being highly strategic for the company. Luxury brands have The proportion of been slow to move online, but there is a consumer demand which may help Amazon get supply from brands. “We have heard from customers that having spontaneous“ sales is a place to browse and shop luxury beauty products is important to them,” says much lower online— an Amazon spokesperson. “Launching the luxury beauty store is our first step in offering a more customized, high-end beauty experience, and it’s already shoppers use the resulted in various brands joining the Amazon platform,” he continues. web to find specific At the time of opening, the luxury beauty store offered products from 24 brands, including Burberry fragrances, Nars and Stila make-up, and skincare products, convenience from Jack Black and Dr Brandt. Brands like Chanel, Dior and Lancôme, and low prices. however, are absent. Analysts say that for the moment, most high-end brands are nervous about going on the site and will wait and see how the luxury store Amazon needs to business develops. give customers other Reaching out reasons to visit However, selling through Amazon brings a string of benefits for brands, not the least the site’s reach. Amazon’s ability to attract consumers is well known. A report by research group Forrester revealed that almost one third of online Verdict Retail associate retail buyers began their search on Amazon, compared with 13% on Google. n n n analyst Jessica Fioriti” www.bwconfidential.com - January 23-February 5, 2014 #86 - Page 10 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Amazon’s Luxury Beauty store

n n n A study by the Shullman Research Center, which measured over 120 stores (including brick-and-mortar outlets) where consumers shopped over a 12-month period, found that Amazon was the number-one destination among

Insight higher-income consumers. Almost 70% of consumers with an annual household income of $250, 000 shopped on Amazon. “While Amazon is perceived as a mass retailer in the US by many, luxury- While Amazon is oriented consumers believe that it delivers convenience in many ways,” says “perceived as a mass Bob Shullman, founder of The Shullman Research Center. He points to the wide assortment of goods, lower pricing, fast and free delivery for Amazon retailer in the US Prime members and easy returns. “Convenience is a benefit that all consumers by many, luxury- appreciate—especially higher income consumers who tend to have little free time,” says Shullman. oriented consumers Experts agree that the beauty site has been nicely conceived with easy believe that it delivers navigation, a mix of editorial and enhanced browsing features and clean design. This makes the store an attractive front for the Amazon consumer who would convenience in many not normally consider shopping luxury, and is a plus for brands thinking about ways. Convenience selling their products on the site. The luxury beauty store also sits well with the company’s focus on the fashion category and attracting consumers looking for is a benefit that entry level items. all consumers “Customers are driven to Amazon for designer/branded clothing at a discount, so opening an online beauty store is a good move and will appeal to these same appreciate—especially shoppers as complementary items on larger purchases,” says Jessica Fioriti, higher income associate retail analyst at Verdict Retail. Joelle Kaufman, head of marketing and partnerships at BloomReach, a company that helps e-commerce sites adapt to consumers who tend consumer demand agrees: “Maybe they will be good at encouraging a customer to have little free time who is not considered to be, say, a L’Occitane client.” There is also the advantage of consumer tracking and access to Amazon’s valuable consumer data. “Amazon is a data-driven company and is extremely The Shullman Research Center focused on customer tracking,” reveals Kaufman. founder Bob Shullman For many, prestige beauty brands cannot afford to ignore these benefits, ” even if it is tricky. And if more consumers are shopping on Amazon for prestige beauty, it seems that more brands will need to be there. Luxury haircare brand Rahua, which is sold on Net-à-Porter’s beauty website, generates 35% of its sales online, and predicts this will reach 50 to 60% in 2014. “Luxury brands are facing the Amazon’s luxury adventure usual challenges—internet retailers want to Amazon made a foray into prestige cosmetics with the launch give discounts and more, which, if not well of a luxury beauty store www.amazon.com/luxury beauty managed, may diminish a brand’s desirability,” last October. The site sells brands such as Nars, Dr Brandt, says Rahua’s ceo Fabian Lliguin. Burberry and L’Occitane. The company says the store’s design was created to reflect the prestige positioning of its brands, Online challenges and allows users to view images rich in color and texture; its There are other challenges apart from just photography also features multiple product angles. securing brand partners for Amazon. The Shoppers can browse by brand, category, collection, color, retailer might also have difficulty encouraging gender, skincare need, free sample with purchase, or editor’s impulse purchases, points out Fioriti. pick. There are also options to build beauty regimens, how- “Spontaneous purchases are key in this sector, tos and Amazon beauty editor tips. Select items will include a given the relatively low selling prices. n n n free sample with purchase.

www.bwconfidential.com - January 23-February 5, 2014 #86 - Page 11 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL BWN confidentiel.indd 1-2 Insight n Amazon’s LuxuryBeautystore cosmetics andfragrancesaresoldinthefuture,bothonlinein-store. be ignoredinbeauty,andislikelytoplayapivotalroletransforminghow example. Thewebsitenowknownas“everyone’scompetitor”cannolonger Amazon’s weaknesses,suchasitsproblemincapturingimpulsepurchases,for will likelyneedtomodifytheirofferbyexploitingandconcentratingonsomeof presence, astrongmarketingmachineandenviableconsumerdata.Retailers they willcompeteagainstthisonlinegiant,whichisopen24/7,hasaglobal through thechannel,traditionalbeautyretailersshouldalsobelookingathow in thebook,musicandelectronicssector.Asbrandsconsiderwhethertosell categories andhasbeenpartlyresponsibleforthedemiseofmanyaretailer challenges incoloritems,whicharehighlyindividualandvariable.” for Amazon,where20%ofproductwillequal80%volume.Therebe fashion-driven skus.“I’dbeinterestedtoknowifthe20-80rulewillwork reasons tovisititswebsite.” convenience andlowprices.Amazonneedstogivecustomersotheradditional to usethewebfindspecificand/oruniqueproducts,andarelookingfor Amazon hasbecomeaforcetobereckonedwithinrangeofproduct Kaufman alsoquestionshowwelltheretailerwillsellhigh-volume, The proportionofspontaneoussalesismuchloweronline—shopperstend A not to be missed morning of refl of discussion. and morning ection missed to be A not the corporations with leading luxury. and and from communication digital technology, BBC representing managers the top and of Ipsos participation with partnership In topics: following the covering and brands luxury for represent will they challenges and new the expectations, presenting to devoted discussing new conference technologies, their impact on luxury client’s morning full A Connecting with clients in 2025 in clients with Connecting ? connected everything future, the of Objects Luxury on megatrends global of Impact The lives our change will that Technologies LUXURY OUTLOOK - 5 "L UXURY IN n L UXURY March 2014 20, More information More

F O E BRUARY UTLOOK C W HINA,

HAT’S 21 - , 2013 4 T H E DITION TH N EDITION EXT ?" 16/01/14 18:13 Store visit

Going private French perfumery chain Nocibé has launched a new store concept dedicated to its private-label offer

elective retailer Nocibé has launched what it calls “a new generation of Sboutiques” in France, devoted exclusively to its private-label offer. The first store in what is to become a chain, called Les Bellista by Nocibé, opened mid-December in a shopping mall in Leers, a city in northern France. “This generation of boutiques was inspired by the needs of today’s consumer,” explains Nocibé ceo Isabelle Parize. The Leers store covers 100m2 (1,076ft2) and offers 1,000 skus from Nocibé’s own brand of accessibly priced make-up, skincare, bath and body items and beauty accessories. Services are also an integral part of the offer: a beauty bar on the shop floor provides hair styling (€15) and makeovers (€7), while manicures (€7) are available at the nail bar. All services use Nocibé products. Waxing and express facial Les Bellista and body treatments—facials start at €35—are dispensed in private treatment areas l Location: and all services are without appointment only. Leers, France According to the retailer, the new chain is to be developed alongside Nocibé. l Size: 100m2 Nocibé’s Parize says that the two concepts are complementary. Four Les Bellista (1,076ft2) stores are slated to open in 2014, two of which will be in the Paris suburbs; the first l On offer: Nocibé’s will open this spring. private-label offer, Nocibé launched its private-label offer in April 2012 and as of last year the category makeovers, hair styling, accounted for less than 10% of its sales. manicures, express Nocibé operates 466 points of sale in France. German retailer Douglas has been in facial and body exclusive negotiations to acquire the chain since October 2013. n treatments, waxing

www.bwconfidential.com - January 23-February 5, 2014 #86 - Page 13 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Store visit

s Nocibé plans to open four new Les Bellista stores in France this year

s A central beauty bar offers makeovers, nail services and hairstyling

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