www.bwconfidential.com The inside view on the international beauty industry September 25-October 8, 2014 #98

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The buzz 2 Vavavoom News roundup f consumers won’t go to stores, the stores are going Netwatch 6 Ito have to go to consumers. This seems to be the thinking behind French perfumery chains and Beauty blogger review Marionnaud’s initiative to launch beauty trucks. The Sephora truck is dedicated to providing make-up Interview 8 lessons using the retailer’s own brand and traveled to The Body Shop Indonesia ceo more than 17 French towns over the summer. As well Suzy Hutomo as providing make-up lessons and beauty tips, vouchers for discounts on the brand’s products at Sephora stores Insight 10 are also dispensed. The Marionnaud truck also offers consolidation complimentary makeovers and manicures and will be stationed in key areas in Paris from the end of September. Show review 14 The idea of a beauty truck is not new. A string of beauty brands, including Cosmeeting & Creative Beauty Thierry Mugler, Rimmel and Glossup, have all launched beauty trucks. However, given the declining traffic at perfumeries and department stores and the fact that Store visit 16 consumers don’t get that excited about these stores any more, the truck concept Murad, Los Angeles could become more widespread, thereby mirroring other industries with their food trucks and fashion trucks. The trucks offer a different experience from the traditional store format, usually create a buzz and perhaps most importantly go to where the consumer is, whether at a concert, sporting event, beach or high-traffic shopping area. Trucks may just be the motor that industry players need to drive more consumers to beauty.

Oonagh Phillips Meet the BW Confidential Editor in Chief team at: [email protected] l TFWA World Exhibition, Cannes, Oct 26-31

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l Cosmoprof Asia, Nov 12-14 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIA CONFIDENTIA L L The buzz Strategy Stay informedwithourdailynewsheadlinesonwww.bwconfidential.com News roundup Results on September 9. on September9. Italian contractmanufacturerIntercos filed a request to list on the Italian stock exchange departments: PrestigeMarketing,CosmeticsMarketingandPersonalCareMarketing. Marketing Department in the DomesticLuxury CosmeticsMarketing Division,Group and willConsumerJapanese beautygroupShiseido hasbe reorganized announcedMarketing changes Group,into three whichto its is corporate part of itsstructure. Strategic The Daniel Fonseca de Jesus will joinsupermarkets, L’Oréal Brazil’s pharmacies strategic and perfumery Nielycommittee Gold chains asfor vice shampoosin president.Brazil. and Niely care. Cosmeticos The products founder are distributedIt reportedat retailers, net sales wholesalers, of R$405m 1981 andclaimstobethelargestindependenthaircolorhaircarecompanyinBrazil. (€140m) in 2013. L’Oréal istoacquireBrazilianhaircarecompanyNielyCosmeticos,whichwasfoundedin is targeting a return to sales growth. is targetingareturn tosalesgrowth. should resultinannualsavings of$200mwithinthenextthreeyears.For2015Coty organized bycategoryandregion thatwasannouncedinJuly,aswellothercuts, market incolorcosmetics,particularly inNorthAmerica. sales fell2.1%(-1.6%like-or-like)to$4.55bn,whilenet lossstoodat$97.4m. falling 1.6% to $1.04bn and a net loss that came in at $20.1m.Coty’s fourth-quarter For the full year,results net fell short of analysts’ expectations, with net sales the launch of Montblanc Emblem and Karl Lagerfeld and steady representedsales from Lanvin.an increase of 21% on 2013. Growth was driven by Montblanc Legend, termination of the licensing agreement in March 2013. license. The company said that the figures were not comparableto due€35.3m to thein the same period of 2013, primarily due to the lossInterparfums of the Burberry The Brazilian company markets two main brands: Cor & Ton for hair coloration and The Braziliancompanymarketstwomainbrands:Cor&Tonforhaircolorationand Coty said its plan to reduce costs, which involves a new company structure Coty saiditsplantoreducecosts, whichinvolvesanewcompanystructure The company said that the decline in sales for the year was mainly due to a difficult Net sales for the period reached €143.9m, which on a like-for-like basis n n n n At aglance...

L’Oréal acquiresBrazilianhaircarebrandNielyCosmeticos AS Watsoncreatesin-housedigitalteam DFS toopenfirststoreinEurope World DutyFreeGroupceotoleavecompany SA reported net profit of €13.8m in the first half of 2014, compared n www.bwconfidential.com -September 25-October 8,2014#98 -Page 2 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIA CONFIDENTIA L L The buzz n News roundup occasion oftheperfumerychain’s30 AS Watson-ownedMarionnaud is changing its name to Marionnaud Paris on the fragrance, watches and jewelry, cultural institutesaswellaretailstore.Toopenin2016,thestorewillsellbeautyand fashion and accessories and Italianin Venice. food, DFS gifts says andthe wine.store willLVMH-owned travelretailerDFSistomoveintoEuropewiththeopeningofanewstore be a venue for promoting Venice’s public events and Marionnaud andICIParisXLinEuropeWatsonsAsia. development. ItwillserviceSuperdrugandThePerfumeShopintheUK,Kruidvat, alongside each of the group’s businessdigital team,units calledto advise eLab, on tostrategies supportHealth &beautyretailerASWatsonGroup (ASW) has itsand created e-commerceweb and a mobilededicated business. in-house The team will work from December5-24.The100m US-based beautysubscriptionboxcompanyBirchbox is opening a pop-up shop in Paris event willbefortheParis-SaintGermainfragrancebySTDupont (Interparfums). conjunction withL’Occitane,offeringproductsfromitsAromachologie range.Thenext an opportunitytobuildvisibilityfortheirnewlaunches.Kooroo’s firstoperationisin time periodwithadiscountformembers.VentePrivéesays the newserviceoffersbrands principle as Vente Privée by offering to newlaunches,includingthoseinthebeautycategory.Koorooworksonsame limited quantities of productsFrance-based flash-salesiteVentePrivéehaslaunchedKooroo,aservicededicated for sale during a short offer anengravingserviceonitswebsitefor€7. from the end of the year for the purchase of a 100ml their makeoversonsocialnetworks. fragrance. The chain will also branded products.Aphotostationinthetruckalsoallowsconsumerstopostpicturesof cards featuringbeautyadviceandtips,aswellvouchersfordiscountsonSephora- by professional make-up artists. retailer’s ownbrandofmake-up.Aimedat15-to-25-year-olds,thefreelessonsaregiven After each class, users are whichgiven travelleda beauty prescription,to 17 towns in Sephora France Franceis looking this tosummer, make-up offering lessons beauty on the lessons go with using its newthe Beauty Truck,services betweenSeptember25andOctober4inhigh-trafficareasParis. has also fitted out a beauty truck website, www.30ansdinspirationsbeaute.fr(30yearsofbeautyinspiration).Marionnaud that will offer complimentarycampaign makeovers in France and otheron September 9 to mark the anniversary, and has created a dedicated store hereinFrance,”Birchbox EuropegmQuentinVachertells be onsale.“Thepop-upstore isawayforustotestthepotentialbricks-and-mortar beauty services. An edited selectionvisitors of canproducts create gleaned their ownfrom beauty Birchbox’s boxes, bestsellers a gifting cornerwill and an area devoted to flash surprise kits—each cost€4andcontaintwo products. traffic areas, such as hotels and nightclubs, the machines offer a selection of four different In other news, Sephora will offer engraving on perfume bottles at six of its stores in Birchbox isalsounveilingitsfirst vendingmachineinFranceOctober.Postedhigh- Retail 2 (1,076ft th anniversary. The retailer launched an advertising 2 ) store will house a discovery area, where www.bwconfidential.com -September 25-October 8,2014#98 -Page 3 n BW Confidential BW . News roundup

n n n People

Travel-retail operator World Duty Free Group’s (WDFG) ceo of nine years, José Maria Palencia, is leaving the company before the end of the year. His departure is the result of differing views on the future direction of the group, which went public last year. WDFG’s The buzz new development strategy will focus on organic growth, mergers and acquisitions.

Following the acquisition of travel-retail operator Nuance by Dufry announced in June, Nuance president and ceo Roberto Graziani is leaving the company at the end of the year.

Estée Lauder Companies has named Agnes Landau senior vice president global general manager of its Darphin brand, effective January 2015. Landau is currently svp global marketing Clinique. In her new role, she will report to Stephane de la Faverie, svp and global general manager, Origins, Ojon and Darphin. Landau will be based in Paris.

L’Oréal has named Richard Cymberg to the role of clients management director for the group’s travel-retail division. The travel-retail division has also named John Mangan to the position of general manager travel retail Europe, Middle East, Africa and India.

The Estée Lauder brand has named former L’Oréal executive Marie-Pierre Stark-Flora to the role of senior vice president of global marketing. She replaces Charisse Ford.

Beiersdorf-owned La Prairie has appointed Laurent Marteau head of travel retail worldwide, a newly created position. Marteau was previously travel retail international director at LVMH Fragrance Brands.

Avon evp and cfo Kimberly Ross will leave the direct seller in October. Avon vp and corporate controller Robert Loughran will be acting cfo in the interim.

Flavor and fragrance company Mane has named Isabelle Guerlin director of perfume 10TH EDITION development fine fragrance EMEA.

Fragrance house Cosmo International Fragrances has appointed Mirco Czech as global account executive for , and .

Fragrance spray specialist Travalo has appointed Stéphanie Jacquet, most recently global commercial & trade marketing leader Lacoste and Rochas fragrances at P&G, as marketing manager. John Kammerman, formerly gm North Asia at Imperial Tobacco, has been named travel retail manager. The appointments went into effect in August. n n n

ADF_PCD_110x130_BW_confidential_vecto.indd 1 07/05/14 10:51 News roundup

n n n Launches France-based Maesa is to launch a color- range for women’s magazine brand Elle this month following a five-year licensing agreement the group signed with Elle publisher Lagardère. Elle Makeup is positioned as an affordable color line, The buzz but with the packaging codes and formula quality of a selective brand, according to Maesa. “In make-up there are three segments: ultra mass with budget brands, traditional mass and selective. However, there is not an offer in the €12-€20 range, so with Elle we want to create the masstige category in make-up and show that products of prestige quality do not have to be expensive,” comments Maesa ceo Julien Saada. The line comprises 123 references; lipsticks are priced from €12.90, foundation costs €16.90 and nail polish is priced at €8.90. In France, Elle Makeup will be sold exclusively at retailer Monoprix for six months. “We are aiming to be among Monoprix’s top-five brands in the next two to three years,” says Saada. In terms of overall objectives, Maesa is targeting wholesale sales of €10m in two to three years. Maesa will expand distribution in France to other retailers and also plans to launch the make-up line internationally. An agreement has been signed to launch in Dubai, UAE in 2015.

Carven (Groupe Jacques Bogart) is looking to re-launch its men’s fragrance offer with the introduction of a new scent, Carven pour Homme. The spicy, woody fragrance was created by Francis Kurkdjian and Patricia Choux of Takasago. Its bottle was created by designer Thierry de Baschmakoff. Carven will also re-launch its Vétiver scent, the brand’s first men’s fragrance which was introduced in 1957. The fragrances will roll out between October 2014 and February 2015. Carven pour Homme at €39 (30ml EdT), €59 (50ml EdT) and €79 (100ml EdT). Vétiver is priced at €62 (50ml EdT) and €82 (100ml). BW Confidential 4 avenue de la Marne Coty is to launch a new fragrance for its Balenciaga franchise called B. Balenciaga. 92600 Asnières sur Seine, France [email protected] The fragrance is the first to launch under the fashion brand’s new designer Alexander Tel: +33 (0)1 74 63 49 61 Wang. It is described as a green woody scent and was created by Domitille Bertier of Fax: +33 (0)1 53 01 09 79 www.bwconfidential.com IFF. The launch will be backed by a print campaign shot by photographer Steven Klein. ISSN: 2104-3302 Publisher: Nicolas Grob B. Balenciaga will begin to roll out from November and retails at €58 (30ml EdP), Editorial Director: Oonagh Phillips €80 (50ml EdP) and €100 (100ml EdP). [email protected] Deputy Editor: Alissa Demorest [email protected] Editorial Coordinator & Assistant: Italian company Mavive is to launch its first fragrance from denim brand Replay this Katie Nichol [email protected] fall. The men’s fragrance, called Replay Relover, comes in a gun-shaped bottle. There Contributors: Tina Clark, Alex Wynne, is also a 25ml version in the shape of bullet. Renata Ashcar, Mayu Saini, Raphaëlle Choël, Corinne Blanché The fragrance, composed by Drom perfumer Subscriptions 1 year: electronic publication (20 issues) + Valérie Garnuch-Mentzel, has top notes print magazine (4 issues) + daily news: €499 or US$699 of bergamot, yuzu and pear, a heart of [email protected] pink pepper and cardamom and a base of Advertising [email protected] rosemary sandalwood and musk. It will roll BW Confidential is published by Noon Media 513 746 297 RCS Nanterre out from this month. The 25ml EdT Bullet Copyright © 2014. All rights reserved. version retails at €19.90, while the 50ml EdT Reproduction in whole or in part without permission is strictly prohibited. costs €39 and the 80ml EdT €49. n

www.bwconfidential.com - September 25-October 8, 2014 #98 - Page 5 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Beauty blogger review BW Confidential reports on what the bloggers are saying about beauty

US drugstore chain Walgreens’ purchase of the remaining shares of UK drugstore operator Alliance Boots has caused a buzz among US bloggers, who are eager to see products like Boots’ flagship No 7 line become more widely available. In the UK, however, the deal has drawn criticism from bloggers,

Netwatch who say that the products are sold “much cheaper” in the US.

The high price points of recently launched prestige facial creams has been a subject of interest in the blogosphere. Some bloggers report that the expensive products often fail to live up to their claims and that the majority give no better results than mid-priced creams. A number of reviewers also complain that the information provided on the products’ packaging is often sacrificed for the sake of the pack’s design.

US brand YoYo Lipgloss has gotten rave reviews for its “cool and novel” concept. The retractable lip gloss, which can be clipped to the inside of a handbag, has been described as fun and practical, and is also liked for its shine.

Dual-purpose make-up products like lip and cheek pencils and stains have created a small buzz on the web. Many bloggers praise the convenience and simplicity of the two-in- one products, but the results are sometimes cause for disappointment. The products are said to have limited lasting power and tend to provide an unnatural finish. The views expressed in this section are those of bloggers and do not represent the opinions of BW Confidential

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170X297.indd170X297.indd170X297.indd170X297.indd 1 111 23/09/1423/09/1423/09/1423/09/14 16:27 16:2716:2716:27 Ce document est édité par The Body Shop Indonesia ceo Suzy Hutomo A growing market The Body Shop Indonesia ceo Suzy Hutomo talks about

Interview the state of the beauty market in Indonesia

How has The Body Shop Indonesia evolved since you acquired the license in 1992 and what are your plans for the future? Our first store opened in December 1992 at Pondok Indah Mall in Jakarta and we opened our 100th store in 2013 in the Centre Point Mall Medan. Today we have 116 stores in more than 25 big cities in Indonesia. We have been expanding steadily, opening more than 10 stores per year on average in the past two years mainly in tier-two cities. We plan to open an average of 10 stores per year focusing on big cities and cities with potential. The product focus is on skincare and make-up. Indonesia is a promising market Growth is taking for us because The Body Shop is relevant to consumers here, providing them with targeted products suitable for their needs and the climate. Many products have light, “place not only in the refreshing textures, like the recently launched Vitamin E Aqua Boost Sorbet or our big metropolises like best-selling Drops of Youth Concentrate, that are perfect for our market’s climate. Jakarta, but also in How do you see the beauty market developing in Indonesia? tier-two cities such The beauty market in Indonesia has high potential. Economic growth is robust and there is a large middle class that is growing rapidly. This growth is taking as Balikpapan and place not only in the big metropolises like Jakarta, but also in tier-two cities, such Lampung, where as Balikpapan and Lampung, where we see a strong development of malls and increasing consumption. we see a strong Secondly, Indonesian women are discovering that they can use more than just basic development of beauty products. They are savvier and are more willing to try new offerings and will also purchase more cosmetics as their income levels rise. malls and increasing The growth of the beauty market is also fuelled by the arrival of more international consumption beauty brands in the market. Consumers used to feel like they had to travel overseas to shop, whereas now, these brands are available locally. I believe prestige brands will grow quite well as the middle and middle-upper The Body Shop Indonesia ceo classes continue to grow. Having said that, we will probably see the mass brands Suzy Hutomo keep pace. This can be attributed to the general income of the population increasing and more consumers buying at hypermarkets and convenience stores. ”

What are the main challenges for beauty players in Indonesia? In this market, it is important to have a local perspective, through local partners, and understand Indonesian consumers and how they perceive brands. We are not as sophisticated as other markets, so things that work well elsewhere may not succeed here. Local relevance and having the right products for the market are key. The Body Shop You need to be flexible when doing business in Indonesia. Local regulations and Indonesia import procedures are not always predictable. As with other emerging markets, l No of stores: 116 infrastructure could also be a challenge, notably given the geography of Indonesia l Average store openings with its scattered islands. n n n per year: 10

www.bwconfidential.com - September 25-October 8, 2014 #98 - Page 8 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL The Body Shop Indonesia ceo Suzy Hutomo

n n nHow is the retail landscape developing? Malls are the main shopping destination for cosmetics. The modern mall is a retail format that is relevant and flourishing in Indonesia. Our brand is still performing well in Jakarta’s Citraland Mall where we have been present since the mall opened in 1993, and where we have seen the profile of consumers evolve over the years, Interview drawing crowds mainly from the area’s universities and offices. We are also present You need to be and excelling in the two new malls that opened in the same area in 2000 with a more premium positioning. “flexible when doing The internet is still in a nascent stage, although it is growing by leaps and business in Indonesia. bounds, notably with the younger generation on social media; there is tremendous opportunity to engage with consumers here. Although it will take time, there is Local regulations and definitely potential for e-commerce. At the moment, consumers like to go online to import procedures browse and do research, but not yet to purchase. Most consumers still prefer to go into the store where they can get advice from staff, especially when shopping for are not always skincare products. predictable.

What are Indonesia’s beauty consumers looking for? Infrastructure could Consumers are looking for relevance. They don’t just want to buy a product; they also be a challenge, expect to understand the benefits of the product and also what the brand stands for. They want to engage with us and we are in turn very involved in the communities notably the geography where we operate. Indonesians like to know what they can do to improve them- of Indonesia with its selves so they are also looking for personalized advice and service. In certain respects, consumers are evolving. With middle-class women now having scattered islands more disposable income, they want to treat themselves more and they also want to better understand what beauty can do for them. Engaging local brand ambassadors helps to connect with consumers as they are more exposed to mass media today and The Body Shop Indonesia ceo find beauty icons aspiring. Suzy Hutomo ” How does the brand’s natural aspect impact emerging markets like Indonesia? Natural brands like The Body Shop have great potential in Indonesia. The market has a long history of being close to nature, being one of the most biodiverse countries, so it is easy for consumers in Indonesia to understand and appreciate the benefits of our products, which are based on natural ingredients. Of course, with urbanization and more people living in cities, there is also an increasing desire among consumers to get back to nature. Clear messaging and transparency about product information, along with customer and after-sales service, are essential to building trust. This is very important, especially in an emerging market like Indonesia, where brand equity and trust are key to success. In part, this is because some products are not safe or are not very well made. n s The Body Shop Flagship store in Plaza Senayan, Jakarta

www.bwconfidential.com - September 25-October 8, 2014 #98 - Page 9 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Insight

Retail consolidation Getting together BW Confidential analyzes what the recent wave of retail consolidation means for stores, suppliers and consumers

etail consolidation continues apace. In the perfumery, department-store, Rdrugstore and travel-retail channels there has been a spate of M&A over the past two years. Consolidation is seen by some as the only way of growing, gaining market share or even surviving in today’s market. Suppliers are more In France for example, given the increasingly difficult climate and the rise of dependent“ on listing e-commerce (with major brands like Chanel opening their own e-commerce sites and Amazon launching a prestige beauty store), sources say that most at stores if a player is independent perfumeries in the country are now up for sale as they simply massive; you have to can no longer compete in the market. Indeed, WSL Strategic Retail ceo Wendy Liebmann says consolidation is being driven by a sense of necessity, as retailers have your product in look for new ways and resources to grow in difficult economic conditions. these stores “People feel that being bigger does that,” she says. M&A is also a way of getting into new markets where it is too difficult for retailers to go it alone or where it would take too long to make an impact. This Planet Retail health and beauty was the case of Alliance Boots’ acquisition of Latin America pharmacy chain n n n analyst Denise” Klug www.bwconfidential.com - September 25-October 8, 2014 #98 - Page 10 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Retail consolidation

n n n Farmacias Ahumada, which operates 1,400 stores in Mexico and Chile. Boosting its position in France was also a main driver of German perfumery retailer Douglas’ acquisition of French chain Nocibé. Through the deal, Douglas Insight became France’s largest perfumery network in store numbers, with 645 doors. In terms of sales, the group is now number two in France, behind LVMH-owned Sephora, while Marionnaud comes in third place.

The balance of power Main retail deals at a glance Changing the balance of power with US drugstore retailer Walgreens announced in August that it suppliers is one driver of the retail would acquire the remaining 55% share of British pharmacy/ consolidation trend. “Suppliers are more health and beauty retailer Alliance“ Boots for £3.13bn ($5.29bn). dependent on listing at stores if a player is Named Walgreens Boots Alliance, the combined company will massive; you have to have your product in operate 11,000 stores in 10 countries and is forecasting sales of these stores,” says Planet Retail health and between $126bn and $130bn in 2016. beauty analyst Denise Klug. This was one of the reasons for Swiss Also in August, Alliance Boots completed its acquisition of Latin travel retailer Dufry’s acquisition of American pharmacy chain Farmacias Ahumada, which operates The Nuance Group this year. The Swiss some 1,400 stores in Mexico and Chile and has revenues of group says the combination of the two around £835m ($1.38bn). companies will confirm Dufry’s position as the worldwide leader in the airport retail industry, with a global market share of German real-estate group Signa finalized its acquisition of 15% and a presence in 63 countries, 239 German department-store operator Karstadt in August this year. airports and a network of 1,750 stores. The group had acquired 75.1% of Karstadt in 2013, and the deal Following the announcement of the deal, will see it invest some €300m in the struggling retailer. Karstadt Dufry ceo Julian Diaz said that travel retail operates some 80 department stores in major German cities. needed consolidation given the growing strength of suppliers, and he predicted Swiss travel retailer Dufry announced it would acquire the world’s more M&A among operators. Dufry also sixth largest duty-free and travel-retail company, The Nuance said that it expects to see an improvement Group, for Sfr1.55bn ($1.73bn). The deal confirms Dufry’s in gross margin through increased position as the worldwide leader in the airport retail industry, with purchasing power. a global market share of 15% and a presence in 63 countries, 239 However, suppliers are often wary of these airports and a network of 1,750 stores. mega mergers and view one less player to deal with as automatically meaning reduced negotiating power. When the German beauty retailer Douglas Holding finalized its acquisition news emerged that Douglas was to acquire of French perfumery chain Nocibé in June, becoming France’s Nocibé, for example, alarm bells rang at largest perfumery chain with 645 doors. Although the purchase many beauty houses. price was not made public, Nocibé was valued at between €500m Aside from the repercussions on shelf and €550m with revenues of some €680m in 2013. space and margins in the wake of these deals, suppliers also usually question where South African retailer Woolworths Holding Limited announced savings will be made and fear that there the acquisition of Australia’s second-largest department-store will be less investment in-store, as money operator David Jones Limited in April 2014, for R21.4 bn is poured into the acquisition process, ($2bn). The combined companies operate 1,151 stores in 16 expansion and integration. countries for combined sales of R51bn ($4.77bn) in 2013. Indeed, the risks are significant, n n n

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n n n particularly as the drive to cut costs can overshadow the fundamental business itself. Sources say that since Advent International acquired German retailer Douglas in 2012, business has been unstable. There have been a large Insight number of staff departures and morale is low as management looks to further cut costs. Some say this is unlikely to change as Advent, a private-equity company, prepares to sell Douglas in the near future, which will likely cause further upheaval. In addition, Liebmann says that large retailers that grow through acquisition can find themselves in danger of losing the agility required to respond quickly and effectively to changing consumer and lifestyle trends. “The operational challenges often slow down the responsiveness to Main retail deals at a glance the consumer,” she says, adding that Chinese conglomerate Sanpower Group agreed in April this large-scale success can be a double-edged year to buy an 89% stake in UK-based department-store chain sword. “Take Sephora, you get that scale House of Fraser in a deal that values the retailer at around where there’s one on every corner, but as a £450m ($746m). consumer looking for something that’s a bit different, it’s hard to find.” Canadian food and pharmacy retailer Loblaw Companies Limited acquired Canadian drugstore retailer Shoppers Drug What’s next? Mart in a C$12.4bn ($11.31bn) deal in March this year. The Consolidation is set to continue. One combined company operates some 2,300 stores including 1,800 ceo from a major brand recently told BW pharmacies and on a pro forma basis generated revenues of Confidentialthat in the next three years C$43bn ($39.23bn) in 2013. suppliers will probably only be dealing with two or three main retailers in the US and Europe in both the domestic and travel- US-based luxury retailer Neiman Marcus was sold for $6bn to retail market. private-equity group Ares Management and Canada Pension In travel retail, more operators are no Plan Investment Board in 2013. Neiman Marcus operates 79 doubt looking for buys following the Dufry points of sale: 41 Neiman Marcus stores, two Bergdorf Goodman deal. As news emerged that Word Duty stores and 36 Last Call outlet centers. Free ceo José Maria Palencia is to leave the company, the retailer hinted that it is Canadian department store retailer Hudson’s Bay Company looking to pursue business combinations acquired US prestige department store operator Saks with other operators. Incorporated for $2.9bn in July 2013. The combined company And in Europe, analysts see what remains operates some 320 stores and reported retail sales of $5.22bn for of the independent perfumeries either the year ended February 1, 2013. forming groups or selling to the region’s main players. In , eyes are still on Italian department store operator La Rinascente, owned by perfumery chain Limoni to see how business Thailand’s Central Retail Corporation, acquired Danish department will pan out. The retailer was bought by store Illum, located in Copenhagen, in March 2013 for an private-equity company Orlando Italy in undisclosed sum. La Rinascente operates 11 stores in Italy and 2012 and is expected to go up for sale plans to open a second flagship in Rome in 2015. again after 2015. Retailers may also look to acquire online Divine Investments, a fund owned by a group of Qatar-based pure players to help boost their business in private investors, finalized the acquisition of French department this area. In a move aimed at harnessing store chain Printemps in July 2013. the growth potential of digital retailing, n n n

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n n n US retail giant Wal-Mart acquired start-up tech company Luvocracy this summer. The Luvocracy application combines social networking and retailing by enabling consumers to view and purchase products that are recommended

Insight by friends, bloggers or other influencers. The operational While all this may make life more difficult for brands, consumers look set “challenges [as a to benefit. They say that shoppers will be offered better prices, as consolidation could provoke price wars among traditional players. However, with the big result of retail M&A] players getting bigger and chains becoming more ubiquitous, there is also a often slow down the risk that the consumer will be faced with a certain sameness of offer. In this way analysts suggest that consolidation will in fact create gaps in the market responsiveness to for small niche players that provide a different, perhaps more original offer. the consumer “I think that there is much more potential for personalized beauty products and offerings, particularly when we talk about formats that use new retail technologies,” says Klug, pointing to the example of US-based subscription WSL Strategic Retail ceo beauty box retailer Birchbox, which recently opened its first brick-and-mortar Wendy Liebmann store in New York. The retail landscape looks set to shift once again. n ”

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www.bwconfidential.com - www.bwconfidential.com - September 25-October 8, 2014 #98 - Page 12 - Page 13 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Cosmeeting & Creative Beauty Beauty on show BW Confidentialreports on what was seen and heard at Cosmeeting & Creative Beauty, which took place in Paris from September 9-11

his year’s Cosmeeting and Creative Beauty turned out to be smaller format events Tthan what the industry has seen in previous years. The trade shows, organized by Show review Beyond Beauty Events (part of the Informa group), hosted 361 exhibitors compared with 480 in 2013. Some 196 companies exhibited at Cosmeeting, the event dedicated to finished products, while there were 165 exhibitors at Creative Beauty, which is devoted The show was smaller, to ingredients, formulations and packaging. Visitor numbers this year were also down by 15% to 18,248. Several exhibitors expressed disappointment, partly due to the smaller “as companies tightened size and what they said was slower traffic. budgets; the market However, Beyond Beauty Events managing director Pradip Bala said that while the show may have been smaller, organizers had invested in bringing high-quality visitors is difficult and some to the event. “The show was smaller, as companies tightened budgets; the market is exhibitors that took difficult and some exhibitors that took several booths in the past only took one this year. However, my feeling is that meetings were better and big companies such as BCM and several booths in the Lumson were satisfied.” He continued: “The success of a trade show today isn’t about past only took one this big floor areas, but about specialization and quality visitors.” Bala added that while overall he was pleased with the Cosmeeting event, for Creative year. However, my Beauty the organizers needed to communicate a clearer message, especially in light of the feeling is that meetings number of competing trade shows that have emerged in Paris. In its communication, the aim is to focus the event as full-service, multi-sector show attracting international visitors. were better There were positives. Business was brisk at French industry cluster Cosmetic Valley’s booths, while there was also a buzz in the Zoom area devoted to niche beauty brands and which played host to 44 brands. Brands in the area said that they had seen a good Beyond Beauty Events number of European buyers at the show. managing director Pradip Bala New features at this year’s show included Cosmeeting Selective, which aimed to ” connect nine brands with solid experience in their home market with key buyers through pre-arranged meetings. “Zoom is interesting to see new concepts, but 60-70% of these brands don’t survive and buyers are looking for brands that have more staying power, which is why we introduced Cosmeeting Selective,” Bala explains. The event’s conference line-up (30 conferences in all) was also singled out as a highlight of the event. Next year’s events will take place from September 15-17. n n n

Beauty Challenger Awards Cosmeeting & French brand Bye Bye Racines came out on top at the Beauty Challenger Awards, Creative Beauty which recognizes niche and up-and-coming brands. The brand, which markets a hair Took Place: color spray to cover roots in between salon visits, won four prizes: the Grand Prix, the September 9-11 in Paris Press Prize (whose jury members included BW Confidentialeditor in chief Oonagh Total Exhibitors: 361 exhibitors vs Phillips), the Haircare Prize and the Web User Prize. The Make-up brand winner was 480 in 2013 German company Und Gretel, the Facial Skincare Prize went to Russian company Cosmeeting exhibitors: 196 Natura Siberica and Lise London took home the Fragrance Prize. Nail brand Fabbnails Creative Beauty exhibitors: 165 won the Beauty Blog Favorite Award. Visitors: 18,248, -15% vs 2013

www.bwconfidential.com - September 25-October 8, 2014 #98 - Page 14 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Cosmeeting & Creative Beauty n n n Seen in show Former LVMH beauty executive Alejandro Rasic presented his new brand, Ayres. The Miami-based company takes its inspiration from the tango culture of Argentina—Rasic’s birthplace. Ayres comprises three bodycare collections—Patagonia, Pampas Sunrise and Midnight Tango—that each feature five skus claimed to be made of all-natural ingredients (body lotion, bar soap, shower cream, body butter and body polish). Prices range from €10-€28. Rasic launched the brand in November 2013 on Ayresbeauty.com and on beauty subscription website Birchbox. In July this year, the

Show review brand went live on European subscription site Glossybox. It is also distributed in Holland, Belgium and Luxembourg and just signed to enter Russia. Rasic is looking for distribution through independent boutiques, concept stores and “trendy” department stores.

Belgian brand JYB Cosmetic’s line, launched last year, was formulated to boost the skin’s natural functions through what it claims is the use of 100% natural and biodegradable ingredients. “We wanted our organic formulas to boost the skin’s natural defenses, but we also wanted to offer pleasant textures and scents,” explains co- founder Jean-Yves Berlemont. All products in the nine-sku range contain between 57% and 97% organic ingredients and come in vacuum-packed packaging, meaning that the formulas last up to six months after opening. JYB is sold in 70 doors in Belgium and is aiming to be in 150 pos by the end of this year, mainly pharmacies, concept stores and high-end beauty salons. It is also launching in Denmark in 2015 and is prospecting the Middle East, Hong Kong and Macau.

Und Gretel is an organic color cosmetics brand co-founded by Berlin-based make-up artist Christina Roth. The selective-priced brand—products range from €18 to €78—is comprised of 48 skus in the eyes, lips and face categories. Und Gretel is in the pre-launch phase; its online shop will open before the end of this year. According to managing director and co-founder Stephanie Dettmann, the brand is targeting distribution through concept stores and luxury perfumeries.

French mask specialist Collagena was showing its range of facial masks and patches. “Masks are big in Asia, and they are making their way to other markets. However, most masks have a fabric base, and Collagena is the only company in Europe that offers hydrogel-based masks,” comments Collagena sales director Karine Taieb-Finet. The hydrogel base—a combination of water and active ingredients— is said to allow the formulas to better penetrate the skin than fabric masks. The range comprises six masks priced from €29 to €34, each with its own function: hydrating, whitening, anti-aging, soothing, detoxifying, and sunburn relief. Collagena also markets under-eye patches and a line of five topical skincare products. The brand is sold in more than 500 pharmacies in France and ships internationally from its e-boutique.

Japan-based company Ruhaku presented its organic whitening range. The formula’s star ingredient is the Gettou leaf, which is said to have anti-oxidant properties. Ruhaku’s range is comprised of a Balance Lotion, Brightening Essence, Night Repair Oil and Day Moist Cream. Prices range from €29 to €44. The brand is distributed through department store Seibu in as well as in spas, and Ruhaku is looking to enter the French market through organic shops and department stores. n

www.bwconfidential.com - September 25-October 8, 2014 #98 - Page 15 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Store visit

Murad looks to boutiques Skincare brand Murad opens its first standalone store

S-based skincare company Murad is opening its first standalone store in Murad flagship ULos Angeles, California in October, which will serve as the brand’s global l Location: flagship location. The opening of the 1,500ft2 (139m2) store also marks the Los Angeles, brand’s 25th anniversary. California, The boutique will sell Murad’s entire range of skincare products, but is l Size:1,500ft2 also intended to educate consumers about nutrition, supplements and (139m2) stress management. In addition to product sales the store will offer a range l Special features: of services, including Guided Skincare Applications, Inclusive Health Skin Guided Skincare Consultations designed to reflect the brand’s holistic approach and YouthCam Applications, Evaluations using a high-definition camera to measure lines and wrinkles, age Inclusive Health Skin spots and sun spots, and inflammation. Consultations and The boutique features an Interactive Art Wall, where customers will be able to skin evaluations using create digital artwork that they can then share on social media. a camera to measure Murad also announced that it will renovate its Inclusive Health Spa in Los lines and wrinkle and Angeles this year. n inflammation

www.bwconfidential.com - September 25-October 8, 2014 #98 - Page 16 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Store visit

s The store offers a range of skin analysis services, including an evaluation with a high-definition camera

s The new flagship store will sell the Murad brand’s entire range

www.bwconfidential.com - September 25-October 8, 2014 #98 - Page 17 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL BW Confidential The inside view on the international beauty industry

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Market watch: Africa The potential & challenges of the next big region for beauty

Packaging How make-up packs are evolving

Insight: fragrance creation What’s next for the industry?

www.bwconfidential.com N°19 September-October 2014

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