BURBERRY PROFITS SLIP/2 A BIG YEAR FOR RALPH/3 Women’sWWD Wear Daily • The Retailers’FRIDAY Daily Newspaper • May 26, 2006 • $2.00 Beauty Straight Talk MIAMI — Beauty’s brightest stars and key decision-makers — including Tom Ford, Leslie H. Wexner, William P. Lauder, Andrea Jung, Susan Arnold and Marc Menesguen — gathered at the Mandarin Oriental Hotel here for the WWD Beauty CEO Summit May 10-12 to offer their prescriptions Andrea Jung for what ails the industry. The ideas were bold and the talk was unusually blunt. For more, see coverage starting on page 4.

Leslie H. Wexner

Susan Arnold

Tom Ford Marc Menesguen William P. Lauder ALL WWD BEAUTY CEO SUMMIT PHOTOS BY JOHN CALABRESE CEO SUMMIT PHOTOS BY ALL WWD BEAUTY 2 WWD, FRIDAY, MAY 26, 2006 WWD.COM Tech Revamp Hits Burberry Profi ts By Samantha Conti amounting to 6 million pounds, or $11.2 million, in the current year. Licensing revenue is expected to LONDON — Profits at Burberry Group plc dipped be broadly fl at, while fi rst-half wholesale sales are WWDFRIDAY 4.9 percent last year as a result of costs related to up a low-single-digit percentage. Beauty the brand’s technology overhaul, Project Atlas. Burberry’s sales increase last year was due in Profi ts for the fi scal year ended March 31 fell to part to strong retail sales in the U.S., where the GENERAL Profi ts at Burberry Group dipped 4.9 percent last year as a result of 106.4 million pounds, or $190.1 million, from 111.9 brand opened seven stores, and in Asia-Pacifi c, million pounds, or $206.6 million. Currency con- where company-owned stores in China and Taiwan 2 costs related to the brand’s technology overhaul, Project Atlas. versions were made at average exchange rates for performed well. The statement said new, franchised Polo Ralph Lauren Corp. was at full gallop in the fourth quarter, as the respective periods. stores in emerging markets such as Istanbul, Turkey; 3 profi ts more than doubled and beat Wall Street estimates by a penny. Before the Atlas-related costs, operating profi ts Warsaw, Poland; São Paolo, Brazil; Jeddah, Saudi rose 2.7 percent to 165.6 million Arabia; Mumbai, Indai, and BEAUTY: The brightest stars and key decision-makers came to the WWD Beauty CEO Summit to offer prescriptions on what ails the industry. pounds, or $295.8 million, from Rose Marie Bravo Cancun, Mexico also contrib- 4 161.3 million pounds, or $297.8 uted to the rise in revenues. From Savile Row to the Serengeti, Andrew Bolton, associate curator at million. Sales in Europe were fl at, 23 the Costume Institute, was into transitions at the Parrish Art Museum. Turnover rose 3.8 percent to due to weak performance in 742.9 million pounds, or $1.33 bil- Spain, where Burberry has The Senate was poised to pass a comprehensive immigration reform bill lion, from 715.5 million pounds, just made a major transition to 23 late Thursday that sets the stage for a showdown with the House. or $1.32 billion. The turnover fi g- retail outlets from wholesale Sales of gold jewelry in the U.S. spiked 4.4 percent in 2005, a six-year ure, which had been released last ones, and in the U.K., where 27 high, reaching $17.7 billion, the 15th consecutive year of increases. month, has been slightly adjusted sales were soft generally. The to refl ect a change in the compa- rest of continental Europe re- ny’s foreign currency translation ported strong results. EYE method. From now on, the com- As reported, Burberry Plage des Palmes was transformed into a Versailles parlor for the “Marie- pany will convert fi nancial results reached a “tipping point” dur- 25 Antoinette” party, with sky blue tents, abundant roses and ottomans. every 30 days, based upon average ing the fi scal year with regard WWD will not publish on Monday in observance of Memorial Day. exchange rates for each month. to its sales channels. Retail “In a year of transition and sales accounted for 42.9 per- Classifi ed Advertisements...... 27 investment, the group achieved cent of all sales, with wholesale To e-mail reporters and editors at WWD, the address is fi rstname. solid fi nancial results,” said chief sales making up 46.2 percent. [email protected], using the individual’s name. executive Rose Marie Bravo in Burberry has been working a statement Thursday. “With a consistently to increase the WOMEN’S WEAR DAILY IS A REGISTERED TRADEMARK OF FAIRCHILD PUBLICATIONS, INC. COPY- RIGHT ©2006 FAIRCHILD PUBLICATIONS, INC. ALL RIGHTS RESERVED. PRINTED IN THE U.S.A. strong spring season underway, percentage of its retail sales, VOLUME 191, NO. 113. WWD (ISSN # 0149-5380) is published daily except Saturdays, Sundays and holidays, with one ad- we enter our 150th year with con- buying previously franchised ditional issue in January and November, two additional issues in March, May, June, August and December, and three ad- ditional issues in February, April, September and October by Fairchild Publications, Inc., a subsidiary of Advance Publications, fi dence in Burberry’s future.” stores and converting whole- Inc. PRINCIPAL OFFICE: 750 Third Avenue, New York, NY 10017. Shared Services provided by Advance Magazine Publishers It was Bravo’s last round of fi - sale corners to retail ones. Inc.: S.I. Newhouse Jr., Chairman; Charles H. Townsend, President & C.E.O.; John W. Bellando, Executive Vice President and nancial results before she makes “Within the next couple of C.O.O.; Jill Bright, Executive Vice President_Human Resources; John Buese, Executive Vice President_Chief Information Officer; David Orlin, Senior Vice President_Strategic Sourcing; Robert Bennis, Senior Vice President_Real Estate; Maurie Perl, Senior way for Burberry’s new chief ex- years, retail will be the pre- Vice President_Chief Communications Officer. Shared Services provided by Advance Magazine Group: Steven T. Florio, Advance ecutive, Angela Ahrendts, in July. dominant route to market, making up more than Magazine Group Vice Chairman; David B. Chemidlin, Senior Vice President_General Manager, Shared Services Center. Stacey Cartwright, chief fi nancial offi cer, said the 50 percent of turnover,” said Cartwright. “There Periodicals postage paid at New York, NY and at additional mailing offices. Canada Post Publications Mail Agreement No. 40644503. Canadian Goods and Services Tax Registration No. 88654-9096-RM0001. Canada post return undeliverable latest numbers were on track. “Underlying profi t for will always be a place for wholesale as a win- Canadian addresses to: DPGM, 7496 Bath Road, Unit 2, Mississauga, ON L4T 1L2. POSTMASTER: SEND ADDRESS the year was actually up 5 percent, and the decline dow to the brand, and licensing should make up CHANGES TO WWD, P.O. Box 15008, North Hollywood, CA 91615-5008. FOR SUBSCRIPTIONS, was just due to costs linked to the preparation and around 10 percent of revenue.” ADDRESS CHANGES, ADJUSTMENTS, OR BACK ISSUE INQUIRIES: Please write to WOMEN’S WEAR DAILY, P.O. Box 15008, North Hollywood, CA 91615-5008; Call 800-289-0273; or visit www.subnow.com/wd . Four initiation of Project Atlas,” said Cartwright, who In the current fi scal year, Burberry plans to in- weeks is required for change of address. Please give both new and old address as printed on most recent label. has been spearheading the project. crease its net retail selling space by a minimum Subscriptions Rates: U.S. possessions, Retailer, daily one year: $109; Manufacturer, daily one year $145. All other U.S., daily one year $205. Canada/Mexico, daily one year, $295. All other foreign (Air Speed), daily one year $595. “By October, we’re going to have global sales of 10 percent. New store openings will be concen- First copy of new subscription will be mailed within four weeks after receipt of order. Address all editorial, business, and stock transparency — which we’ve never had trated mostly in U.S. and Asian markets. and production correspondence to WOMEN’S WEAR DAILY, 750 Third Avenue, New York, NY 10017. For permissions before,” she added. “We’ll be able to have early New retail openings over the next six months and reprint requests, please call 212-221-9595 or fax requests to 212-221-9195. Visit us online: www.wwd.com. To subscribe to other Fairchild magazines on the World Wide Web, visit www.fairchildpub.com. Occasionally, we make visibility on sales and stock trends, and frankly, I include stores in Atlantic City and Riverside, N.J.; our subscriber list available to carefully screened companies that offer products and services that we believe would can’t wait.” Kansas City, Mo.; Madrid, Spain; Sydney, Australia, interest our readers. If you do not want to receive these offers and/or information by mail and/or e-mail, please advise As reported, Project Atlas foresees investment and Vienna, Austria. The brand is also doubling the us at P.O. Box 15008, North Hollywood, CA 91615-5008 or call 800-289-0273. WOMEN’S WEAR DAILY IS NOT RESPONSIBLE FOR LOSS, DAMAGE, OR ANY OTHER INJURY TO UNSOLICITED MANU- of some $94 million during the fi rst three years, size of its Hong Kong store in Ocean Center. SCRIPTS, UNSOLICITED ART WORK (INCLUDING, BUT NOT LIMITED TO, DRAWINGS, PHOTOGRAPHS, AND TRANSPAR- generating cost savings in excess of $37.4 million As for the chief executive handover process, ENCIES), OR ANY OTHER UNSOLICITED MATERIALS. THOSE SUBMITTING MANUSCRIPTS, PHOTOGRAPHS, ART WORK, annually by the project’s third year in 2007-2008. which began in January, Cartwright said it’s been OR OTHER MATERIALS FOR CONSIDERATION SHOULD NOT SEND ORIGINALS, UNLESS SPECIFICALLY REQUESTED In terms of guidance for the current fi scal year, a smooth one. Burberry said it was expecting a “significant” “We’ve been very lucky, and Angela has been negative exchange rate comparison, due to the able to sit down with all of our suppliers, custom- weakening dollar. Atlas expenses are expected to ers and international offi ces, and work beside Rose be approximately 19 million pounds, or $36 mil- Marie,” she said. “It’s been a very, very thorough Quote of the Week lion at current exchange, with savings and benefi ts immersion.” “Tommy will continue to play an important role in determining the Joe Boxer Head Steps Down DNA of the brand. He won’t be involved in micromanaging decisions.’’ By Vicki M. Young acquisition, Joe Boxer had a wholesale volume of $100 million and was sold primarily at depart- — Fred Gehring, chief executive offi cer, Tommy Hilfi ger NEW YORK — William Sweedler, head of the Joe ment stores, including Federated Department Boxer division of Iconix Brand Group, is leaving Stores, May Department Stores, Saks Inc., after less than a year. Dillard’s and Marshall Field’s. Sweedler joined Iconix last July after it ac- Joe Boxer was the fi rst major department store quired Boxer for $80 million from Windsong brand to migrate to a discounter. Kmart gained In Brief Allegiance Group LLC, based in Westport, Conn. the right to sell and manufacture Joe Boxer prod- Sweedler also had led the brand under Windsong. ucts and control the brand’s entire distribution. ● DIRECTING FIGLEAVES: Intimates online retailer figleaves. Joe Boxer is sold primarily at Kmart stores, a A source familiar with the change at Iconix com said Tuesday it has hired Bill Bass as its independent di- nameplate operated by Sears Holdings Corp. said Sweedler will likely return to Windsong, rector. He will be responsible for strengthening the eight-year- Sweedler could not be reached for comment, which owns the Alexander Julian and Como old, U.K.-based company’s plans to expand in the U.S. and in- but is said to be leaving at the end of this month. brands. ternationally. Bass established his career at Lands’ End, where “Bill Sweedler’s contribution to Joe Boxer Financial sources, including investment he worked for six years and served as its senior vice president was enormous,’’ said William Susman, presi- bankers, said Iconix is contemplating a second- overseeing e-commerce and international sales. Following the dent and chief operating offi cer of investment ary public offering and that Merrill Lynch will sale of Lands’ End to Sears, Bass worked as general manager of banking fi rm Financo Inc., which represented likely be the underwriter. Neither a Merrill Sears’ direct-to-customer division. He is currently chief execu- Windsong in the sale to Iconix. “Windsong today Lynch spokeswoman nor Neil Cole, chairman, tive officer of Fair Indigo, a multichannel retailer of free-trade is an exciting apparel company, given its op- president and chief executive offi cer of Iconix, apparel, and serves on the board of Marc Ecko Enterprises. portunities. Bill is a great talent, wherever he could be reached for comment. chooses to apply his energies.” Iconix on Tuesday said Gail Tentler has Joe Boxer was founded in 1985 by Nick joined the company as managing director of in- Graham and sold to Windsong in March 2001. ternational licensing. The brand management Joe Boxer’s operating assets, trademarks and fi rm a week ago said it entered into a licens- Corrections trade names were included in the sale. ing agreement with First American Brands, a Eric Nadler is vice president of sales, operations and e-commerce As a subsidiary under Windsong’s umbrella, subsidiary of Italian fragrance marketer Vapro at Danskin. His title was incorrect in a story on page 9, May 17. Joe Boxer signed a long-term exclusive agree- International, for its Bongo brand. The Bongo ● ● ● ment with Kmart in 2001, with the goal of re- line will launch for Holiday 2006 and will be An image of George Clooney on page 64 of the May edition of launching the brand with a new line of home distributed to mid-tier department and special- WWDScoop should have been credited to © Annie Leibovitz/ and apparel products. At the time of Windsong’s ty stores, retailing for $28 to $45. Contact Press Images. WWD, FRIDAY, MAY 26, 2006 3 WWD.COM Polo Profits Get a Boost Emporio Armani

By Vicki M. Young component and the consistent messages to consumers via To Exit Milan Shows advertising at Polo.com and through print media. Farah By Luisa Zargani NEW YORK — Polo Ralph Lauren Corp.’s income nearly dou- noted the company’s best customers are cross-shoppers, bled in the fourth quarter ended April 1, thanks to a hefty buying across different product lines and at multiple points MILAN — There’s going to be another charge in the year-ago period. Profi ts beat Wall Street esti- of distribution. empty slot in Milan’s Fashion Week calen- mates by a penny. The company this week said it would shut the U.S. op- dar in September — and it will be left by For the three-month period, income was $62.5 million, or eration of the Polo Jeans Co. brand in spring none other than Giorgio Armani, who has 58 cents a share, up from $23.4 million, or 22 cents, in 2007. Polo bought back the U.S. business decided to hold his spring 2007 Emporio the year-ago quarter. The company beat Wall Street’s in February from Jones Apparel Group Armani show in London for the fi rst time. consensus estimate of 57 cents a share. The year- for $255 million. The international Emporio Armani will show on Sept. 21 ago quarter included a charge to settle litiga- Polo Jeans business, which al- at a location to be determined. London tion with Jones Apparel Group. Excluding ready targets a higher-end mar- Fashion Week runs Sept. 19-22. The brand the charge, income in the year-ago quarter ket, will be unaffected. is the second to leave here for another would have been $86 million. The decision to stop Polo European city after Miu Miu departed for Total revenues in the quarter rose 7.7 Roger Farah Jeans distribution in the Paris last season. percent, to $971.6 million from $902.2 U.S. is part of the company’s In a statement, Armani said the show million, which included a 5.7 percent overall global strategy for will be part of a “unique fashion music gain in wholesale sales to $573.8 million the denim business. A high- event” to mark the launch of the Emporio and a 14.9 percent increase in retail end premium denim line Armani (Product) Red line from Emporio sales to $334.9 million. The increase in will be introduced for men Armani, a capsule collection of clothing, wholesale volume came primarily from through Polo Ralph Lauren accessories, eyewear, watches, jewelry the inclusion of Polo Jeans and foot- and for women though the and fragrances. During the event, which wear, the launch of Chaps for women Lauren brand. will be televised, Armani will also show and boys, and increased sales in Lauren The company will con- his fall 2006 Privé couture collection and and the company’s full-price men’s wear tinue to expand its denim signature ready-to-wear line. business. At retail, total company same- products in other lines via a “London is in many ways the world’s store sales rose 3 percent, refl ecting an tiered approach. “Beginning most cosmopolitan and infl uential city, increase of 1.2 percent at Ralph Lauren in spring 2007, we will increase as it has become a crossroads for so stores, 10.6 percent rise at Club Monaco our Double RL denim products many of today’s cultural references, in- stores and 2.8 percent in factory stores. Ralph Lauren at our highest price points...In ad- cluding contemporary art, architecture, Revenues at Polo.com rose 73 percent. is looking to dition, we will increase our denim of- the performing arts, literature, food, The balance in total revenues was from expand its fering in our Rugby brand as well as our music, fi lm and fashion,” said Armani in licensing income. accessories Chaps brand for men’s, women’s and chil- the statement. For the year, income jumped 61.8 per- business. dren’s,” said Farah during a conference Giorgio Armani SpA will donate 40 cent to $308 million, or $2.87 a diluted call to Wall Street. percent of its gross profi ts from sales share, from $190.4 million, or $1.83, a year He noted during the telephone inter- of the (Product) Red collection direct- ago. Total revenues rose 13.3 percent to view that at Double RL, a pair of jeans ly to the Global Fund to Fight AIDS in $3.75 billion from $3.31 billion. could run as high as $400; merchandise Africa. The (Product) Red initiative was “The underlying fundamentals of our at various price points below that is ex- cofounded by Bono and Bobby Shriver business and the ability to leverage our pected to be “very successful.” In com- as part of the Global Fund and is aimed strengths have never been better. Looking parison, denim merchandise under the at channeling private-sector money forward, we will continue to take steps Black Label brand starts at $325 and can into the fight against AIDS in Africa. to advance our retail expansion, to fur- go to over $1,000. Double RL as a retail Emporio Armani is one of the fi ve part- ther enhance the quality of distribution concept is still in its infancy, and Farah ner brands, along with Gap and American of our brands and to further strengthen acknowledged there are plans to expand Express, participating in the initiative, our infrastructure. We are excited about the store base, but declined to elaborate which was launched last December at our prospects and look forward to an- other than to say the company is “looking the World Economic Forum in Davos, other strong year,” said Ralph Lauren, at some sites.” Switzeerland. chairman and chief executive offi cer, in The company expects to expand its ac- The show will also mark the reopen- a statement. cessories business, which has a higher ing of London’s Emporio Armani fl agship Roger Farah, president and chief oper- margin opportunity. In Lauren, which al- and café on Brompton Road. The store ating offi cer, in a telephone interview at- ready has handbags and footwear, category opened in 1988 and has been extensively tributed the quarter’s results to “fabulous possibilities are belts and scarves. refurbished. product” across all brands under the Polo Men’s wear sales appear to be getting “The new façade is striking and can be Ralph Lauren umbrella. He explained stronger, and the factory store business lit up at night,” said an Armani spokes- that product line from one business is has been helped by shrinkage in off-price man. “That road is the main entry point to creating demand in another, sibling op- distribution and the reduction of under- the city from Heathrow airport.” eration. performing doors. The spokesman said Armani is plan- Other boosts to the company’s bottom The company affirmed its previous ning an aggressive advertising campaign line were the ability of the retail opera- earnings per share forecast of $3 to $3.10 on buses, outdoors and in the press to tion to support the company’s wholesale for fi scal year 2007. highlight the event.

“optimistic.” Nothing about smelling so sweet…. Looks from Playboy’s underwear line. Fashion Scoops JET SET: Hugh Hefner isn’t letting his age get in the way of his status as an international playboy. SARNE GIVES UP GHOST: After selling a controlling stake in The 80-year-old mogul swung by Harvey Nichols her London fashion label Ghost last December, Tanya Sarne last week during the British leg of his party- will be leaving the company she founded in 1984. Ghost, a packed European tour to celebrate the launch of label famous for its fl oaty viscose fabrics and fl uid feminine his Playboy men’s underwear line at the store. silhouettes, is now owned by Kevin Stanford, the British Hefner held court with his three girlfriends, Holly retail entrepreneur, and the Icelandic investment group Arev Madison, Bridget Marquardt and Kendra Wilkinson, Management. “I feel sure the new management will uphold while he signed copies of his latest book, “Playboy the philosophy of Ghost, and wish everyone involved success 50 Years: The Photographs.” “It’s the girls’ fi rst for the future,” said Sarne, who added she’s leaving to pursue visit to London,” said Hefner, before turning to other interests. A spokesman for the company said the new more jovial matters. “I do my best to keep up with owners plan to lower the collection’s price points and appeal them — Viagra is the best legal recreational drug to a broader customer base. The new management also plans out there.” to roll out Ghost stores across the U.K. over the next decade, Hefner looked on while fans, who had waited to add to the company’s four existing stand-alone stores in in line outside the store for a glimpse of the London, Los Angeles and New York. magnate, scoped out the latest retro-inspired fall ’06 Playboy men’s wear collection, which includes COMING UP ROSES: Sir Paul Smith has long been an authority velour robes, vintage-print T-shirts with images of on eccentric British style, and now he even has a variety former Playboy covers, Las Vegas-themed briefs of England’s signature fl ower, the rose, named after him. and jersey bottoms complete with embroidered The designer was presented with the Sir Paul Smith rose Playboy logos (in addition to the staple Playboy at London’s Chelsea Flower Show earlier this week — as a men’s basic boxers). surprise birthday gift from his wife, Pauline. The deep pink “The brand is stronger than ever on a global climbing rose was developed over three years by rose grower scale,” said Hefner, though he shrugged when asked Amanda Beale, and it fl owers from spring to winter. Smith said about his own taste in underwear. “I like him sans the warm color refl ects the fact that he’s always “happy” and underwear!” interjected girlfriend Madison. Playboy founder Hugh Hefner and friends at Harvey Nichols. 4 WWD, FRIDAY, MAY 26, 2006 WWD Beauty CEO Summit Leslie H. Wexner: Shopkeeper’s View

LESLIE H. WEXNER, ONE OF THE GIANTS OF CONTEMPORARY RETAILING, predicted that the “best is yet to come” in the beauty business. “The next 10 years is going to make the last 20 look like a slow walk,” he declared. Referring to his own company, Limited Brands Inc., Wexner, the chairman and chief executive offi cer, added, “We think we are going to double our beauty and cos- metics business in the next fi ve years in the lower 48 states. We’re not really excited about Hawaii and even Alaska. We’re Midwesterners, and that’s where we think our growth is. We think the industry is going to grow enormously.” Wexner came to the summit to deliver a seemingly simple message: that he looks at the world as a shopkeeper — and that’s not easy. By the time the Limited Brands ceo had fi nished delivering his Thursday morning opener, the high-pow- ered crowd had plenty to think about, and the residual buzz echoed throughout the conference. Often viewed as a master of vertical retailing in apparel, lingerie and beauty, Wexner humbly portrayed his groundbreaking track record as one driven simply by a desperate need for survival. In retelling the now familiar anecdote about starting his fi rst Limited store with $5,000 borrowed from an aunt, he showed a little-seen side of himself. “I wanted to be a shopkeeper, and on Aug. 10, 1963 [when the store opened], the summary of my life’s ambition was, ‘Don’t go broke,’” he admitted, as a wave of laughter welled up. “It wasn’t funny at all,” he responded. “I didn’t sleep for weeks. I developed stomach ulcers because I just didn’t want to go broke. I don’t know if I wanted to be a success, but I really didn’t want to go broke.” So he made the pilgrimage to Seventh Avenue in New York in search of brands. There he received a lot of sympathy and total rejection; the department stores had fi rst dibs on all the choice merchandise. “I said, ‘How do I satisfy my customers, let alone not go broke selling second-rate and third-rate merchandise?’ I thought I knew what my store would be; I thought I knew the customer. Knowing the cus- tomer comes fi rst; knowing your store, second. So the things that were in my do- main, which aren’t easy — displaying the store, providing the point of purchase, customer service, all the things that I physically could do with the help of two part- time salespersons in my little store — was kind of all for naught if I had second-rate merchandise,” Wexner reasoned. “So I began by not being rejected by the customer, this important, dumb skill of knowing about stores and customers.” but being rejected by the industry. Wexner added that he never moved his headquarters out of Columbus, Ohio, to “The choice was go broke or go fi gure it out,” Wexner continued, saying that he New York, Paris or Milan because “our business is centered where the customer is, found willing manufacturers of fi rst-rate merchandise from Pennsylvania to Italy. where most of the stores are.” His fi rst store morphed into a chain of 500. After buying Victoria’s Secret in 1980, Some of his sharpest observations came during the question-and-answer period, he ran into the same wall with intimate apparel manufacturers, then had the same particularly when an audience member compared him to a fox in a henhouse, with his experience a third time with the beauty industry in the late Eighties. “I went to vertical retailing. Wexner laughed and replied that years ago, conventional wisdom every one of you,” Wexner said. “Completely rejected and for the same reasons that predicted he would torpedo department stores. “Never did,” he replied. “I don’t think we were rejected in apparel, for the same reasons we were rejected in lingerie, we we dented them. They have their own set of issues, and they’ve been reinvented. were rejected in personal care.” “Wal-Mart is a reinvention of a department store, Target is a reinvention of a department store,” he continued. “Kohl’s is a reinvention of a department store. Montgomery Ward doesn’t exist. Sears perhaps is rising from the ashes, maybe Penney’s is, too. There’s a cyclical nature on a global basis. We haven’t hurt them. I wanted to be a shopkeeper, and on Aug. 10, “I say this kind of in a challenging way,” he continued. “People say you’re the fox “ in the henhouse, and everybody is now in the henhouse business in one way or an- 1963 [when the store opened], the summary of my other. None of the major cosmetics brands wants to be known as retailers, because it kind of hurts your [price/earnings ratio]. But you know, you have 1,000 stores or life’s ambition was, ‘Don’t go broke.’ so, and people might begin to notice. — Leslie H. Wexner,” Limited Brands Inc. “I’ve never seen in the history of the world a branded manufacturer become a retailer — the kind of two-headed monster — successfully,” Wexner asserted, point- Wexner pointed out, “I did not invent the beauty cosmetics specialty store.” ing to Michael Eisner’s diffi culties in launching Disney stores. “It’s a hell of a band- That honor went to perhaps Shop Huit, the predecessor of Sephora, or maybe Body width to go from labs to stores and all the parts in between and understand them. Shop, or “all those thousands of French and Italian ladies that run perfumeries in And you can look at cars, you can look at apparel, you can look at a lot of things, but Europe.” over a period of time, no one has sustained it. That dumb skill of running stores and “But we could take our shopkeeping skills and our customer skills and begin to seeing it and being responsive is an enormous, complicated and detailed thing.” get started. When we got started, we visited almost every one of you — every one of Returning to the question, he said, “It’s easy to see us as the enemy. I think we’re you — and said, ‘We have this idea: We want to create a specialty business in beauty. the opportunity. And from a customer point of view, there are people that want to Would you partner with us? Would you help us?’” buy personal care products in department stores. There are people obviously that Wexner then recalled Leonard Lauder taking him on a tour of Estée Lauder’s want to buy them in specialty stores. There are other people that want to buy them in Melville, N.Y., plant 15 years ago to demonstrate the diffi culty of cosmetics manu- drugstores and supermarkets, and some people over the Internet and at airports and facturing, and Wexner was overwhelmed — so much so that it convinced him to all kinds of ways. That’s great. All this stuff is going to be sold in all these places.” stick to what he knew. “I have no desire [to learn about manufacturing], because we Addressing another question, Wexner returned to the theme. “Over a period of don’t have the time. Our sole purpose — we begin at the end of the pipe that says time — and I am very optimistic — I think we will have partnerships with almost fi rst is the customer, then we’ve got to be terrifi c shopkeepers. And all this other all of you, because it’s not in your interest, not in our interest and certainly not in stuff that you guys do infi nitely better than we will ever do in apparel, in lingerie, our customer’s interest to tell people where they have to buy things. They’re not in cosmetics and beauty — because that’s what you do. We’re shopkeepers. That’s going to behave that way. So our migration is a result of being accepted from abso- a pretty hard thing to do, and it’s pretty damn complex, and it keeps me busy and it lute stonewall rejection, that’s what you’re seeing. We’re in the business of running keeps me energized.” stores to sell things to our customers that really make them happy.” He later added, “We do not want to be in your space. We’d be delighted if we Wexner ended his speech with a hopeful prediction. “Globalization, technology, never had to make anything, if all of you would sell us all the things that you make segments of lifestyles, products that are going to be invented that you haven’t even and think about us. dreamed of to satisfy men and women and different needs. The emotional content “It’s really a tough business,” Wexner continued. “The shopkeeper’s view is to that you bring to people’s lives — I mean for $15, it’s entertainment, for $50, it’s bet- spend all your time in the shop, spend all your time with the customer and know ter than going to the opera. them like you know a friend. Not know about them, don’t research them, just know “I think the industry is tremendously creative,” he continued. “The channels of ’em. Watch their eyes, the way I did in the fi rst store. distribution, the countries of distribution are just going to be explosive in growth. “Probably my best friend in retail was Sam Walton — one hell of a shopkeeper. The partnerships that have been created, will be created, are the tip of the iceberg. Sam could go on for an hour telling you the merits of salt licks in midsize cities and “In a world that is commoditized, there’s always an opportunity for products that villages, and how that was the key to the success of the Wal-Mart store in that place. make people smile, that have emotional content,” he continued, asserting that what And he could look at the customer and take him apart with his X-ray vision — the inspired the birth of Starbucks and its famous $4 drink was “McDonalds selling all clothes they were wearing, the car they were driving — and imagine the kinds of that mediocre coffee at 25 cents a cup. products and the price that he would put on those products that he would sell. “The world is full of commodities, very little opportunity for self-expression, “The obsession that the shopkeeper has with the shop and the store is our full- very few people have tailor-made clothes, tailor-made houses, tailor-made shoes, time job,” Wexner added. “We integrate backward and deliberately don’t want to tailor-made cars. So how do we enrich people’s lives? I think it’s more than what know what you know. We don’t have the bandwidth, we don’t have the time. We’ll happens on the Internet and more than what you can get out of an iPod,” Wexner never be as smart in product development, we’ll never be as smart in marketing, declared. “I think it’s those touches, those feels, those smell-goods, those feel-goods we’ll never be as smart in effi ciencies, we’ll never know all the things that you know that change your life.” almost intuitively about bottles and glass and molds and colors and dyes. We have — Pete Born WWD, FRIDAY, MAY 26, 2006 5 WWD.COM WWD.COM Ford’s Call to Action: Renew the Spark TOM FORD OPENED THE WWD BEAUTY CEO SUMMIT BY GIVING THE INDUSTRY is overwhelmed. The customer wants and needs someone to tell them what to buy some simple yet stirring advice: Trust your instincts. and how to use it, to be honest with them and to make promises that can be kept.” “Many of us today are paralyzed by fear,” said Ford, who gave the summit’s open- That means it’s time to renew the authority — not the launch machine, said ing keynote address on May 10 to a packed crowd. “As we operate in an industry that Ford. “We’re concerned more with keeping up with the speed of the market rather launches products at a scale that is often vast and worldwide, a certain amount of than honing and refi ning our vision so women today turn to us as their mothers fear is understandable; the stakes are high. The fear can often result in the creation did with their full attention,” he said. “We need to return to a belief in our own of bland products that do not challenge or innovate.” products and to the creation of products that we can honestly say to the customer And, he said, fear can make companies reticent to reinvent. “It can make us that they need. Perhaps we need the confi dence to value ourselves higher in order hesitant to take a brand name that is known around the globe and give it a fresh, for the customer to highly value us. Perhaps we need to have the confi dence to new spin,” he said. “It can lead us to put out unsurprising products with unsurpris- make bolder gestures and turn more heads.” ing names promoted in an unsurprising way. It can make us weak and dull and, Ford said too often the beauty industry underestimates the sophistication of the ultimately, fear can make us lose.” consumer. “We think that safe and familiar is what they want, and that’s one of the To overcome that obstacle, it’s critical to fi nd the courage to take a risk, he said. dangers of today,” he said. “Mainstream taste is no longer what we think it is. The “How do we get back in touch with that risk-taking gene that we all possess, yet girl next door, thanks to media and the Internet, is as likely to be as familiar with that is muffl ed as business gets bigger unorthodox fragrances and rain-for- and the stakes get higher? We need est botanicals as you are. Let’s give to trust our intuition. If we’re bored her something to think about. Let’s while we’re designing a product, the give her something to lust for.” consumer will be bored. If we’re ex- While Ford conceded that the cited when we create something, we long-term loyalty of his grandmother’s can actually endow that product with day is a thing of the past, he thinks an excitement that will translate to a in serving consumers’ insatiable positive reaction from the consumer. need for newness, the beauty indus- Today, more than ever, the customer try is losing its focus. “I’m not saying wants something signifi cant and bold. it’s easy — we’re at a diffi cult cross- Half-hearted attempts to please ev- roads,” he said. “The beauty land- eryone and offend no one will simply scape is bigger than ever before, and come off as second-best.” the customer is currently wandering In fact, he said, the greatest break- all over trying to forge her own path. throughs are often things that break Beauty is no longer just cream and with tradition. “We often spend our paint in a bottle, nor is it about one time looking over our shoulders at our or two mega-hit products that every competitors rather than looking for- woman has on her dressing table. ward and forging a new way,” he said. The consumer is exploring so many “We rely on testing and focus groups things in the quest to look her best and surveys to tell us what the consum- — wellness, detox, diet, Botox, fi llers, er wants when the very thing the con- surgery, even sleep sometimes. sumer wants most is for us to tell them “The power of a well-loved name is what they want and need. This is our huge in a world that is so fi lled with role — to lead and to guide. To do this, new products and brands,” Ford con- we have to saturate ourselves with the tinued. “The trick is to take it from a market and today’s culture and then few steps behind the curve to several react with a fresh eye, as if we were paces out front, to go beyond the status our consumer encountering our prod- quo, to go beyond the current beauty uct at retail for the fi rst time. We need industry protocol and to chart out new to put the business models and spread territory to excite and win customers. sheets to the side, tap into the zeitgeist If I’m here to tell you anything, it’s and be bold in our expression of it.” that brand capital is more resilient Being bold has never been a prob- than you think. As I experienced in lem for Ford, who from his days as a my own career in fashion, you can design assistant at Cathy Hardwick to yank a classic brand into the future designing for Gucci has always had an [as he did at Gucci] while still profi t- unshakable faith in the merit of his ing from its legacy and the prestige own opinions. “Confi dence has always of its past. In fact, when you do a 180- served me well and I think has been degree turn and step boldly in a new one of the reasons for my past success direction, not only does the legacy of — and I hope it’ll help me achieve the brand become more interesting, future successes, as well,” he said. “I it propels you and fuels you because think that confi dence is exactly one of it communicates an authority and ex- the things that today’s consumer needs pertise. We then need to be ruthless in from a beauty brand. What he or she is critiquing ourselves. Are we succeed- looking for is a voice that speaks with ing in our mission statement? Are we authority and clarity, a voice to trust, old? Are we tired? Is our message still a voice to cut through the barrage of relevant? Do we deliver it clearly? advertising, TV, Internet, makeover What are our core products? What are shows, beauty blogs, celebrity endorse- we about? Are they still valid? What’s ments and, of course, a sea of constant- our future? Where are we going? Who ly changing products all vying for our is our customer? Are they the right attention. customer? Do we want that customer? Such industry staples as fl ankers Are we giving them what they need?” and ancillaries may actually be erod- “Nonconformity is, well, it’s not so ing brand value, said Ford, not in- nonconformist anymore. Mainstream creasing it. “The beauty industry, just taste has become increasingly sophisti- like all fashion-related industries, is We need to trust our intuition. If we’re bored while cated and wide-ranging; there are infi - suffering from an overload of prod- “we’re designing a product, the consumer will be bored. nitely more ways to purchase unusual ucts,” he said. “We’re devaluing our products than ever before. How many assets with a constant and never-end- — Tom Ford” women do you know who rave about ing sea of fl ankers, gift-with-purchase, their favorite scent from some small purchase-with-purchase, promotional little company you’ve never heard of? products, spin-offs, derivatives, ancillary, seasonal hits, seasonal fl ashes. All of this Meanwhile, many beauty executives are more and more lost, trying to fi gure out the ul- is really eroding the value of our core products and the perceived value of our timate way to rework gift-with-purchase, to reinvent presentation at travel retail. It’s no brands. By supplying a constant stream of merchandise, the consumer is left with wonder that these tired and tested methods for conducting business no longer wow the a feeling that our products are empty and hollow, that there’s too much to choose consumer. After all, how exciting is it to get a trial-size moisturizer or to be spritzed with from and that it’s all too available to have any real value.” perfume in a department store when magazines are talking about niche organic skin care So does this mean that the authority of the major-league brands will erode fur- from Europe and the celebrities are all ordering custom-made fragrance blends?” ther? But there is a simple, albeit not an easy, answer, he said. “We need to ask our- Not necessarily, said Ford, who has given the venerable Estée Lauder brand a selves what excites us. What would excite us as consumers? What do we want? What best-selling kick over the last year. “Consumers want strong direction, now more are we tired of? We must each ask ourself what our company stands for. What are than ever,” he said. “And as desirable as the niche brands and the wellness and we about? To use an unromantic business term, what is our mission statement? lifestyle oriented aspects of beauty may be, it is the major-league beauty brands When things become unclear or complicated or diffi cult, I think it’s always best to that — if they’re smart — will offer this direction to the mainstream customer. The return to the fundamentals; to edit and streamline.” consumer, as we all know, is more educated than ever. But she, and increasingly he, —Julie Naughton 6 WWD, FRIDAY, MAY 26, 2006

WWD Beauty CEO Summit WWD.COM Fiske Charts Beauty’s New World TO GROW — AND, INDEED, SURVIVE — IN THE evolving beauty landscape, it’s necessary to look at the competitive field in an entirely new way, says Neil Fiske, chief executive officer of Bath & Body Works. “The beauty landscape, when you put it all togeth- er, is pretty exciting,” said Fiske. “Total consumption, properly defi ned, is growing about two times the econ- omy. New channels are growing rapidly. You have the direct channel, whether it’s infomercials, QVC; you have the Internet, you have door to door — Body Shop at Home is an example — growing double-digit rates in the U.S., eBay. You have proliferation and growth of the specialty channel, lots of boutiques. And you have the off-mall channel, which is experiencing very strong growth rates.” Fiske, who used his theory of affordable luxury to reposition Bath & Body Works — and launched the chain’s new fl agship format — is not afraid to prac- tice what he preaches, having teamed up with brands such as C.O. Bigelow, L’Occitane, Dr. Patricia Wexler and American Girl to revamp the chain. The next fi ve years in beauty retailing“ will unleash more innovation, more change, more radical transformation than in the previous 30. — Neil Fiske,” Bath & Body Works

“The next fi ve years in beauty retailing will un- leash more innovation, more change, more radical transformation than in the previous 30,” said Fiske, pointing out that spas and cosmetic surgery are among the growth areas that can be leveraged. “I think our constraints to growth are largely self-imposed. [In] the conventional view of the beauty market, you have body care, hair care, color, and it’s chopped up into the little channels of distribution — mass, direct, spe- cialty — and it’s about $45 billion. And for a long time, most of us have probably been looking at the industry, one way or the other, like this. The problem is, if this is the way we look at the beauty business, we’re not going to grow. If you look at it over time, measured the same way, the conventional view of the beauty market has grown 2 percent to 3 percent per year, not adjust- ing for infl ation. After infl ation, fl at or negative over a fi ve- or six-year time period. We are lagging [behind] the growth of the overall economy.” Fiske suggests taking an expansionist view of in- dustry and the consumer. “Let’s look at where she is spending her money and how she thinks about the beauty category,” he said. “If we defi ne it that way, we get to a much different picture, more like $170 billion. It starts with the $45 billion I just showed you. Then, if you simply add the hair salon business at $53 billion, that’s a big chunk. Nail salons at $6.5 billion; cosmetic procedures, a $12.5 billion market now. Tanning, $5 billion. Spas, over $11 billion. Cosmetic dentistry, $3 billion. Health and fi tness, a $15 billion business. Vitamins, $9 billion. And if we don’t think that’s beau- ty, we’re not thinking about it the way she is.” Beauty services are “clearly outpacing” the rest of the industry, said Fiske, who noted that salons are growing at 7 percent per year, and said that from 1997 terrevolution of sorts to a growing consolidation in the the white kid dressed up in hip-hop, it’s just a kid to 2002, spas went from being a $2 billion industry to traditional channels. Competition in the conventional growing up in a multicultural environment. When we an $11.4 billion industry. Cosmetic surgery procedures view is viewed as very much zero sum. One competitor classify things, when we put people in boxes, when we are growing at 24 percent per year, he said, while cos- wins, the other competitor loses. One fragrance is a think about the industry as having boundaries, we sti- metic dentistry is growing 29 percent per year and the success, it’s at the expense of another. The expansion- fl e our growth. And third, it’s really about embracing number of nail technicians is growing 9 percent per ist view is that the category is incredibly elastic. She change. It’s about embracing the upstarts, the icono- year. “What’s the message? She’s spending more than will spend more money on beauty if we give her the clasts, the rule-breakers, the outsiders and the new- she ever has on the beauty category. [If] the product is right products and the right experience to buy them.” comers. Most of our best hope for innovation and dra- right, the service is right, the environment is right, she Internationally, opportunities abound, he added. “This matic acceleration of growth in this business comes will trade up. And I think our constraints to growth are truly is a global market, not just with the presence of glob- from the newcomers, the outsiders, the people who largely self-imposed...How many of us have yet thought al brands and global appeal, but an enormous opportu- are willing to change and challenge our thinking.” about the potential of spas as a distribution channel? nity exists for us in those newly developing countries is “How many times have we heard that there are too “On the one hand, we hear about massive consoli- enormous,” Fiske said, adding, “The connection between many fragrance launches? A lot over the course of the dation. On the other hand, there have never been more inner and outer beauty is really an opportunity to expand last day and a half. The funny thing is, we heard it points of distribution in retail than there are now. So our growth and our thinking about the beauty category.” two years ago, too. How many times have we heard how do we square these two views? The expansionist “How do we accelerate growth? At the end of the too many promotions? Funny thing is, we heard it two view would say, ‘Look at the consolidation.’ Industries day, I think it comes down to three simple things. years ago,” Fiske said, labeling the industry’s problem that consolidate typically aren’t very innovative; in- First, we need to become, as Judy [Wray of Rite Aid] “the prisoner’s dilemma.” He described the condition dustries that consolidate typically are mature. And I said, customer-centric and never underestimate her. as being trapped in a habit but unable to change out know we love the anti-aging business, but I don’t think Not know about her, not research her — know her. Go of fear of the consequences. we really want to be a mature business. The decon- into her home, go shopping with her. Second, we’ve “As long as we keep defi ning the industry on our terms, structionist view would say that the proliferation of got to break down walls and classifi cations. You have not the consumer’s terms, we’re going to be trapped.” retail channels and points of sale is very much a coun- to break down the way we think about things. It’s not — Julie Naughton 28190_Royal 1 5/24/06 5:05:42 PM 8 WWD, FRIDAY, MAY 26, 2006 WWD.COM WWD Beauty CEO Summit WWD.COM Lauder’s New Persona: The ‘Humble Brand Keeper’

“I’M JUST A HUMBLE BRAND KEEPER,” WILLIAM P. LAUDER, PRESIDENT and chief executive officer of the Estée Lauder Cos., declared in his keynote speech. The simple opening phrase was a response to the assertion of Limited Brands chairman and ceo Leslie H. Wexner a day earlier that he was “just a hum- ble shopkeeper.” Lauder continued that, as chief of the Estée Lauder Cos., he is also a brand buyer and a brand creator. Throughout his talk, he weaved in the obligation of brands to elicit an emotional response, and he challenged his industry peers to view their brands through the lens of the consumer. “Most of us in this room feel passionately about our brands,” he said. “The chal- lenge we have is getting our consumer passionate about our brands.” Lauder talked of the “chicken-and-egg syndrome” between the brand and the store, and of the arm-wrestling that too often determines what brands go in which stores. He noted that the representation of a brand in a great retailer is important for success, but that the passion a brand exudes to the consumer is paramount. “A great retailer wants our brands primarily because of the connection our brands have with the consumer,” declared Lauder. “Our challenge is to stand up, take a look at our brand and experience it from the consumer’s side. At the end of the day, what makes great brands is the image and the passion that those brands gen- erate in the consumer through her emotion.” But it takes an objective eye to ensure that the consumer will see the creativity in the company’s product concept. Borrowing from Billy Crystal’s classic charac- ter Fernando Llamas from “Saturday Night Live,” Lauder said the temptation is to look at a project and say, “You look marvelous, you’re such a wonderful lipstick.” He cautioned that consumers, bombarded with new products, don’t always share the marketer’s love affair with the lipstick. In an industry that offers consumers the same product, such as a lipstick, for a range of between $2 and $32, Lauder commented that prestige companies win by offering a “wonderful experience” of full service in a high-end store. He noted that the company found that, when it raised Crème de la Mer’s luxury price point to $190 from $150, demand for the skin cream actually increased at Saks Fifth Avenue. A great retailer wants our brands primarily because“ of the connection our brands have with the consumer. ” — William P. Lauder, Estée Lauder Cos.

“It doesn’t make sense,” he said. Trying to untangle the consumer’s logic, Lauder added that there are price bands within the mass and prestige markets where the shopper feels comfortable. “If the price is too low for what they are get- ting, they say, ‘Something must be wrong.’ If it’s too high, they say, ‘Well, it’s just not worth it.’ We’re in a business that reinforces a consumer’s wants, not needs.” Lauder’s primary retail channel — department stores — also caters to wants, not needs, requiring brands and retailers to work together to foster a luxury expe- rience that the consumer will seek out. However, one department store business teetering on the edge of commodity is fragrance, warned Lauder. In the fragrance industry, “we’ve commoditized our brands, because we’ve let them out everywhere,” he said. “And what do we all wring our hands about? Surprise, surprise: Fragrance over the last fi ve years has been the most challeng- ing segment of our business.” Likening the fragrance industry to the movie business, Lauder commented: “We spend a lot of time and a lot of money developing a great new fragrance, we put it out there. If it’s successful in the fi rst weekend, like the movie business, it’s a success. If it’s not, we have to say, ‘All right,’ and go on to the next.” Too often, beauty fi rms use the mass market as a secondary sales solution, and have trained the consumer that, if she waits, she can fi nd it for less at Wal-Mart or Target, noted Lauder. For beauty fi rms trying to retain a scent’s prestige position- ing by selling it exclusively through specialty retailers, such as Neiman Marcus, they hit a sales ceiling of $10 million. “The problem is, the development cost was ties arising from J.C. Penney’s deal with Sephora, the executive said that, over $12 million,” said Lauder. “That’s not an economic model for success.” the last 10 to 15 years, the shift from traditional retail to alternative formats has He continued, speaking of the process: “That’s not a formula for success in our been enormous, estimating a share loss of roughly 15 to 20 percent. Referring to business, certainly, but we are all guilty of it. I think it was Sigmund Freud who Sephora’s partnership with Penney’s, Lauder commented: “Strategically, it’s a said, ‘The defi nition of insanity is trying the same thing again and again and ex- good idea. Now it’s a question of, how do you pull it off? Is J.C. Penney going to be pecting a different result.’ The question is, how can we break that cycle?” able to pull the Sephora customer into their stores? That’s the big question. It’s He noted that the Estée Lauder Cos. dared to do things differently with the certainly a challenge. But if they can pull it off, they’ll be quite successful.” Sean John scent, which is currently the number-one-selling men’s fragrance. He also noted that the two retail concepts have different brand imagery, and Shifting to the evolving retail landscape, Lauder put the recent consolidation that it may be diffi cult to adapt Sephora’s 5,000-square-foot concept into a 1,500- trend in context by taking a look at past decades: “In 1970, the Estée Lauder Cos., square-foot space in Penney’s. which at the time was three brands — Estée Lauder, Clinique and Aramis — did Europe, Lauder pointed out, is experiencing similar consolidation and disrup- business with 202 different retail nameplates. In 1990, it was 170. In 2006, it’s 17.” tion, with A.S. Watson acquiring France’s Marionnaud and “Sephora continuing to The number of nameplates may have decreased, but Lauder said the amount of gobble up smaller retailers.” business and the door count have both grown dramatically. Seeking opportunities abroad, Lauder said: “I think China is a home run for Choosing to look at the rampant retail consolidation as “the glass half full,” many of us, if we play it smart.” Lauder noted that, while a majority of the 1.5 bil- Lauder commented that Federated Department Stores’ acquisition of May Co. lion Chinese population earns a mere $120 a month, the other 10 percent earns will result in a national department store chain for the fi rst time in U.S. history. multiples of that $120, which translates into 150 million people, or the population Federated’s national reach — under the Macy’s banner — will allow companies of France, Italy and Germany combined. like the Estée Lauder Cos. to launch a product to every region of the country in “I think that, when we gather here, or someplace else, in two years’ time, China one fell swoop. will have surpassed the size of the French economy. In 10 years’ time it will have “We’ll have one retailer, Macy’s, with a presence in 49 of the 50 states, as well as surpassed every other economy in the world, perhaps with the exception of the Puerto Rico,” he said. But he acknowledged that the Federated-May merger will United States and Japan.” cause some disruption and “discomfort.” The key to unlocking an emerging market such as China, noted Lauder, is to Addressing the mass market manufacturers in the audience, he said: “For make brands relevant to a new group of consumers with different perspectives those of you used to dealing with Wal-Mart and Target, I’m sure we have a lot to and viewpoints. learn from you in dealing with one retailer whose notion of compromise is to do Regardless of the country or territory, Lauder said, “the consumer has all of it their way.” the power.” Responding to a question from the audience about emerging retail opportuni- — Molly Prior

10 WWD, FRIDAY, MAY 26, 2006

WWD Beauty CEO Summit WWD.COM Arnold Declares It’s Time to Listen THE BIGGER THEY ARE, THE HARDER THEY FALL. THOSE WORDS MAY Arnold said. have been a lesson to many a schoolyard bully, but it seems today’s beauty leaders While women may turn to the Web as easily as they do a girlfriend to discuss are taking heed of the old saying and not resting on their laurels — not even for a beauty, men, on the other hand, have a ways to go. Arnold hopes that new ways minute. to communicate with them will help manufacturers crack this market, as well as Susan Arnold, vice chairman of P&G Beauty & Health, took the summit’s breathe new life into other categories, such as anti-aging products, a market she theme “Bigger Than Beauty” and turned it into a challenge for the audience said is still only defi ned as women between the ages of 40 and 55 years old. — especially the big players — who she dared to think bigger about beauty. In addition to communicating better with consumers, beauty companies need Specifi cally, Arnold asked her peers to build better relationships between brands to inspire them, too. Arnold recalled a time when women anticipated the newest and consumers, develop inspiring products and, perhaps most colors of the season and even stood in line to buy some of them. important, be honest. “We were the envy of other industries. They marveled at our Arnold recalled a time when big companies could talk to con- ability to form emotional connections, to go beyond merely trans- sumers and consumers would listen. Now, these companies need acting business,” she said. to listen to their consumers and, in turn, respond to their needs. So what happened? “We need to pay attention to her. We need to rekindle the “In the past 10 years, we seem to have focused more on prolif- fl ame, to romance her with our products and our brains. And we eration than ‘gotta have it.’ Our counters, store shelves and Web need to talk straight to her,” said Arnold, who recently took on sites are stuffed with a lot, and I mean a lot, of product. And you P&G’s health business, in addition to overseeing the company’s know what? She really isn’t buying that much more of what we $20 billion beauty division. have. In fact, our share of her wallet is shrinking somewhat, while Beauty executives must fi rst pay attention to a consumer’s industries like consumer electronics and organic foods are grow- needs. By knowing what matters to her and what’s going on in ing,” Arnold said. her life, Arnold argued, a company can better produce prod- While Arnold believes beauty executives need to squeeze out ucts she’ll love. She pointed to Apple and eBay as companies more must-have items, she does point to recent successes: lip to learn from. plumpers, self-tanners and color highlighting shampoos. “Apple was certainly paying attention when the record indus- She even cited a P&G success: Olay. try wasn’t. They paid attention to the way people were using the “When we evolved Olay into a beautiful line that ‘Loves the Internet and how it was changing their relationship with music. Skin You’re In,’ the business took off,” Arnold said. People no longer wanted to hear an entire CD, they wanted to The third piece of advice Arnold shared with her peers was download individual songs and then burn their own personal the importance of honesty with consumers, in the form of better mixes,” Arnold said. “Now, 42 million iPods, about a billion songs information and clear, well-documented, transparent claims. and over $9 billion later, iPod is bigger than music.” “Beauty has seen an explosion in new products and solutions, EBay is another company Arnold said invented itself by paying from nanotechnology and cosmeceuticals to natural oils and herbs. attention to how people use the Internet. But a recent chat with More companies are offering and promising more stuff. Sadly, that eBay’s chief executive, Meg Whitman, taught Arnold that no com- means more snake oil, and we all know that’s true,” she said. pany is too big to rededicate itself to listening to its consumers. A product’s ingredients are as important as proof that they “Despite all the safeguards and rules, a few people fi nd work and are safe, and that companies stand behind what they ways to cheat,” Arnold said. “So eBay is reinventing the way it Susan Arnold sell. Arnold noted the challenge is a bit steeper for beauty compa- responds. They just added over 1,000 trust and safety experts,” nies, seeing that instant validation isn’t always practical or mea- Arnold said. surable (such as how well a wrinkle cream works), and since information needs to To better listen to consumers, Arnold suggested utilizing blogs. By visiting stand up to regulatory and legal scrutiny. Technorati.com, a search engine that tracks blogs, Arnold said one can track the “My company has not been perfect. No company has. We all need to improve. number of blogs created about a certain topic — and what consumers think about But anyone who doesn’t play fair hurts everyone who does. I challenge my compa- that topic. ny, my competitors and all of our partners to work together to set the bar high.” “Bloggers tell each other what they like and what they need, which mascara Inspiration, in Arnold’s view, means spending less time on product prolif- really works and which to avoid. And while their infl uence on purchases may still eration and more time focused on creating products that truly delight and cre- be small today, we’d be foolish to ignore it,” she said. ate demand. Arnold took a stab at Technorati.com by typing in “Pantene” as a keyword. “And that, ladies and gentlemen, is bigger than beauty,” she said. The site turned up over 12,000 references to the leading P&G hair care brand, — Andrea Nagel

to the Viktor & Rolf beauty license through which L’Oréal introduced the Flowerbomb fragrance, which ranks number one at Saks Fifth Avenue and Menesguen’s Formula for Prestige in the top 10 in Europe where it’s carried. “Why did we choose Viktor & Rolf?” he asked of MARC MENESGUEN, PRESIDENT OF L’ORÉAL’S ranks among the top fi ve in all the U.S. stores it is the quirky Dutch duo. “Well, the obvious answer is luxury products division and vice president of sold and is growing at more than 70 percent state- their talent, their creativity and their art of rein- L’Oréal SA, asked the charged question, “What could side. As a brand, Shu Uemura had to go back to its venting fashion with a unique point of view. Viktor be the driving forces that will fuel the growth of the roots and take a cue from the original philosophy & Rolf do not only talk about beauty and fragrances, prestige beauty market in the years to come? of Shu Uemura himself — “Beautiful makeup starts they bring us the vision of a better world and make “Well, of course as you can imagine I don’t have a with beautiful skin.” Menesguen called it “a subtle a dream in doing so.” crystal ball,” he quipped, adding — much more seri- combination of art, science and nature, which epito- Global high-end brands are feeling the pressure ously — that the industry is at a “turning point. In mizes the heart of Japanese culture.” from such prestige names and are therefore being the last couple of years, we have seen the erosion of Its innovation stems from the forced to up their quotient of inno- the traditional levers of growth. The large number brand’s choice of natural ingredients, vation, service and dreams. of launches and the escalation of traditional pro- technologies and applications, he said. “I think that this is a very motions with endless gift-with-purchase have satu- To illustrate his second point, the healthy competition for us all,” said rated our distributors’ shelves and counters. And I importance of service, Menesguen Menesguen. also believe they have saturated the minds of our discussed Kiehl’s. He added that another promising consumers.” “It’s all about service,” he said of category is the men’s beauty market. Menesguen said that as president of Lancôme a the L’Oréal-owned brand, which he “We have been waiting for this decade ago, he realized that prestige consumers ex- likened to Japanese beauty brands, segment to grow for more than pected more than excellent products and exciting offering lengthy consultations and 20 years, and it’s now happening brands. Rather, the keys to making a strong luxurious panoply of samples that can often re- in the prestige market,” he said. brand are “innovation, proximity and modernity.” sult in a purchase. “Today, men represent 20 percent “These three words became my guidelines during “It’s not a marketing strategy,” he of our sales in L’Oréal’s luxury all my years at Lancôme, and I believe that they are said. “It simply is an essential part of products division. still relevant as all our brands must integrate the the brand. No service — no Kiehl’s. “After 10 years in this business, best of today’s technology, build a strong relation- “This value of service is univer- I realize how lucky we are because ship with our customers and, of course, be in line sal,” continued Menesguen. “It also the prestige beauty industry is one with the spirit today,” he said. “Now, is it enough for explains the immediate success of of the few perfectly global indus- our customers in 2006 and beyond?” Kiehl’s in Hong Kong, in Korea or in tries and yet remains very close Menesguen discussed today’s paradox of, on the one Taiwan, and how an American brand to people, culture and daily life hand, brands’ globalization, and, on the other, consum- made it very quickly in this very com- because, of course, beauty is very ers’ increasing desire to have a point of difference. petitive Asian environment. In a way, much linked to culture,” he said. To drive business growth, he believes there are it also illustrates my fi rst point on Menesguen remains optimis- Marc Menesguen three main axes: sheer innovation, service and sheer innovation, because Kiehl’s tic about the category, which has dreams. is as genuinely American as Shu grown 40 percent faster than the Innovation-wise, he said that consumers “are Uemura is genuinely Japanese. And it creates the total health-and-beauty business worldwide. looking for new experiences, and they expect new same excitement in Hong Kong as Shu Uemura in “I would like to share my strong belief in the high and different points of views on beauty.” Los Angeles.” potential for growth of the prestige beauty market,” An example, said Menesguen, is Shu Uemura, the Making people dream is the third element in de- he confi rmed. L’Oréal-owned Japanese cosmetics brand that now veloping the prestige market. Menesguen pointed — Jennifer Weil AGE DEFYING MAKEUP WITH BOTAFIRMTM

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WWD Beauty CEO Summit WWD.COM Andrea Jung’s Call to Break the Mold OLD HABITS DIE HARD. BUT FOR THE CHIEF forced to forge a retail business due to a govern- executive of a multibillion-dollar beauty firm, com- ment ban on direct selling. “I think this concept of Andrea Jung placency means losing ground to a growing circle of a single-brand, single-retail channel that defi ned us competitors. for more than a century had to be broken for us to After a tough 2005, the need to look at her busi- really go forward and see what the potential could ness objectively and address its challenges without be,” she said. bias is precisely why Andrea Jung engaged in the In Jung’s view, thinking in tune with the summit’s mental exercise of fi ring herself as chairman and theme of “Bigger than Beauty” must include break- chief executive offi cer of Avon Products Inc., and ing from formulaic advertising and marketing ef- then rehiring herself the next morning. forts, and taking a worldview that includes emerging During her keynote address, she challenged her markets, such as Brazil, Russia, India and China. peers to write their own virtual pink slips. She acknowledged that paving a viable path in “You’ve got to fi re yourself and rehire yourself emerging markets is complex, but that “you can’t tomorrow morning,” she said. “You’ve got to act. run from the numbers.” The growth rate of these Because you all know what happens when you markets far outpaces those in the developed coun- change a ceo and someone comes in and is able to tries, but success there will require what Jung look at everything extraordinarily objectively, go called “market creation,” given that consumers in out of the box, break all paradigms, lose any emo- China, for example, spend $5 a year on beauty. The tion to the way things were and be able to make the question is, noted Jung, what’s the industry’s ability kind of change that is necessary, sometimes a seis- to accelerate the beauty market in China or Brazil? mic change…. And if you can do that while you’re Turning to advertising, Jung commented that there, it’s harder, but it’s the best of both.” beauty companies continue to pour money into the In Jung’s case, the exercise resulted in a multi- same tired formula of model shot on the left, logo year restructuring plan for Avon that involved trim- and product shot on the right. ming layers of management and focusing on fewer, She called on her industry peers to shatter the but better, products. current advertising template, which often includes Jung declared that the seismic shifts of the retail a hefty dose of celebrity. “I don’t think people and landscape — including consolidation, multichannel consumers want faces, I think they want voices. strategies and new distribution partnerships — will How do we challenge that paradigm?” “redefi ne the business.” “In our case, we didn’t want to sign Salma “That’s going to be the fi nal endgame-changer for [Hayek] unless she would stand up before Congress this industry in the next several years, and we’ve and testify about domestic violence,” said Jung. got to break the channel paradigm,” she said. “That’s how emotional connections are going to be Jung nodded to several paradigm-breakers, made — through the voice, not the face.” such as Target, which has peppered its mix with In Jung’s view, building the right emotional con- Boots products; J.C. Penney for its partnership nection for the brand is what will separate compa- with Sephora, and the Estée Lauder Cos.’ deal with nies from one another so that, theoretically, there Kohl’s Department Stores. She also acknowledged are no true competitors. that Avon’s partnership with Penney’s fell apart “I’m a believer that every strength can be a weak- after a solid try, saying, “I still believe it was a good ness if you let it,” said Jung. “It’s an unbelievably thought at the wrong time.” crowded playing fi eld. There’s not only the advent “Those of us who have tried to spawn new busi- of private labels and commoditization, but there’s a nesses from the mother ship know it’s tough,” said lack of differentiation.” Jung, adding that it requires incubating the project “Now, if you don’t have brand loyalty and you to protect it from antibodies that want to destroy it. don’t have channel dominance, you can’t even play Refl ecting on Avon’s need to “break its own anymore. But it’s hardly a winning formula,” said mold” after 110 years of selling items door-to-door, Jung, noting that succeeding ultimately hinges on Jung noted the company has pursued selective an emotional connection. “It’s about relationships, franchise opportunities, including kiosks in U.S. not customers.” malls and in China, where prior to this year it was — Molly Prior Wexler’s Prescription: Healthy Skin Is Beautiful Skin KEEPING TRUE TO HER PROFESSION AS A DERMATOLOGIST, DR. PATRICIA Wexler’s solution? Wexler began her lecture to the beauty industry by asking if anyone was wearing For starters, the beauty industry may be ripe for a new business model, one sunscreen. While the conference was held inside a windowless ball- that’s based on listening, teaching and anticipating needs and can target room, presumably safe from the Miami sun, Wexler reminded ex- young customers with prevention and good skin care messages. ecutives “a free radical doesn’t know if it’s coming from the “That is promoting the very idea that healthy skin is beauti- sun or if it’s coming from the fl uorescent light bulbs, but ful skin,” she said. “Protection, prevention and good skin it’s doing damage either way. And it’s causing aging.” care practices allow health and beauty to converge in Then she dropped a bomb. an achievable and realistic way and provide skin care “And how many of you are wearing a hat, sun- paths for younger customers to grow up following. screen or even sunglasses? I’ve had fi ve patients Anticipating and providing what this customer will in my practice with melanoma of the retina since be expecting from a skin care regimen as she ages is I started 20 years ago.” our true opportunity. It’s a compelling and dynamic Wexler didn’t mean to scare but rather to new model for business,” Wexler said. educate her audience, many of whom don’t She also shared some scary data. Skin cancer, know a fraction of what she does about healthy she said, is the most common malignancy in the skin care. But, in Wexler’s opinion, if the in- world and is increasing exponentially. Melanoma dustry is to be serious about spreading antiag- affected one in 50 Americans in the U.S. last year. ing messages, it should begin practicing safe When she started her practice in 1986, the ratio sun exposure. was 1 in 90. Wexler, who last year launched a skin care “Skin care is not just a question of antiaging, it’s line in Bath & Body Works, is an associate clinical a question of life and death. I’d like to say that an professor at Mount Sinai School of Medicine and ounce of prevention is worth a pound of technology,” appears on talk shows, still fi nds time to run her she said. Manhattan dermatology practice. Her patients often Wexler links the future success of the beauty indus- share what they want from the beauty industry — and try to presenting a realistic ideal, and to marketing ad- Wexler told her now captive audience all the details. Dr. Patricia Wexler vancements in technology in an easy-to-understand way. “She feels that the skin care and beauty industry “What I’ve discovered is that my patients want some- overall frequently overlooks and disregards her real con- thing easy like a GPS [Global Positioning System] for the cerns. She also feels often that the industry joins with the face,” Wexler said. media to present very unrealistic visions of what beauty is or And just because a dermatologist’s name is slapped onto a pack- should be. She knows that she’s not a supermodel, but she wants to age doesn’t make what’s inside the next cure-all. look her best, whether it’s thinner or more wrinkle-free. She wants to look bet- “Dermatologists risk the integrity of their fi eld if they lower the standard and ter, and she wants to be presented an ideal that’s reasonable and attainable,” give into quick fi xes that are long on hype and short on performance,” she said. Wexler said. — Andrea Nagel We salute our sponsor partners. WWD BEAUTY CEOSUMMIT Thank You! May 10–12, 2006 Mandarin Oriental Hotel, Miami

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1409-BEAUTY-WWD Thank you_HAD.in1 1 5/16/06 1:16:18 PM 14 WWD, FRIDAY, MAY 26, 2006 WWD Beauty CEO Summit WWD.COM Clarins Chief Urges Teamwork for Growth LEAVE IT TO THE CHARM OF THE FRENCH. means that we maybe have to rethink the speed Christian Courtin-Clarins, president and chief Christian Courtin-Clarins of launch,” he said, and “rethink the quality and executive offi cer of the Clarins Group, addressed and Karine Courtin the novelty to be really novel.” the beauty crowd with a disarming joke about his Since 1980, the percentage of European accent. But, by the end of the speech, an insight- perfumeries represented by chains rose from ful and comprehensive analysis of the fragrance 14 percent to more than 75 percent, while the market since 1980, Courtin-Clarins had proposed world market is becoming more global with the a solution to a problem that bedevils the indus- rise of new power players, such as travel retail try: how to rein in nonstop product launches and and Brazil. return to an era of sustainable profi t growth. His As for fragrances, single-brand houses such answer: Stop haggling at retail. as Chanel are surrounded by groups. The top 10 “I had a dream,” Courtin-Clarins said, adding represented 60 percent of the market in 2000, but that he had been reminded of his vision while lis- by 2004, they accounted for 83 percent. tening to William P. Lauder, ceo and president of “Brands started to be less important for the the Estée Lauder Cos. big groups because it was more important to play The Clarins chief said that, instead of con- the portfolio in order to increase their weight,” stantly arm wrestling over margin, retailers and he said. “The brands have a tendency to disap- manufacturers should join forces, “go hand in pear in this case.” hand and look at the reality of our business.” He And the groups have become more segmented. continued, “Instead of always fi ghting over mar- In the Eighties, the category of companies called gin — because we need that margin money to Couture, and including Yves Saint Laurent and bring people to the store — we need money to do Christian Dior, represented 70 percent of the fra- advertising.” grance market. The other camp was Cosmetics, Speaking from experience, he said, “When we companies such as Estée Lauder, which occupied reduced our advertising budget in many coun- 25 percent of the market. Now Courtin-Clarins tries, we increased the number of promotions in has divided the fragrance market into seven the store. But we are just looking for the same families. The two most dynamic are Createurs customer; we didn’t bring in new customers.” — Thierry Mugler and Jean Paul Gaultier, for ex- He then sharpened the point by alluding to an- ample — and Designer, meaning houses such as other keynote address by Andrea Jung, chairman Calvin Klein, Ralph Lauren and Giorgio Armani. and ceo of Avon Products Inc. Courtin-Clarins The Clarins chief charted the personality dif- said he was surprised to hear Jung say that the ferences between the two poles, pointing out that American consumer spends an average of $123 a the Createurs often demand maximum support year on beauty products. In France, the fi gure is for their fi rst scent. Designer-license companies, $300 a year for more expensive products in selective, “Maybe we can also reduce promotion because you meanwhile, often pay more attention to the second or prestige, distribution stores. The challenge, he said, end up with the customers who are going to move from effort. He pointed out that Calvin Klein’s fi rst scent is to convince American shoppers to fulfi ll their basic one promotion to the other,” he said. “You don’t build a fl opped, but Obsession took the market by storm. beauty needs in prestige outlets and raise the U.S. sta- brand on promotion. You build a brand on advertising, In all of this, the consumer — who has grown tired tistics to $300 or $350 a year. on service, on know-how, on many, many things. That’s of marketing gimmicks and is seeking environmen- Courtin-Clarins then went through an exercise, my conviction. And the word conviction in our group is tal sustainability — has changed the most radically. imagining what products the women in the room used key, because without conviction, you go nowhere.” Courtin-Clarins described her as “full of paradox,” that day, and he described a basket of products totaling In his presentation, Courtin-Clarins portrayed the mixing chic and cheap and shopping at both Colette in $200. If those products have a shelf life of two months, fragrance market as both diversifying and consolidat- Paris — “the most snobbish outlet that you can fi nd” — the challenge for the industry is to get the customer to ing over the last three decades, with the number of and Carrefour. “They will buy jeans and fashion; they resupply six times a year, or spend a total of $1,200. product launches spiraling upward and the success love what is free and they love what is costly,” he said. When asked later how he would do that, Courtin- rate spiraling downward. Pointing to a sales growth “They love natural, but they do Botox, and now they are Clarins said the fi rst method is to increase advertising rate of 1.5 percent, Courtin-Clarins said for 100 fra- thinking more East-West than North-South. That’s the because brands must express themselves and there are grances launched in a year, “80 will totally disappear customer that we have to handle with a lot of care.” more methods of expression now, such as the Internet. in fi ve years,” and three will rank in the top 30. “So it — Pete Born

activity, which drives the footfall into David your stores in order then for the brands Lane Crawford Head Touts ‘Core DNA’ Riddiford to be able to sing,” he said. He believes in brands versus pri- DAVID RIDDIFORD, PRESIDENT OF Beauty brings big foot traffi c to Lane vate labels, especially for beauty. “Our Lane Crawford, has overseen tremen- Crawford. “Our beauty business has role is not to try and compete with the dous changes in the beauty business grown by over 20 percent per year for brands, and that’s why I personally at this 156-year-old specialty depart- the last three years, and this year will feel very strongly about not having a ment store chain. The upscale retailer grow by more than 25 percent,” he said, private label in department stores. operates three prestigious department making it the biggest area in all of the I think people come to department stores in China and four in Hong Kong, stores, representing nearly 30 percent stores because they want to see a great including an 80,000-square-foot show- of their business. With a market very selection of branded merchandise, and case store in the International Finance concerned about skin, Riddiford said it our job is to create the theater and cre- Centre there. is no surprise that skin care is by far ate the environment in the stores,” he “Now there’s only one Harrods in the strongest part of the business. “We said. However, Riddiford noted that it London, there’s only one Galleries carry more than 160 brands, many of is especially challenging in Hong Kong Lafayette in Paris and there’s only one which are exclusive to Lane Crawford. to create retail theater via architec- Saks Fifth Avenue in New York, but we The top 10 brands have grown at an ture in mall locations. “We’re inside have these four stores in Hong Kong,” even faster rate than the business as a shopping malls. And therefore, what said Riddiford. “And before 2004, all whole,” he said. we are trying to do is, we’re trying to of these stores had the same merchan- Customers are willing to open their create very, very strong identifi cation dise offer, so the customers would only pocketbooks at Lane Crawford stores. inside the malls. So that’s why we are need to visit their local store. The lat- Riddiford said his company accounts trying to differentiate our businesses est strategy that we now have is to try for two of the top 10 doors in the world and have these very strong environ- and encourage our customers to travel for the sale of La Mer. “We’re a very ments.” The IFC store is a perfect ex- around to our stores.” To that end, each small business in a very small part of ample. It is a luxurious store with the store, which averages between 50,000 Southeast Asia, and I think it’s an amaz- same marble found in the Louvre. “It’s square feet and 80,000 square feet, ing, amazing achievement,” he said. timeless, it’s tailored and it’s contem- has its own look — or core DNA, as In the past 18 months, Lane porary,” he said. Riddiford dubs it. Crawford has launched many brands in partment store retailing. “The idea of The markets where Lane Crawford Just 10 years ago, the beauty busi- the Hong Kong market, such as Benefi t, the department store, if you look back operates are changing drastically, he ness was an add-on at Lane Crawford. Bliss, Fresh and Lola. “We focus our at the original concepts of department noted. Retail sales in China, for ex- “Now, it’s true to say that I think Lane beauty business on providing specialist stores and the way they were created, ample, are doubling. Riddiford con- Crawford is probably the beauty head- services, the idea being that we provide the department store operators, they cluded, “I think we can all get seduced quarters in Hong Kong,” Riddiford told somebody who has an objective view of were showmen, they were impresarios. by the numbers in China. And I think the summit audience. “In line with the the brands and can guide the buyers And I think it’s very, very important most of the people in this room are strategy that we have for our total busi- toward which brands they think is rel- for us that what we’re trying to do is, looking at how we can explore the op- ness, each store has its own brand iden- evant for them,” he said. we’re trying to create a very strong re- portunities in China and maximize our tity and its own brand selection in our Riddiford said Lane Crawford is tail environment, an architectural envi- business in China.” beauty business,” he said. trying to bring back the theater of de- ronment with theater and promotional — Faye Brookman WWD, FRIDAY, MAY 26, 2006 15 WWD.COM WWD.COM Espa Founder Colors Spa Biz as Tricky, Yet Profi table

By Andrea Nagel Susan Harmsworth SUSAN HARMSWORTH HAS HAD HER FINGER ON THE PULSE of the spa business for nearly 35 years — even before the term “spa” was commonly used. Harmsworth, who now deals exclusively with creating spas for five-star hotels through her company, Espa — and receives as many as 10 requests a day from those looking to get into the business — is still surprised by the industry she helped shape. “Spas have actually overtaken golf as the number-one reason people choose to visit a resort,” she said. The biggest growth area in the spa market is with fi ve-star hotels. However, Harmsworth predicts many new players will learn that the spa industry is not one where you can make a quick buck. “I think we’re going to come to a point very soon of sorting out the men from the boys, because a huge number of hotels go into spas without understanding why they’re doing it or what they’re trying to achieve,” Harmsworth said. “We’ll often see a $20 million to $30 million budget and somebody hasn’t thought through why they’re building a spa at all.” Making spa operations even more diffi cult is the global customer who can remain anonymous. For example, some hotel spas within cities generate 50 percent of business outside of hotel guests, with 25 percent of that number using a gift voucher. Harmsworth sees Europe, a mature market for most of the beau- ty industry, as one of her biggest growth opportunities, particularly since the revival of the spa market is being driven by the growth of the luxury sector as fi ve-star hotels, such as the Four Seasons, Ritz Carlton and Mandarin Oriental, open up all over the continent. Complete wellness retreats also are emerging as one of the major new areas of growth. A retreat in the Maldives recently completed by Harmsworth offers a life coach, Pilates, running in the sea, treat- ments and nutritional services. I think we’re going to come to a point“ very soon of sorting out the men from the boys, because a huge number of hotels go into spas without understanding why they’re doing it or what they’re trying to achieve. — Susan Harmsworth,” Espa

Harmsworth said her spas are profi table, but she admitted that operating a spa within a hotel is much less challenging than a stand- alone unit, since a partnership affords a spa shared costs such as marketing, staff benefi ts and staff eating. Staffi ng, she said, is the single most pressing issue in the spa in- dustry, because it can sometimes account for as much as 75 percent of overall costs. And the problem is global. “People often think if you’re working in Asia or Eastern Europe, staff costs may be lower, but that’s not the case anymore. We just opened the Peninsula in Hong Kong, and because of the plethora of spas that have opened [there], costs have gone through the roof. Similarly, in Russia: The world is recruiting in Eastern Europe and Russia, taking the good people away, making salaries within those countries go up.” While staffi ng is tough, training is key to success. Harmsworth believes the beauty industry could learn from the type of training spas give employees. “I don’t think therapists can deal with people effectively unless they can understand themselves, understand energy, understand negative energy and how to block it, how to nonaggressively deal with their guests and their clients,” Harmsworth said. What is similar between spas and the rest of the beauty indus- try is trends. The organic market is growing as people are more aware of toxicity issues. Organic food, rather than diet regimens, is becoming a primary issue. Longer treatments are a big growth area; people want to spend more time with one therapist. In turn, spas are training therapists to be multifunctional so they can stay with a guest all the way through their various treatments. Guests are also resisting gimmicks, and they don’t want complicated treat- ment menus. “The marketing hype around treatments is ridiculous,” Harmsworth said, something that has the potential to alienate the guest who seeks honesty and treatments that deliver. “Less is more.” In some cases, the spa industry is ahead of the rest of beauty. The male market — one that is still ripe to crack in mass and prestige — is very strong in the fi ve-star spa market. In places where Harmsworth operates spas, men can be as much as 50 percent of the market. And while retail areas in spas are growing, Harmsworth said, “At the end of the day, whatever people tell you, the majority of the profi t comes from treatment, not from product.” One of the biggest challenges for a spa is delivering a consistent standard. A great treatment one day and a bad one another day is an unclear message to guests. Contributing to a successful treat- ment is the soul of a spa. “It’s an intimate service. It’s not a widget business, it’s a people business. And if they lose their soul, they won’t succeed.” 16 WWD, FRIDAY, MAY 26, 2006 WWD Beauty CEO Summit

John Demsey, Benny Medina, Eve Jeffries, Bernd Beetz and Stephen Stoute. Multiculturalism Key to Celebrity Formula CELEBRITIES HAVE BECOME BEAUTY’S FAVORITE advertisement,” said Stoute. “It’s not four women of Lopez with Coty. The resultant fragrance, Glow by JLo, marketing tool — but to sustain the momentum, said a different ethnicities posing together for a photograph did $100 million globally at retail in its fi rst year on panel of experts, it’s critical to realize that celebrities as if they are friends. And because we do not have a counter. “When we took Jennifer Lopez to [Coty chief and multiculturalism coexist and are interdependent. defi nition that we can all adhere to as an industry of executive] Bernd Beetz to talk about fragrance, we had “Something very much is changing in the wind right what multicultural is, we opt for ethnicity and use it as not necessarily succeeded with the launch of a clothing now,” said John Demsey, global president of the Estée a tactical response to support a particular product. We line — which I remembered at the time [Jennifer] was Lauder and MAC Cosmetics brands at the Estée Lauder overlook the larger opportunity of looking at not only not quite as passionate about,” remembered Medina. Cos. and a co-host of a panel at the summit. “And the how products support multiculturalism, but how the “But the fragrance was something that she had actually notion of multiculturalism and the role of celebrity has entire industry has been slow to embrace it. pretty much designed, like a song that she had always dramatically transformed our business and continues “To be clear, multicultural is not a race or a color of wanted to write for years. [She] knew exactly what the to be sort of the quake or the sound heard around the someone’s skin,” continued Stoute. “It’s a landscape that essence of that fragrance would be with the launch and world,” he added. houses a mind-set that young adults and teenagers share, with [Coty executive] Catherine Walsh. And ultimately, It’s critical to be clear about what multiculturalism ac- brought on by three primary forces: proximity; the infl u- the corporate culture really embraced [her], including tually is, said Stephen Stoute, chief creative offi cer and ence of MTV, music videos and entertainment, and the her in the process, and also being strong and deter- founder of Translation Consultation and Brand Imaging, Internet. These combined forces have lent transparency to mined enough to edit when maybe we were going down the panel’s co-host. Stoute, a music mogul turned brand- cultures, access to cultures. And yet we still, as an indus- a path that wasn’t going to be commercially viable.” ing guru, put together the star-studded Carol’s Daughter try, want to put people in boxes…and demographics and The matching process between celebrity and prod- investment team last year and has been responsible for charts and Q ratings, and it neuters us from understanding uct is perhaps the most critical factor for success some of the most high-profi le celebrity and consumer cultural impact and what affects these consumer groups. — something that Medina likens to producing a movie. campaigns, including Beyoncé Knowles’ True Star fra- The culture of our companies suffer as a result of it.” “You start with a bad script, it’s going to be a bad movie grance deal with Tommy Hilfi ger Toiletries. Passion is one of the most important qualities for a — it won’t get good in the editing,” he said, noting that “Multiculturalism is not about African-American successful product, noted Benny Medina, a partner in a great product is key. “The marketing materials may models skinned over an existing general marketing Handprint Entertainment, who helped match Jennifer trick the public initially, it may infl uence them, but Beauty’s Brave New (Media) World

IT’S BEAUTY’S TOP COMMANDMENT: KNOW THY CONSUMER, Lauder’s Sean John fragrance launch and MasterCard as ef- And those numbers can be staggering. “We’re the largest and communicate with her effectively. But Marc Pritchard — fective examples of this strategy — albeit often in unexpected U.S. [wireless] carrier and we cover 273 million people across president of global cosmetics and retail hair color for Procter ways, he said. “MasterCard is a credit card company, so you’d the country with our voice and data networks,” said Lefar. & Gamble, chairman of the Cosmetic, Toiletry and Fragrance think that they’d focus on transactions, trying to get people to “We have 56 million customer relationships and last year gen- Association and the host of a panel on the subject — says it’s buy more. Instead, they focus on creating the emotional con- erated $34 billion in revenue and are growing at double-digit that second point that can be a challenge for marketers. nection of bringing people life’s treasures and priceless mo- rates each year.” Non-voice business last year totaled $2.6 “The digital world has brought an explosion of ways to ments, the little pleasures that people value the most. They billion, he said, adding that global text and instant messages communicate with consumers,” said Pritchard, “and that blend a conventional strategy that has TV and print with a digi- will exceed 1.6 trillion this year, up 35 percent from last year, means that we need to look at different strategies of how we tal strategy that creates a personalized dialog with consumers. and picture and video messages will exceed 3 billion. need to market to her.” Chief among them are the myriad “At a minimum, every company in this room needs to have Cingular Wireless was, last year, the number-two purvey- electronic forms of communication — cable and satellite TV, a digital marketing strategy, because we need to keep up with or of digital music in the country — second only to iTunes, the Internet and cell phone blasts, in particular. “TV used to [the consumer] and she’s moving at lightning speed,” con- Lefar said. “The digital music business for us last year was be the big three networks, and now it’s cable, satellite, digi- tinued Pritchard. “We also need to recognize the dramatic $750 million,” said Lefar. “The games, graphics and images tal — as many as 600 channels,” said Pritchard. “And the changes that are occurring because of communications tech- — while we’ve been sitting here today in this room, 75,000 Internet was born with Web sites for geeks, but now everybody nology. And as technology advances at an even faster pace, we mobile games have been downloaded to people’s phones, just is online and you can get virtually anything. So think about it need to accelerate our experimentation so the beauty industry today. And that’s just our company, and we’re just below a this way — it’s simple: Online is no longer the new media, it’s is a leader in the future of marketing.” third of the market. Thirty billion text messages were sent or part of the mainstream media.” Pritchard and his panel’s commandments include creating received in the past year. Five hundred million multimedia In fact, “new” media is increasingly the fi rst place con- a relevant and meaningful dialog that matters to the consum- messages, that’s video messages or picture messages. And sumers are looking for product information. Mentioning a er; rewarding differently; expecting failure and allocating a set while you might not do it on a regular basis, there’s an awful recent conversation with his 15-year-old daughter, Pritchard amount of money to marketing experiments; anointing a digi- lot of people now with new phones, crisp screens on high- said she spends three or four hours online per day and doesn’t tal czar; creating a content strategy, and, above all, having a speed networks, that are doing Internet browsing directly off watch TV very often. She also always has her cell phone, so digital strategy to leverage the new infl ection points so beauty of their phones. And that number is growing fi vefold to tenfold that she can text-message and take calls, he added. “So that can be the leadership in the future of marketing. “Think of every six months in terms of the number of browsing sessions means on Cover Girl, without a digital strategy, I may not even mobile marketing as a new screen,” urged Pritchard. “We al- we’re seeing. These are real businesses.” be having a dialogue with my own daughter,” Pritchard said ready have TV screens, we have computer screens, we’ve now They are, however, nail-biting for marketers not accus- with a chuckle. “And by the way, it’s not just teens. We’ve got a cell phone screen. And that screen can bring in anything tomed to giving away so much of the power to consumers. done some research, and 30- to 35-year-old soccer moms are — text, audio, video, movies, shows, commercials, whatever “She’s always had opinions, but now she has a voice,” noted consuming media in much the same way. the case may be. Our job is to fi gure out how to make it rel- Pritchard. “She can evaluate, criticize, praise or even kill a “Despite the complexity of the digital world, I believe mar- evant for the consumer so they invite us in.” new product idea or reputation. What if just a few thousand keting is still fairly simple,” said Pritchard. “It’s about the That’s something that Pritchard’s panel — Deborah Wahl of the 30 million blogs started to attack one of our product brand, the message and the media. But we need to change Meyer, vice president of marketing for Lexus, and Marc Lefar, chief launches? Consumers never had that kind of power before.” how we communicate with consumers.” Pritchard pointed to marketing offi cer of Cingular Wireless — know only too well. Wahl Meyer agreed. “The Web sites and the Web blogs WWD, FRIDAY, MAY 26, 2006 17

WWD.COM they’re going to…probably talk 10 people out of the endorsements and products, is a very huge step,” he and going stronger than ever. So I think there is an ele- movie when it’s bad, when they could’ve talked 25 peo- said. “Now, [it is] a step in the direction of opportunity ment in there which you get into a certain franchise ple into the movie when it’s really good. If I believe in for artists, who have to determine how much of a con- — but then it’s up to you as a creator of beauty prod- your music and you exude an incredible style and taste, nection they [will] have to the things that they want to ucts to really make the consumer loyal. Just don’t give and I, in this case, appeal to you in terms of the aspira- create, the products that they want to brand and/or en- him a reason to leave your franchise. As a marketer, tional need to want to look like you, to want to walk like dorse. And at the same time, it’s a huge responsibility you market toward a target consumer group and you you, to dress like you, to be able to infl uence you, it can for you, because not everything really, truly works.” bond with the consumer group with a certain kind of translate because of that fact.” Although few consum- Nor does every celebrity, opines Medina. “There are product marketing. Once you’ve developed into that, ers will ever achieve that precise style, Medina admits, people who have sort of the cult or the status that does I think you develop a whole new model, and you talk “the infl uence the celebrity has on the consumer to create the opportunity to sell something,” he said. “Not to that consumer and you bring innovation and you’re make them feel better about their lives and themselves, every artist or celebrity really exudes that. Back in the entertaining. [And with that approach] I’m absolutely particularly if they are proven to do something great, is day when we were just starting Puffy’s clothing line, convinced you can go a long, long time.” really incalculable.” this is a guy who had, along with a host of other hip-hop While some companies have a grasp of the importance It’s also crucial, once the marriage is made, to keep artists, completely reinvented the Tommy Hilfi ger com- of celebrities and multiculturalism, the beauty industry the celebrity involved — something not every company pany. So once the guys on MTV with rap records started has to do better, said Stoute. “Because I have a market- is willing to do, learned Eve Jeffries, the Grammy-nomi- wearing Hilfi ger’s brand, which was at a low point at that ing consultant company, we work with the Verizons of the nated rapper and actress, who will enter the beauty time, sort of taking on a real mainstream, WASP-y styled world, the Pepsis, the Microsofts, and you get to see how world this fall as a spokesperson for MAC’s Viva Glam they deal with this new emerging group. And when I go campaign. “I did and I do still have a clothing line,” she back to the beauty business, I really do see Neanderthal- said. “One of my partners — I can’t say the name — I The notion of multiculturalism like adoption of how to embrace this new consumer didn’t feel he wanted to be a partner. He didn’t listen to group…as an industry, [beauty has] one of the best prod- anything I said, he didn’t really want to do anything I and“ the role of celebrity has ucts that translates online, but you still have traditional wanted to do, he really didn’t have my back when it came thinkers saying they can’t smell it, though, so why would to talking to the bigger companies that we were putting dramatically transformed our they buy it? That’s not true. That’s why you build a brand the clothing line into. It hasn’t made me turn my back on that’s strong, because there’s trust.” doing another clothing line, but it would have to be [dif- business and continues to be sort The wave of the future? According to Medina, it’s ferent.] It would have to be a real partnership. Why write clear. “Look for more important and profound state- me a check or be a partner with me if you don’t want to of the quake or the sound heard ments being made by women of color, and not just as listen to my point of view at all? I think you come to me endorsers of products that they don’t necessarily seem because you like what I do already, so why try to change around the world. properly married to, like a Latifah or even a Halle me when you wind up in a partnership? I’ve had some Berry — in that case, that I think are terribly misused, of my fans come up to me about my clothing line and — John Demsey, Estée Lauder” and MAC Cosmetics sorry — with the brands that they represent…after win- say, ‘That doesn’t look like what you would wear.’ And it ning an Academy Award, I think that Halle Berry and wasn’t, and I didn’t wear it. So, I was like, ‘Girl, you’re effect, with their music and their culture, the brand all of her gorgeousness deserved to have something right,’” she said, to laughter from the crowd. started to reinvent itself. Then you had Fubu and Russell that was more refl ective of her.” Coty’s Beetz — whose celebrity licenses include Simmons and Puffy and Jay-Z and a few others who And this is far from an isolated incident, added those of Lopez, Sarah Jessica Parker, Celine Dion, were in the space at that time, saying, ‘Well, I’m tired of Stoute. “With Carol’s Daughter, we had some initial Kimora Lee Simmons, Russell Simmons and David selling Tommy’s clothes. They’re buying this because of resistance with distribution,” he said. “[The line] and Victoria Beckham, to name a few — is a true be- our music and we should be doing this ourselves.’ Well, launched in Sephora about six weeks ago and they’ve liever in the star strategy. “I think in the last fi ve, six, where do you go to? First you go to Tommy, fi rst you go moved orders up; it’s selling through extremely, ex- seven years, there was really a paradigm shift with the to Calvin Klein, you go to all of the brands that you have tremely well. I think the executives there are surprised. consumer and with the entertainment industry,” Beetz been building, saying, ‘Don’t you want to bring this cul- When Lisa Price, the founder of Carol’s Daughter, went said. “The paradigm shift is, the consumer is more will- ture up underneath your umbrella and see if there’s to do the educating in the stores on how to sell the ing to bond with celebrities. The other one is the para- an opportunity that we can do with this same aesthetic brand, she had an audience of salespeople that want- digm shift in the entertainment industry, with key peo- under your umbrella?’ Everybody basically said no.” ed to buy it fi rst. Forget selling it to customers — [the ple looking at beauty as a key part of becoming their In fact, Medina said, each of these brands could salespeople] wanted it, because they’re there and they brand or part of their creativity. These two changes have been owned by a major conglomerate. “Not in knew there was a need in the marketplace. That need played to our mantra, which is, we are a beauty product any way to embarrass anybody, but when you look at has to be satisfi ed. I know we’re looking for margins creator; that’s our sole purpose in life. What we have the fact that you say Phat Farm, Fubu and Sean John and who’s going to get to China fi rst and who’s going to been able to do is to create a winning proposition be- all could’ve been brands up underneath the Tommy really dominate duty-free. I know we’re looking and ex- tween what the talent can bring to the brand and what Hilfi ger umbrella or empire at that time, it would be a panding and trying to fi nd margins there and increase we as beauty experts can bring to the party.” substantial business right now.” market share there. But while we keep going up and Medina noted that celebrities’ increasing willing- Will these brands last forever? Maybe, maybe not. abroad looking for these profi ts, I’m saying to you right ness to market consumer goods has led to quantum “When we started with expanding to celebrities with here in America there are billions of dollars just sitting leaps in deals. “The fact that the artistic community, Jennifer Lopez, people thought it would be one, two, on the fl oor, waiting for these people to be spoken to that Hollywood itself and television, fi lm and music maybe three years [before the fragrance was out of the and touched in languages that they understand.” no longer look at it as a negative to be associated with market],” said Beetz. “But we’re now in the fi fth year — Julie Naughton

were actually on sale in the store, we had enormous amounts of traffi c coming into the stores, and we’ve exceeded our sales objectives in every month since,” she said. But, Lefar warns, “Don’t kid yourself that you’re going to be able to control that dialog. A lot of smart marketers think, ‘If I can just be really brilliant at marketing’ — which is doing some of the stuff we’ve talked about today — ‘that’s going to drive my product through the roof.’ Well, I’m sorry to tell you, but if you’ve got a crap product and don’t have a value propo- sition people care about, expanding the dialog and trying to drive that proactively is just going to kill you faster. It actually helps those who really have good products and have content that people care about. And for those that don’t have a good value proposition, it exposes your weakness and lack of depth very, very quickly.” To that point, Wahl Meyer suggested allocating at least 10 percent of a company’s media budget just to experiments. Lefar agreed: “Tell people that you expect failure and wel- come it. If some of the experiments don’t fail, if they can’t measure them, if things don’t just blow up in your face oc- casionally, you’re not pushing the right buttons. So I think leaders need to set that expectation in their organization, to expect failures.” One non-traditional project Wahl Meyer is working on is creating informational content on TiVo Showcase, a project of TiVo. But the message is clear: Ignore the “new media” channel at your peril. “American Idol — this year [it] will drive almost Deborah Wahl Meyer, Marc Lefar and Marc Pritchard. 100 million messages, just this season alone. This business has expanded into downloadable ring tones from the drama that happened just last night,” said Lefar. “You can have are very interesting but very scary for us, because it really “For the fi rst week of looking at the results on this thing, those contestants’ ring tones on your phone, chat communi- is letting the consumer have control and seeing what hap- it was the most nail-biting experience I personally have ever ties, blogs, all accessible via your wireless phone. Think about pens,” said Wahl Meyer, who added that the brand chose to been through,” remembered Wahl Meyer. “Comments started it: Three years ago, nobody would’ve talked about a wireless go this route as bloggers and enthusiast clubs would be the coming in, and I’d say at least half of them were negative. So phone as an entertainment vehicle. It didn’t exist.” But the most likely, if things went well, to get a buzz about Lexus’ new I’m about to dive under my desk; I’m not coming out. And times, they are a-changing. “The forecast right now is that by model out on the Web. She admits this strategy carried a big about six days later, as I’m still following all these changes, 2009, 35 percent of children between the ages of fi ve and risk, though: “If they didn’t like it, we were cooked, because all of a sudden the conversation starts to turn around,” she nine will have dedicated numbers for cell phones. This is far they were also the most likely to get the word out about it and said, adding that it evolved into a well-balanced and positive from a mature business, even outside of the U.S.” take the story a lot further. discussion. “By the time we got to the launch and the cars — J.N. 18 WWD, FRIDAY, MAY 26, 2006 WWD Beauty CEO Summit WWD.COM Chopra Outlines an Emerging India

INDIA REPRESENTS A FERTILE Indians shop will be altered. “This is our Research also showed that lipstick opportunity for beauty marketers. time to shine,” said Chopra. is the most commonly used product, but However, it is a country where consum- Today, India has more than 6.9 million that Indian women tend to wear it only ers have to be persuaded to use beauty stores, and that’s expected to swell by 25 on special occasions. “So a woman on products on a daily basis. percent in the next few years. Chopra said average purchased only two lipsticks a That’s been the major hurdle for the there will be robust growth in shopping year. So if you are the market leader, it country’s largest beauty manufacturer to malls. Three years ago, there were only doesn’t make a difference, because you tackle. And tackle those notions it has. three malls in the country. Today, there have a very small market because there Today, Lakme Ltd., which was launched are 354, and a major petrochemicals com- is no consumption,” Chopra explained. in India in the early Fifties, has a 48 pany is diversifying into retail and plans “And, again, here the campaign was to percent share of the country’s cosmetics to build 14 million square feet of retail encourage women to wear lipsticks fairly market, according to Anil Chopra, vice space in the next fi ve to seven years. often or every time they step out of their president of the Lakme Lever Division. And in the last 10 years, 15 million homes. And the campaign was very spe- Lakme was acquired by Unilever India people have moved out of poverty. In cifi c — use lipsticks because you never eight years ago and is now a division of the next fi ve years, there will be another know who is watching your lips today.” Hindu Sun Lever. 40 million. Despite the improvement in Creating the Lakme experience is “So it’s [Lakme], and it’s been there economic status, Chopra said, Indian Anil Chopra paramount to building the brand, he con- all this period of 50 years and has held women are still looking for value for tinued. There are currently two major the Indian woman’s hand through all their money and like single-use packs at initiatives: the Lakme beauty salons and these years,” Chopra told the audience low prices. change perceptions about beauty prod- the Lakme fashion week. at the summit. “Unilever India produces 20 billion ucts. “The Indian woman is deep-rooted Lakme got into the fashion business to There’s no denying India is a market single-use packs which are sold in the toward her family, her friends and her make the brand more holistic. “You get on the upswing. The population tops 1 Indian economy. When a country moves relationships — these are the most im- an opportunity for consumers to actu- billion, and there is a shift from poor from below poverty level, getting into portant. And I think that marketers who ally interact with the brand and have ser- rural markets to an improving economy. the consuming class [and] wants brands, get a good understanding of this are able vice,” said Chopra. These efforts helped “A large consuming class is now coming wants products, [they buy] the single-use to communicate much, much better,” he transform Lakme from a brand known alive,” Chopra said. packs that cost between 2 cents and 5 explained. for quality to one also known for a con- He said India’s economy totaled $300 cents a pack. As these people start mov- Lakme research revealed that Indian temporary positioning. The brand had billion in 1995 and will hit $700 billion ing into the consumer classes, they buy women had a lack of knowledge about been labeled “My mother’s brand.” “And this year. The market is undergoing seis- brands and will move up and up and makeup. To allay their fears, Lakme hence, the imagery needed to undergo a mic changes, including an expansion of then [to] the top end of the market,” created a campaign to get them comfort- major change,” Chopra said. “But it was Baby Boomers with huge expectations. Chopra said. able with makeup. For example, it used very important that when we changed the By 2025, India will have the fourth-largest Lakme has made dramatic inroads in the headline “Is It Bad to Look Good?” image that we maintained this unique economy in the world, ahead of the U.K., marketing to the women of India, especial- in an ad campaign. “And it talked about understanding to the Indian woman, be- France, Germany and Italy. It will be a ly since that market is fragmented. There how if you use makeup properly, sub- cause the Indian woman always says, ‘I time of great investment, growth and op- are lower socioeconomic groups in rural tly, the right way, it’s not that it’s going want the best quality in the world, but I timism, he said. There will be an income areas that are obliged to forgo purchas- to get the wrong type of attention,” he am an Indian and I am proud of it.’” explosion at every level; the top 10 million ing beauty products at this time. They are said. “Another tag line was, ‘Do Men Chopra pointed out one warning households alone will have a purchasing very religious and suspicious of change. Look Down on Makeup?’ And fi nally, ‘Is about India: Changes are putting pres- power greater than four times the turn- But there is an emerging group ready to Makeup a Diffi cult Art to Learn?’ This sure on the infrastructure. “It is under over of Unilever and P&G worldwide. embrace styles from around the world. campaign really reinforced Lakme’s a huge strain, and that is India’s biggest Chopra said the Indian woman’s There are also groups divided by age, with leadership in the cosmetics business, bottleneck for moving up fast. But bar- needs will change, and she’ll be look- younger women being bolder and women because we spoke in the language of the ring that, it is a green light for India’s ing for pampering products and will be 30-plus still adhering to older customs. consumer. We spoke to her about her big- growth. It is our time to shine.” more willing to try new things. The way As a company, Lakme has had to gest fears,” he said. — Faye Brookman

fi ght them. Obviously, they’re looking for something that to them is an alternative, which nurtures them.” Rechelbacher’s Green Approach, Naturally Given that, Rechelbacher believes big business opportunities are to be found in plants, water, sun- HORST RECHELBACHER, CHIEF EXECUTIVE in the psychology of behavior. Why do people behave? screens and air purifi ers. officer of Intelligent Nutrients and founder of Why do people buy?” “This is what I call the new economy — fi xing Aveda, is a green marketer supreme. “Because ‘why’ is so important,” he maintained. things,” he said. “So eco-chic is where fashion is. This He told summit attendees that he thanks a for- Rechelbacher is confi dent that business organiza- is what I call lifestyle. There are a lot of customers mer client of his — Shirley Hutton, a.k.a. the “Pink tions can be spiritual about healing, where the client is out there who are waiting for the goods.” Cadillac Lady” at Mary Kay Cosmetics — for teaching paid utmost attention. He is a fi rm believer that, in par- However, he cautions companies not to go green him the ins and outs of marketing. ticular, the organic industry, which is growing exponen- simply because it’s a great fi nancial opportunity (at “She was number one at the whole Mary Kay net- tially in sales and popularity, will be key in the future. present, organic businesses ring up $21 billion, and work, and she used to come into the salon and say, Rechelbacher described one conference he went by the end of the decade they’re expected to generate ‘Horst, I love the way you do my to in Boston, attended by 5,000 $63 billion), but rather “because you live it yourself. hair, but you are not effi cient behind women, where speakers discussed You cannot be an environmental company until you the chair when it comes to sales,’” how “we are living in a chemical learn to walk the talk.” Rechelbacher explained. “‘Because stew,” including possible carcino- Rechelbacher does just that. Although industry exec- you never talk about what you got. gens in beauty products. Many in utives routinely point to an unblemished safety record, See my big Cadillac out there? I have the audience had a strong emo- Rechelbacher became concerned with talk of toxic beau- fun. I build relationships.’ tional response. ty and consumer products, and he searched out natural “And I go, ‘yeah?’ She says, ‘yeah.’ So did Rechelbacher. cleansing substances, such as leafy green foods that help Try to teach me what you’re doing, “I have always been uncom- the liver clean itself. He even made edible shampoo. be my coach, I said.” fortable with lipsticks,” he said, His is beauty from the outside in — and inside out. So she pitched in, and “because I have been studying “My marketing strategy will be that it is made from Rechelbacher scored record sales. nutritional assimilation. I’ve been nutritional substances, and yes, it is safe because it is “I started training my people. interested in nutrition and how we edible,” he said. Then I started making product and deliver nutrition so it assimilates Rechelbacher’s new company, Intelligent training the network,” he said. “And better, so it’s not swallowed, so it Nutrients, is based in a warehouse in Minneapolis I think that’s the success of Aveda goes through the body. Because the and has conceived “head-to-toe” products with one today, because it became an exclu- body’s acid destroys a lot of the nu- cleanser for animals, humans and houses. sive mentality of service where we trition we take. So what came up “To train my customer, the retailers, the people actually touched people. We invented through research are lips. Anything whom we work with, I believe in retreats,” he said. stress-relieving treatments.” Horst we put onto the lips immediately “I have 570 acres on the St. Croix River in Wisconsin, He said it all goes back to “sharing Rechelbacher goes into the bloodstream, it is an and we do organic farming there. We teach massage. energetics,” or the fl ow and transfor- excellent delivery system.” “So many times, you and I have a great idea and what mation of energy. Rechelbacher has wasted no do we do?” he asked the audience. “Sometimes, we trash “Because business is about relationships, and busi- time in getting into the eco-friendly beauty trend. He it because the team says it’s a bad idea, costs too much, ness is about transaction of action, it’s energetics,” he has, for instance, trademarked a product called Lip whatever. Or we say it’s a great idea, and we put it on said. “Your energy versus my energy — software, in- Delivery Nutrition with Color, which supplies the fi le in storage and we forget about it. Or, we can plant formation, hardware, products. body with nutrients while giving lips a tint. it and cultivate it and every day worship it, give con- “One of the most important things in my life I’ve “I am already getting ready for this movement,” he sciousness to it, water it, make it grow up to become the been studying is what the relationships are between said. “Why? Because I’m a cosmetics businessperson new success — and it just can become a rule-breaker.” mind and body, because I’ve always been interested who pays attention to customers, who doesn’t want to — Jennifer Weil WWD, FRIDAY, MAY 26, 2006 19

WWD.COM John Jay: Cultural Info Critical to Success

JOHN JAY HAS AN UNUSUAL MONTHLY COMMUTE: by learning from the world, and competitive advan- As executive creative director and partner of Wieden tage in the future will come from discovering, access- John Jay + Kennedy, he divides his time between offi ces in ing, mobilizing and leveraging knowledge from many Portland, Ore., Tokyo and Shanghai. Grueling, yes, but locations around the world.” mandatory, too, Jay said, because of Asia’s increasing That’s what W+K did when it was deciding how importance in global affairs. to launch Nike’s “Just Do It” campaign in China. “We “After 500 years of Western control of the world, the came in thinking, ‘This is the powerful Nike brand,’” 21st century will see a shift in the balance of power Jay said. “As we dug deeper, we found out we’re not from the Atlantic to the Pacifi c,” he said, noting that going to teach these kids anything. They’re already the World Bank projects that by 2020 the seven richest living a life of ‘just do it.’” To that end, W+K “threw countries in the world will be China, the U.S., Japan, out all of the old rules,” combining traditional and a united Korea, Indonesia, India and Germany. non-traditional media. The opening campaign in- Using those statistics as a platform, Jay delivered volved online documentaries and an invitation to an address that looked at the psychological and cul- young Chinese people to send in their own life sto- tural drivers in China and Japan — factors that many ries. In just three weeks, the Web site received over Western companies fail to take into account when 7 million hits and 1,000 story submissions. “In the they enter a country, he said. age of interactive media, customers don’t want to Jay began with China, noting that by 2014, the communicate with brands or their spokespeople any- Chinese will have “displaced the consumer as the en- more,” Jay said, “they want to communicate through gine of growth in the world economy.” Despite its in- them.” creasing dominance on the world scene, though, “lit- During the second half of his speech, Jay focused tle is known of what motivates and drives the Chinese on Tokyo, where he said that a new beauty attitude community, and people trust them,” Jay said. consumer,” he said. “Cultural knowledge is critical is beginning to emerge, one that values inner beauty Jay concluded by urging beauty brands to innovate for building iconic brands, and yet it’s sorely lacking as much as outer beauty. “Beauty is no longer about more in their approach to advertising and cultural in most managers’ arsenals. Rather, such knowledge youth and specifi c features, but true beauty lies in the communication, giving the audience fi ve big-picture requires the managers to develop new skills.” visage,” he quoted from a popular magazine. “What questions to consider: What’s particularly important to take into account they’re talking about is inner beauty coming through ● What are the values your brand represents, and is how quickly consumer attitudes are developing, — that how you live your life, the kind of food you how are they coming across? Jay said, noting that for the fi rst time ever, young eat, the exercise you take, are you happy — all of that ● Do you have a voice that is unique and true to people in China now have options and opinions. He is coming through, and you’re judged on more of an your culture? Why do you exist? Why should anyone likened the rapid pace of change in China to com- inner beauty.” care? pressing 400 years of Western civilization into 40, To that end, a plethora of health and well-being ● Is there any intimacy in your communications, or adding that there has been a convergence of global magazines have sprung up in Japan, devoted to the is it only scientifi c? Do you respect the intelligence of taste-makers in the country, bringing with them in- convergence of inner and outer beauty. Magazines are your consumers? credible surges of creativity. also becoming more interactive, opening salons where ● Are you using the Internet and digital communi- Further complicating matters is that every genera- cosmetics that have been featured in the pages of a cations to have a dialogue, or is it simply a one-way tion and geographic region in China is different, and magazine are displayed on a table. Beauty editors, conversation from your corporate point of view? Are the dilemma for marketers is clear: “As I watch my too, are setting up their own salons. One such salon you building a community? clients coming into the country, the difference be- has over 1,000 members, who pay about $19 on their ● Where is the sense of heart in your brand and tween cultural arrogance and cultural ignorance is fi rst visit and then an hourly fee. “These young beauty product communications? Does it come across? not that big,” Jay said. “The challenge is to innovate writers are collecting their own audience, building a — Jenny B. Fine Shiseido Builds a Market From the Ground Up

IN THE LAST QUARTER CENTURY, SHISEIDO’S FORTUNES In 2003, Shiseido established Shiseido China Co. Ltd. and in China have multiplied from doing business in Beijing with began expanding in the chain store business, beyond depart- only 60 stockkeeping units to a broad-based presence, spreading ment stores, the previous focus. “From then, we began signing into midsized cities with a distribution of 1,000 stores in two dif- contracts with local cosmetics stores and conducting a com- ferent sales channels. munity-based style of selling with different product lines from The startling progress of the company was outlined in a pre- those sold in department stores,” Saito noted. “Therefore we sentation authored by Tadakatsu Saito, corporate senior ex- currently conduct business mainly through two channels — de- ecutive offi cer and chief area managing offi cer of China for the partment stores and cosmetics chain stores with our companies Tokyo-based Shiseido Co. Ltd. in Shanghai and Beijing.” Unfortunately, sickness prevented him from traveling to the In pinpointing the reasons for Shiseido’s success in China, summit, but his presentation was made by Heidi Manheimer, Saito pointed out that the cosmetics market there has been boom- chief executive officer of the New York-based Shiseido ing in line with “the tremendous growth of the Chinese economy Cosmetics (America) Ltd. She graciously stepped in and read in general” and said Shiseido was fortunate to fi nd good part- Saito’s speech. ners, such as the cities of Beijing and Shanghai. “We were able Shiseido’s strategy hinged on the realization that, unlike other to build a strong relationship of trust with these partners,” he kinds of products, cosmetics is a segment with strong cultural wrote. “Also, we came in at the earliest stage and were able to links. Shiseido executives, therefore, tried to enhance the per- gain the trust and capture the imagination of the consumers. And ceived value of the brand by placing a high priority on putting we developed Aupres, a line of cosmetics exclusively for Chinese down roots in China and encouraging goodwill among consum- women, which won high marks for quality.” ers. The marketing strategy centered on accentuating Shiseido’s Aupres is sold through about 500 department stores at lo- quality, service and luxury image. cally affordable prices and still ranks number one in sales vol- Much is at stake. Saito noted that the Chinese cosmetics mar- ume, Saito noted. The line has been upgraded into a complete ket has been growing rapidly since the Nineties, and that this lifestyle brand, and its distribution has been expanded into “a year total cosmetics sales in China were about 96 billion yuan, direct sale retail system, which meant that our intentions at a which is about $12 billion. When the different exchange rates manufacturer could be conveyed directly to our consumers,” he are calculated, cosmetics sales in Japan are slightly more than said, adding that it was then a rarity not to do business through 100 billion yuan, or about $13 billion. “The market is very close Heidi Manheimer a local wholesaler. to Japan in size and, I think, will soon overtake Japan,” Saito Shiseido’s emphasis on customer counseling “was very well stated in the speech. received by customers. We still believe, and it has become one of Shiseido entered mainland China by doing business at Beijing Hotel and a hand- our business philosophies, that great customer service is more effective than adver- ful of other local stores, selling a limited number of products, mostly skin care prod- tising,” Saito wrote. ucts and lipsticks. In 1983, the company launched the Hua Zi cosmetics brand after He still sees three challenges: Overseas brands have made the market very com- signing a technology transfer agreement with the city of Beijing. In 1991, a joint petitive, “and we must take steps to establish ourselves in the proper position in venture company, Shiseido Liyuan Cosmetics Co. Ltd., was established with the city. the context of massive global competition.” Second, risk management is key in a This paved the way for the launch in 1994 of the China-exclusive brand, Aupres. country where scheduling delays can pop up from sudden regulatory shifts, the Saito noted, “In the Nineties, accompanying the rapid economic growth of China distribution systems remain unstable and customer relations are becoming more after a shift to a policy of reform and opening up to the outside world, there was a important. Third, intellectual property issues in the form of counterfeiting and rapid growth of the trendy class. Shiseido capitalized on this by establishing a coop- outright copying remain a problem, although progress has been made since China erative company with the city of Shanghai [Shanghai Zotos Citic Cosmetics Co. Ltd.] entered the World Trade Organization. “We all should work together and support to act as an additional hub for the East and South China regions where the reform the Chinese government and their organizations in their efforts to overcome the and liberalization policy was proceeding most rapidly. Through this cooperative com- problem,” Saito concluded. pany we began producing and selling products with relatively modest price points.” — Pete Born 20 WWD, FRIDAY, MAY 26, 2006 WWD Beauty CEO Summit Wray Shines Light on Beauty Macy’s West Keeps Up With Retail Shift “PEOPLE HAVE ALWAYS BEEN portunity for everyone — 40 percent of WHEN JUDY WRAY, CATEGORY MANAGER FOR RITE AID CORP., ENVISIONS beauty’s biggest strength,” said women say they do not have a favorite her customers, she sees them as the architects of a new beauty skyline. Elizabeth Morello Eckhardt, senior vice beauty brand. And about 50 percent say “They are the designers of the future of beauty. And think about it: No matter president and general merchandise they do not have a favorite store for where you look, more and more people today thirst for design-driven, high-style manager for beauty for Macy’s West. “I their beauty purchases.” products that blend form with function and add beauty to their lives.” think, though, they are still our biggest Even better, in Morello’s view, is the These consumers may be driven by a thirst for design, but their secret tool, challenge.” fact that consumers are willing to pay Wray said, is the neighborhood drugstore. “Just little old me. That’s right, the But despite the challenges, said the price for products they love. “A re- drugstore. And Rite Aid is reacting to this with a new store prototype called Morello Eckhardt, “I think there has cent survey of luxury shoppers found Customer World.” never been a more exciting time in this that while a majority of affl uent custom- According to Information Resources Inc., the drug class of trade accounts industry. There are movements and ers made their last luxury purchase on for more beauty sales than any other mass channel, Wray said. She presented trends in beauty that suggest we are sale or at a discount, their fragrance data showing that last year, close to $7.2 billion in sales and 43 percent of the entering a new phase, a time when cul- and beauty purchases were made at sales among mass marketers went to drugstores. Beauty care sales in drug- tural and creative changes are coming regular price. Top retail prices for pre- stores grew 2.9 percent for last year, which actually was a faster rate than any together to create a wealth of new op- mium face products have doubled com- other trade class. portunities. It is not business as usual, pared to fi ve years ago.” Rite Aid did even better. “Through the initiatives that Rite Aid has implement- but it is a great time to be a retailer.” Consumers have redefined what ed, we grew beauty care sales by 4.2 percent, and we’ve been able to grow sales of She didn’t downplay the shock waves beauty means to them — expanding the color cosmetics by 6.4 percent over the last six years.” Rite Aid has accomplished of the seismic shifts in the retail world, category’s defi nition to include well- these numbers by having a fi rm handle on what customers want and by translat- particularly Federated Department ness, ingestibles, spas and services, ing that into the Customer World concept. Stores’ integration of May Department among other items — and it’s critical A few examples of Rite Aid’s response to new consumer demands in its Stores, however. “You all know there’s for retailers to pay attention to that. Customer World stores include enhanced adjacencies, products for mature been a profound and likely perma- “They’re all beauty choices and [the shoppers, a new store layout for quick in-and-out shopping and a men’s groom- consumer] likes them under one roof,” ing area. she said. “And we’ve learned that it’s She said men shop differently than women, and they especially eschew cou- Retail is not dead, OK to have a mix of big established pons and bargain-hunting. According brands and small brands on the sell- to Euromonitor International, sales of “department stores ing fl oor. Both can thrive. What is im- Judy Wray men’s grooming products are expect- portant is balance so that one doesn’t ed to increase to more than $4.5 bil- aren’t dead, Macy’s overshadow the other.” lion by 2009. “In our stores we found Service is another key area, said that although a majority of shoppers and Federated certainly Morello Eckhardt, pointing out that it are female, which we cater to, 34 per- can’t be “business as usual.” She ex- cent of those walking through the door aren’t dead. plained, “We enlisted the help of our were men. That’s a sizable population. vendor partners in the training and de- And the average male spends 51 min- — Elizabeth” Morello Eckhardt, velopment of our people in one format. utes a day on personal grooming, and Macy’s West The response we’ve got to the training more than $5 billion a year on groom- program tells us that we’ve tapped a ing,” Wray said. To that end, Rite Aid real need. We see our customers want- has a dedicated men’s shopping area nent shift going on in retailing,” she ing newness and excitement across all in the store. said. “Consolidation, new entrants and categories,” said Morello Eckhardt. “In Consumer shifts are also fuel- a migration to the ends of the market fact, she’s so attracted to newness, she’s ing interest in products for matur- spectrum have radically altered the turned the fragrance business into a ing shoppers. “Thankfully, a num- competitive landscape. We only have ready-to-wear business.” But despite ber of new lines have recently been to look at what has happened on Union consumers’ supposed yen for newness, launched aimed at the Boomer beau- Square in San Francisco where Macy’s surveys have shown that they dislike ty shopper. For example, earlier this West is headquartered to know this. Not clutter, she said. year Revlon launched its new Vital long ago the square was populated by I. “What does better look like? It Radiance line, designed to enhance Magnin, Joseph Magnin, Liberty House, starts with the service piece. Being the natural beauty of women age 50 City of Paris, Saks [Fifth Avenue] and able to get her in the chair and listen- and older. But it’s more than just Neiman Marcus. Now there’s Saks, ing to her. Better also means being in product. Vital Radiance offers these Neiman Marcus and Macy’s. But those stock. With the systems that we have women customized service, including famous names didn’t just disappear — today, we should never be out of stock a dedicated staff of beauty specialists they were replaced by interesting new and disappoint the customer. Having available seven days a week by phone retailers who brought something fresh what she wants when she walks in the to provide personalized consulta- to the business. Sephora, Lush, H&M, door is the most critical way to build tion,” Wray said. Forever 21, to name a few. This same and keep her trust. Better means new, While many drug chains are add- process of weeding out tired formats innovative, concise point of sale, visual ing service, Rite Aid is strictly self- has been going on in other consumer and marketing. And what does better serve. And from studies of videos of areas, as well.” look like from the vendor perspective? shoppers, Wray said, there is a desire Macy’s West has been forced to up- Faster innovation. We can’t be fast to get in and out without too many date itself, she said. “A while ago, peo- enough.” obstacles. However, Rite Aid took a ple would’ve told you that Macy’s didn’t — Julie Naughton unique approach in addressing this get it, that we would be among customer need. “Recently, we intro- the failures in retailing. They duced Emma, an interactive, in-store beauty consultant. Emma gives customers would’ve said that you can’t com- Elizabeth the information they are searching for about beauty,” Wray said. “In the market pete in the middle and that a de- Morello where we are testing Emma, customers can get detailed product information. partment store as a concept and a Eckhardt Emma provides them with more information on an item when it is scanned. She category is dead. Well, retail is not can show videos on products and their benefi ts. And more importantly, customers dead, department stores aren’t can go to Emma for beauty tips.” dead, Macy’s and Federated cer- Rite Aid also delivers targeted product promotions. The chain recently mar- tainly aren’t dead. In fact, we’re keted Almay for one month in its stores. The promotion included samples, cou- growing. We’re growing because pons and in-store makeover events. “Then we went to the source where Almay we challenge ourselves constant- customers were fi nding their beauty information. Through a partnership with ly to fi nd new ways to meet the Hearst Publications, we were able to secure mentions within the promotional consumer’s changing needs and pages of their beauty books. We drove them online, to fi nd out more about pro- preferences.” viding a Web link to data locations. And we went direct to the customers, with While today’s consumer has e-mail blasts to those who reside within 5 miles of our demo locations,” she myriad retail and product choic- said. es — and many consumers shop The comprehensive one-month campaign for Almay showed impressive results in more than one channel for for Rite Aid. In the demo stores, the chain was able to achieve Almay’s average beauty — the good news is that sales for one week in just four hours. Makeup artists reported that 6,500 pieces of women love to shop for beauty, Almay products sold during the event time — 11 pieces per store from the beauty said Morello Eckhardt. “NPD demo alone. reports that women are purchas- All of these efforts refl ect Rite Aid’s passion to understand shoppers and what ing beauty products more fre- they want in the chain’s stores. “You may ask if this approach to retail really quently than they were fi ve years works. I say yes, that’s without a doubt. And why am I confi dent? Because we’ve ago, with 15 percent of women seen the proven success. Our Customer World store sales, depending on the vari- saying they’re purchasing more ous categories, have increased 35 to 50 percent. To date, the Customer World fragrance, 22 percent increas- concept has been implemented in about 100 of our stores, and we plan on going ing their makeup purchases and to 800 to 1,000 more within the next fi ve years. It’s all part of making sure we give 40 percent increasing their skin what the customers want on their terms,” Wray concluded. care purchases. And the news — Faye Brookman gets even better. It offers op- WWD, FRIDAY, MAY 26, 2006 21

WWD.COM

Stephen Stoute, Shawn “Jay-Z” Carter and Signe Gammeltoft and William Laurent Andrea Robinson Daniel Rachmanis Lauder. Attal and Jack Wiswall Miami Mixer It was time to party at the Mandarin Oriental when the speeches paused. Andrea Robinson, of the Estée Lauder Cos., and Artur Grynbaum, of O Boticário, each won Verdura rings in a contest at a special Willy Wonka-style candy shop set up in the lobby, and the Thursday night dinner started on a stress-reducing note as keynote speaker Horst Rechelbacher led a group massage Jean-Pierre before launching into his talk. Later that evening, an after party offered beach towels, not to Houri and mention Cuban-style, hand-rolled cigars and exotic drinks. Demi Thoman Jack Stahl Christian Courtin-Clarins, Karine Maggie Ciafardini, Cosimo Policastro, Courtin and Eric Thoreux. Lynne Greene and Chantal Roos.

Scott Thia Breen Beattie

Marc Menesguen, Eve Michele Christian Courtin-Clarins Jeffries Scannavini and Philip Shearer.

Nicolas Jerry Mirzayantz Vittoria Jane Hudis, Lisa Hawkins, Terry Darland and Pamela Baxter.

Donald Loftus, Joyce Avalon and Nicholas David Riddiford and Peter Wetenhall Munafo. 22 WWD, FRIDAY, MAY 26, 2006

WWD Beauty CEO Summit WWD.COM Cohen Details Art of ‘Power Branding’

MARSHAL COHEN SOUNDED A WAKE-UP CALL FOR THE BEAUTY manufacturers in the room. To illustrate the survey’s fi nd- industry, challenging attendees at the conference to “grab the bull by ings, Cohen said that in the prestige market, sales of self- Marshal Cohen the horns.” tanners slid 25 percent last year. Why? Because consumers “The best way to predict the future is to go out and create it,” can go into a Target store and buy Jergens Natural Glow for declared Cohen, chief industry analyst for the NPD Group Inc. $4.99. “So the consumer is jumping ship,” he said. Speaking quickly and determinedly, Cohen rattled off several At the same time, in the prestige skin care business, the industries — including footwear, premium denim and electronics number of products with a price of $70 and up has doubled — that are competing with beauty for consumers’ dollars. since 2002, said Cohen, adding that the business grew 26 Distractions from outside the industry — such as MP3 players, percent last year. which continue to double in sales — are prompting the consumer To explain, in part, consumers’ cross-channel movement, to spend money differently, noted Cohen, adding that beauty fi rms Cohen said that the bottom third of the prestige market is “compete for consumers’ spending and frame of mind.” reaching downmarket for brands with an emotional con- To win over both, Cohen explained the art of what he calls nection, and midlevel consumers are reaching up for items “power branding,” a dual-pronged approach to lifestyle and image with a glossier brand image. marketing. “Number one, be relevant. You must explain to con- Turning to the power of celebrity, he declared, “A picture sumers what this product does and why it’s important in their is worth a thousand words. A celebrity is worth a million.” lives. The second part of it is helping them understand how it fi ts And while celebrities generate excitement, NPD found into their lifestyle,” said Cohen. He continued, speaking from the that consumers are not willing to pay more for products viewpoint of a marketer: “I’m not interested in how old you are, trumpeted by famous faces. “They’re willing to buy it and I’m interested in how you feel. I want to know about your life. I they’re willing to listen,” but not to assign a higher value to want to know what you do. I don’t want to know about the demo- it, remarked Cohen. graphic stuff. I want to know what’s inside your head and what you Using Chanel No.5’s association with Nicole Kidman as really want this product to do for you.” an example, he said that when used correctly, star power Displaying an Olay print ad that reads, Wrinkles and pimples. can elevate sales. When Chanel No.5 introduced Kidman What’s next? Bifocals and ripped jeans?, Cohen commented that in its advertising in 2004, the fragrance had a 26 percent message “cuts to the core” of what women are thinking. growth rate, after a decline of 6 percent in 2003, according Turning to the prestige market, he noted that the skin care busi- to Cohen. ness is up 2 percent, and the antiaging segment is up 10 percent. He “What did they do? They didn’t change the bottle, they cautioned that not only Baby Boomers are driving this growth, but didn’t change the packaging, they didn’t change the fra- also twentysomethings looking for prevention. Speaking to the two grance, they probably didn’t even change the price. So noth- groups requires two very different messages, said Cohen. ing really happened other than Nicole Kidman,” he said, Meanwhile, the mass and prestige worlds are colliding. Citing adding that Chanel was able to attract a new, younger con- an NPD survey of 48,000 consumers, Cohen reported that when sumer to the iconic fragrance. participants were asked whether skin care and beauty products As Chanel adapted the celebrity trend to fi nd its brand, sold in drugstores and grocery stores are of lesser quality, nearly Cohen called on its peers to do the same. “It’s about going 60 percent of men and 75 percent of women responded no. out and creating your own market. It’s about uniqueness.” “That’s what we’re up against,” he said, addressing the prestige — Molly Prior Liebmann Outlines How to Succeed in ‘Never Normal World’

IF THE INCREDIBLY FAST PACE OF CHANGE IN in beauty than ever before: 15 years ago, Liebmann can’t buy it in the same fabulous experience and gor- the beauty industry has you asking, “What the heck tracked eight retail channels for the category; today, geous environment that I can buy candy in at Target.” is going on?,” Wendy Liebmann, founder and presi- that number is 24. ● Don’t isolate the beauty category from the rest of dent of WSL Strategic Retail and author of the fre- Still, with all the transformations, “we are at the the store. “It’s holistic; it’s about a fusion,” she said, quently quoted WSL From the Edge Trend Letter, very beginning of a new shopping decade,” Liebmann citing the London department store Selfridges as an says you’re not alone. Running through the signifi cant said. To explain what today’s consumers are look- example, where beauty is merchandised on multiple deals of the last 12 months — the alliance between ing for, Liebmann created a fictional character, J.C. Penney and Sephora, L’Oréal’s acquisition of The Prudence. “She is one heck of a prudent shopper,” Body Shop, third-party brands in Bath & Body Works, Liebmann laughingly explained. “She has a prudent If we think we’ve been just to name a few — Liebmann used the question as a mind-set that is calculatingly price-conscious. That “ refrain to highlight the unrelenting pace of change in doesn’t mean she necessarily only wants the lowest reinventing beauty…I would her speech, “Reinventing Beauty in a Never Normal price in town, but she certainly is smart enough to World,” also the title of her 2006 megatrend report. know what a good price and a good value is and that’s suggest…that what we’ve been During her presentation, Liebmann discussed the fueling her mind-set.” societal changes that have led to a transformation in Today’s consumers want an easy shopping ex- doing is repeating beauty. the shopping habits of consumers, revealed what mat- perience, but one that provides entertainment, too. ” ters most to shoppers today and prescribed six rules for Customer service is key. And if your product isn’t — Wendy Liebmann, WSL Strategic Retail reinventing the beauty business. considered essential, they’re not “My head is spinning as we Wendy buying it anymore. In the past fl oors, including in a nail salon in the fashion depart- watch the American shopper go Liebmann two years, categories such as pets, ment, in a pharmacy on the top fl oor and in a tattoo from drugstore to dollar store to health and food have risen in im- parlor in the teen department. discount store to department store portance to women, Liebmann re- ● Inspire the consumer. “It’s got to be experiential. It’s and online and catalogues, too,” ported. But when it comes to beau- got to be inspirational. They’ve seen it all, they’ve done she said, citing statistics from ty, only hair care and skin care are it all, they’ve shopped it all and they don’t know what to- the report. “What we’re seeing is considered essentials; fragrance morrow is going to look like, so you better inspire them,” American shoppers spinning the and color cosmetics are not. Liebmann said. She singled out a recent promotional globe to a degree that we’ve never “So what do we do in this ever- program at Le Bon Marché in Paris that integrated beau- seen before.” spinning, never-normal world ty and food. “It was so whimsical, it was so silly, it was so The world is changing so quick- when it comes to beauty?” asked funny, that you just wanted to buy it all,” she said. ly, Liebmann explained, because Liebmann. “We talk a lot about re- ● Newness counts. “Why do we think that if fash- of societal upheaval in the last six inventing beauty. But if we think ion stores like Zara and H&M and Mango deliver new years — the bursting of the dot- we’ve been reinventing beauty for merchandise into the stores every 10 days, that the com bubble; the terrorist attacks the last 20 years, I would suggest consumer doesn’t expect that from us and will wait of 9/11; corporate, political and to you that what we’ve been doing months and years and centuries, it seems, to see new- religious scandals; war, natural is repeating beauty.” ness; real, discernible interest.” disasters; rising fuel prices. To that end, Liebmann re- ● Simplify the shopping experience, provide killer “It is a never-normal world,” vealed her six rules for reinvent- customer service and edit, edit, edit product selection. Liebmann said. “American con- ing beauty: “It’s about service, it’s about easy, it’s about edited.” sumers are telling us they don’t ● Stop merchandising beauty ● Create a bond of trust with your consumer and know what’s going to happen to- as a commodity. As an example, don’t disappoint her. Here, Liebmann cited the air- morrow and, as a result, they’re Liebmann cited Target, which re- line industry, “where nobody trusts anybody any day,” trying to take control of their life cently unveiled a revamped candy she said. But then came Jet Blue, “who sort of took in the only way they know how. department she called “a beauty the Target model of expect more, pay less, and rede- “Guess what?” she continued. department bar none. It takes com- fi ned an airline carrier.” “For the most part, it’s where they modity brands like Hershey and “Repeating, repeating, repeating no longer works,” she go shopping, where they choose M&M and puts them in a fashion concluded. “Reinventing beauty is a huge opportunity and to spend their money everyday.” mind-set,” she said. “Well, I want a huge challenge, but a wonderfully embracing idea.” There are more shopping choices the best lipstick, thank you, and I — Jenny B. Fine WWD, FRIDAY, MAY 26, 2006 23 WWD.COM Hamptonites Get Glimpse Congress Set for Immigration Battle By Kristi Ellis ing compromise legislation. citizens. I think that is amnesty,” Sen. Arlen Specter (R., Pa.) said Sessions. WASHINGTON — The Senate said the Senate bill is not “am- The Senate bill outlines a Of Lure of African Fashion passed a comprehensive immi- nesty,” as many conservatives three-tiered program. Those il- gration reform bill Thursday, by have contended. legal immigrants who have lived By Jessica Iredale a vote of 62-36, holding together a “There is a rigorous ladder in the country for fi ve years or delicate compromise and setting which the undocumented im- more would be allowed to stay SOUTHAMPTON, N.Y. — From the stage for a showdown with the migrants have to pass through,” in the U.S., continue working Savile Row to the Serengeti, House over a guest worker pro- Specter said. “They have to pay and apply for citizenship. They Andrew Bolton, associate gram and citizenship for illegal a fi ne…they have to undergo a would have to pay a fi ne of at curator at the Metropolitan immigrants. criminal background check, they least $3,250, settle back taxes Museum of Art’s Costume The bill, if signed into law, have to pay back taxes, they have and learn English. Institute, demonstrated his would tighten border security, to learn English and they have to Illegal immigrants who have knack for seamless transitions stiffen fi nes against employers work for six years, and it is genu- lived in the U.S. between two at the Parrish Art Museum hiring illegal immigrants, create a inely earned citizenship, by any and fi ve years would be required here last week. temporary guest worker program measure.” to go to a point of entry before Fresh off the Met’s Union and establish procedures by which Jack romp “AngloMania: Tra- illegal immigrants who live and dition and Transgression in work here can earn citizenship. There is a rigorous ladder which British Fashion,” which was It is expected to be a diffi cult “ unveiled earlier this month, task to reconcile the Senate bill the undocumented immigrants have Bolton tackled the subject of with a House measure passed traditional African garb and in December that would make to pass through. its widely interpreted infl u- it a felony to be in the country ” ence on Western fashion in without documentation, a law — Sen. Arlen Specter (R., Pa.) a talk titled “The Lure of that would affect an estimated Africa: From Saint Laurent 11 million to 12 million illegal to Gaultier,” as part of the immigrants. The House bill does Sen. Edward Kennedy (D., they return to the U.S. and begin exhibition “Power Dressing: not contain provisions for a guest Mass.) called the comprehensive the process for citizenship. They Men’s Fashion and Prestige worker program or citizenship bill “a realistic attempt to solve would have to pay the same fi nes in Africa,” showing at the opportunities. the real-world problems that have and fees, pay back taxes and learn Parrish through Sunday. Senate Majority Leader Bill festered too long in our broken English. An illegal immigrant in “It’s been quite a switch,” Frist (R., Tenn.) has said he ex- immigration system.” Kennedy the country for less than two years mused Bolton of his inter- pects a compromise will be said, “It protects our security would have to leave and would continental focuses of late. reached in a conference commit- through stricter enforcement and not have any guarantee of return. Although the work of British tee. But Minority Leader Harry tamper-proof immigration cards The bill also would estab- designers John Galliano Reid (D., Nev.) said messages from and high-tech border controls. It lish a new electronic verifi ca- and Alexander McQueen House leaders on reaching a com- protects American jobs and wages tion system and put the onus on and milliner Stephen Jones promise bill are “not encourag- by bringing immigration out of the employers hiring immigrants. factored heavily in his slide ing.” President Bush has thrown shadows and requires employers Employers would face maximum show, it seemed “Africa” and his support behind legislation that to pay fair American wages.” fi nes of $20,000 for each illegal “AngloMania” aren’t as dis- creates a temporary guest worker Sen. Jeff Sessions (R., Ala.), worker and possible jail time. parate as one might think. program and generally allows il- one of the most outspoken crit- The bill also calls for hiring Bolton, dressed in a suit legal immigrants a path to citizen- ics of the measure, called the 1,000 new Border Patrol agents and wearing horn-rimmed ship after they pay penalties and bill “deeply fl awed.” this year and 14,000 by 2011, ob- glasses, began the pre- taxes, and learn English. “First, people who are here taining new surveillance equip- sentation as he ended it Debate on the fl oor Thursday illegally…will be given over a ment and constructing 370 miles — with looks from Jean Paul illustrated the diffi culties that period of time every single ben- of triple-layered fencing and 500 Gaultier. The fi rst, a men’s An African-inspired look from Jean lie ahead for lawmakers in craft- efi t this nation can bestow on its miles of vehicle barriers. silk skirt — critically panned Paul Gaultier’s spring 2005 couture at its debut in the mid- collection. Eighties — referenced traditional robes worn in the Democratic Republic of Congo. Bolton recounted Gaultier’s famous defense to the press (“Putting a skirt on a man is not a travesty. Putting a Feds Seize Alleged Counterfeit Jewelry bra on him is”), and used his fi nal slide to wryly point out the de- signer’s subsequent contradiction: the iconic cone bras cribbed NEW YORK — Federal marshals in raids on Thursday trying to profi t from our individualism, advertis- from African sculptures and made famous by Madonna, not to confiscated more than 100 allegedly counterfeit ing and public relations.” mention many of her male dancers, during the singer’s “Blond Judith Ripka jewelry pieces from four companies. Judith Ripka, after an internal investigation, ob- Ambition” tour in the Nineties. The fi rms carried multiple categories of jewelry tained a federal court order that led to the raids. Gaultier’s gender-bending and nuanced androgyny aside, substantially similar to Judith Ripka’s Federal offi cials were not available for comment. Bolton, who came to the Met four years ago from London’s Vic- signature gold, silver and col- A separate Judith Ripka coun- toria & Albert Museum, maintained that designers have most ored-stone pieces, according to terfeiting case, the result of a raid often coopted African fashions for simpler reasons: sex appeal Judith Ripka executives. The at a Hong Kong factory two years and power. Leopard prints, fi rst used in the West during the im- companies were not immediately ago, is pending in Chinese courts perialist days of the mid-18th century, were particularly fashion- identifi ed, but are located in the and is expected to go to trial this able in the Sixties and Seventies. Jewelry Exchange in the 47th year or in early 2007. “They came to be seen as a symbol of sexual liberation, equat- Street Diamond District and at “This is just the tip of the ice- ing women’s physical emancipation with the feral nature of the 578 Fifth Avenue. berg,” said Berk. “It’s expensive wild cat,” said Bolton, also citing Yves Saint Laurent’s monu- “[Counterfeiting is] a major to pursue copyright litigation. Too mental 1968 safari collection and Tom Ford’s more contempo- problem for us,” said Ronald J. Judith Ripka bracelets. many people were profi ting from us, rary YSL Rive Gauche collections as loaded fashion statements. Berk, chief executive offi cer of the and we decided to put a stop to it. But the “Ford is well known for his portrayal of powerful women, and Judith Ripka Cos. “I suppose, in a way, it says second you close one down, another pops up.” leopard prints appeal to his notion of female erotic allure.” something about our success. By copying us, Ripka has 11 U.S. stores, including one here. Bolton also examined bold intersections of fashion and they’re fl attering us. On the other hand, they’re — Sophia Chabbott African customs that make spots seem rather tame in compari- son. Body painting and lip plates, typical of the Surma tribe’s mating and marriage rituals, have appeared in McQueen’s col- lections in the form of a leather catsuit and jewelry, respectively. Galliano gleaned inspiration from the Masai’s skeleton-deform- Chico’s 1Q Net Gains, but Forecast Cut ing neck rings — the effects of which Bolton illuminated with an X ray — and beading for his 1997 collection for Christian Dior. NEW YORK — Chico’s FAS Inc. posted first- results for White House|Black Market and Galliano also commissioned Jones’ rendering of Afro wigs for quarter results on Thursday that included gains Fitigues, its newest brand. his 2002 collection. Even the all-American Ralph Lauren loosely in profits and revenues, but the company low- “Chico’s FAS Inc. continues to be one of the riffed on the Congolese process of scarifi cation for some of his ered full-year earnings-per-share guidance. most productive and profi table apparel retail- body-cleaving evening gowns in spring 1997. For the three months ended April 30, income ers in the industry,’’ Scott Edmonds, president “Ralph Lauren, who you very much associated with a much rose 11.2 percent to $52.5 million, or 29 cents a and chief executive offi cer, said in a statement. more Twenties and Thirties Gatsby-esque aesthetic, has often diluted share, from $47.2 million, or 26 cents, in “Even after implementing the new stock-based fl irted with the idea of African fashions,” said Bolton. “Anna the year-ago quarter. Sales climbed 19.8 percent compensation accounting requirements, Chico’s Sui and Marc Jacobs have done it, too.” to $392 million from $327.3 million, which includ- still produced an overall operating margin in While Africa’s reach continues to extend toward Western ed a same-store sales increase in the low-single- excess of 20 percent.” fashion — most recently in Gaultier’s spring 2005 couture col- digit range. Excluding catalogue and Internet, The company adopted a new standard for lection — Bolton conceded that these days, Western culture’s sales for the Chico’s/Soma brand rose 11 percent, how it accounts for stock-based compensation grip has tightened considerably on the local aesthetic, both to $297 million, and sales at White House|Black expenses. here and abroad. “Traditional garments are becoming much Market increased 62 percent, to $79 million. Chico’s expects diluted earnings per share less apparent across the globe,” he said. “The idea of jeans and The company said catalogue and Internet for fi scal 2006 to be $1.20 to $1.24, down from T-shirts are becoming the global uniform. I mean, it’s sad, but sales gained 55 percent because of the addi- previous guidance of $1.23 to $1.26. one can’t stop the wheels of modernity.” tion in fi scal 2006 of the catalogue and Internet — Vicki M. Young 24 WWD, FRIDAY, MAY 26, 2006 WWD.COM Media/Advertising

Publishers Peer Ahead to Second Half By Jeff Bercovici In the fi rst half of 2006, Jane seemed some areas, particularly prestige beauty. Another category where spending to be getting the worst of the competi- “Before, it was just an idea; now, it’s re- seems to be improving, or at least stirring NEW YORK — Unforgiving. tion: Ad pages fell 41 percent versus the ally happening,” said Glamour publisher a bit, is automotive — despite Detroit’s In a word, that is the nature of the ad- same period in 2005, to 235.8, according Bill Wackermann. “Some of the market- continuing implosion. “Overall, it’s soft, vertising market magazine publishers to Media Industry Newsletter. (Pages for ers who play heavily in the department but there are pockets of strength,” said are facing heading into the second half. the industry as a whole were down about store arena are really planning for an ef- Esquire publisher Kevin O’Malley. “The Increasingly, they say, achieving growth 1 percent in the fi rst half, according to fect on that fourth-quarter business.” higher end of the Detroit market is actu- means anticipating advertisers’ every MIN.) Lamadrid blamed the decline on “Anybody who depends on department ally doing quite well,” added Mitchell. need, diversifying into new areas such as commitments that were largely in place store business is concerned about their One of the biggest worries publishers Web and mobile content, and squeezing before he took over as publisher in sales for fall and holiday,” agreed Allure express these days is not a softening ad every last drop of revenue from categories November, and said Jane’s pages will be publisher Nancy Berger. category, but the cannibalizing effect of the that were once considered marginal. As up in the second half “pretty signifi cant- Balancing that out, to some extent, is Internet on print ad spending. “Emerging publishers fi nd themselves working hard- ly,” thanks to strong spending by fashion, projected solid spending behind a sec- media is stealing dollars out of traditional er than ever just to match ad page totals beauty and technology marketers. ond-half wave of fragrance launches. media, no question,” said Berger. from the year before, “Flat is the new up” Other publishers said those three sec- “The fragrance guys are up to some re- But for magazines that have estab- has matured from a joke into a mantra. tors — fashion, beauty and technology ally cool stuff,” said Kristine Welker, pub- lished a strong Web presence, this prob- “Is business booming?” asked Jane pub- — are driving their increases, with some lisher of Cosmogirl. Moreover, she added, lem, at least, contains the seeds of its own lisher Carlos Lamadrid, rhetorically. “No. caveats. Foremost is the ongoing impact “Retail’s looking pretty solid.” solution, said Cosmo publisher Donna People aren’t spending wildly, but there of Federated Department Stores’ acqui- “Retail is the one really bright spot Lagani. “I’ve seen more aggressive in- certainly is money there. But it’s more sition of May Department Stores, which I’m seeing in the second half,” concurred terest and commitment to the Web from competitive every year.” is seen as depressing ad spending in Details publisher Chris Mitchell. marketers than ever in the past.”

CHOP SHOP: There are some problems even celebrities can’t Mandy has been moonlighting with former Abercrombie & fi x. One of them is Shop Etc.’s less-than-stellar newsstand Fitch trend forecaster Meredith Levy on a wedding planning performance. Beginning with its November 2005 issue, site called Bffbridal.com. The weekly online column and MEMO PAD the Hearst shopping title switched from all-model covers consultancy site went live on Thursday. “Everyone was to stars such as Angie Harmon and Paris Hilton. “What we’ve constantly hitting us up for help planning their weddings,” NEW HEAD OF HOUSE: Not every editor in chief gets to found in the past 12 months is we’re almost unable to talk said Mandy, who covers travel for New York and edited handpick their successor, but then, how often does an about shopping now without talking about celebrities,” the magazine’s Weddings issues until 2004. “When girls editor lure Oprah Winfrey to their parent company to start a editor in chief Mandi Norwood told WWD at the time. who aren’t in the fashion/media business get engaged, hugely profi table joint venture? Apparently she found a way, though, because the May they have no idea where to start in terms of makeup Good Housekeeping editor in chief Ellen Levine, who 2006 issue, with Katherine Heigl, helped launch O and is still listed as editorial consultant will be the last to feature an actress on the O masthead, is ascending to the role of editorial for the foreseeable future. A Hearst director at Hearst Magazines, with Rosemary Ellis, the spokeswoman confi rmed there has editorial director of Prevention magazine, being named as been “a movement back to product her replacement, Hearst announced Thursday night. As covers.” Shop Etc. also has increased WWD reported last month, Levine will be Hearst’s fi rst-ever its trim size, from a “catalogue” editorial director. She has been at Good Housekeeping format to a larger one used by other since 1994, and also has helped develop several of the Hearst titles such as Cosmopolitan company’s launches in recent and Harper’s Bazaar. That change took years, including Weekend, Quick & Simple and the effect with the April issue. Shop Etc. shuttered Lifetime. sold an average of 173,098 copies Levine had been interviewing candidates for the Good on newsstands last year, generating a Housekeeping job for several weeks. She also has been sell-through rate of 27.8 percent. working with the outside design fi rm FaheyO’Connor on a A women’s magazine editor said redesign of the magazine, according to various industry she was not surprised to learn of the sources. Other names that are said to have come up change, given the B-list nature of in the job search are Peggy Northrop, editor in chief of some of the actresses who graced More; Susan Toepher, editor in chief of Quick & Simple, Shop Etc.’s cover: “If you go down the The home page of Bffbridal.com. and Isolde Motley, the outgoing corporate editor of Time celebrity chain far enough, a model actually sells better.” artists, stylists, locations, gowns, etc. My inbox was always Inc. (Motley responded in a statement, saying, “I have Cargo, another shopping magazine, also had trouble fl ooded with questions about wedding planning — not to had a wonderful run at the best magazine company, and deciding whether it was better served by models or mention honeymoon planning, since I’m a travel editor. So I am looking forward to traveling with my family and celebrities. The issue was resolved when Condé Nast we basically decided to turn all that scoop we’re always completing a book on a subject dear to me. I shuttered the title in March. — J.B. dispensing into a business….The Knot is an awesome can’t imagine taking another magazine job in the resource, but their taste and content really speaks to a foreseeable future.”) HITCHING POSTS: As if there weren’t already enough bridal mainstream audience. We wanted to tap into the sphere Prior to joining Prevention, Ellis worked as a Web sites — brides.com, TheKnot.com — a magazine of upscale, stylish, city brides, who aren’t going to be consultant. — Jeff Bercovici and Sara James editor is launching another one. New York contributor Tara satisfi ed with what everyone else has.” — S.J. WWD, FRIDAY, MAY 26, 2006 25 WWD.COM Royal Moment Queen Kirsten CANNES, France — It would be somewhat intimidating for a 25-year-old actress CANNES, France — The Plage to play France’s most infamous queen, yet veteran Kirsten Dunst grasped the role des Palmes was transformed into wholeheartedly in the new film “Marie-Antoinette.” Of course, her journey from a Versailles parlor for the “Marie- Spiderman’s squeeze to corseted French royalty was guided by pal Sofia Coppola. “She Antoinette” after party Wednesday has a very light, bubbly, playful side and she can be this party girl, but she also has night, complete with sky blue tents, depth and a very serious side,” Coppola says of her star. “I wanted the character to have abundant roses and tufted ottomans. “I Kirsten both.” On the eve of the premiere, Dunst sat down to discuss what it was like being a didn’t know everything was going to be blue,” laughed Dunst queen and surviving those corsets. Kirsten Dunst in a pale taffeta Rochas gown. “Oh well, — M.M. at least I match.” Almost — the ingenue was sporting red hair extensions for “Spiderman 3” instead of the WWD: How is it working with Kirsten Dunst in “Marie-Antoinette.” pale hair she wears in “Marie-Antoinette.” Sofi a Coppola? As Dunst and her Kirsten Dunst: The thing about Penélope posse milled about, Sof, we don’t sit there and talk Cruz director Sofi a Coppola about it until we are blue in the kept company with her face. I understand her aesthetic father and brother on teak and her. I think Sofi a felt that deck chairs. “It’s a really what I had inside of me was big deal to be here,” she what she wanted this character said. “Now I can fi nally to be. She gave me freedom. relax a bit.” Even though She is a very intuitive woman, the audience both even though she is very private. Y PASCAL LE SEGRETAIN-GETTY IMAGES; “MARIE-ANTOINETTE” STILL COURTESY OF COLUMBIA PICTURES CORP. OF COLUMBIA IMAGES; “MARIE-ANTOINETTE” STILL COURTESY LE SEGRETAIN-GETTY Y PASCAL booed the fi lm and gave it a standing ovation? WWD: What did you do to “At least I’m getting a channel Marie-Antoinette? reaction.” Her cousin K.D.: For me it was very Jason Schwartzman sensorial acting, very much was still in awe about what this thing tastes like or what this bed feels like. Everything was supposed of the red-carpet to be so new to her in the beginning. All her decadence and joy came out of not having spectacle earlier. that sweetness and satisfaction in her life, which stopped her from growing up. It was “It wasn’t as freaky a very childlike reactionary thing. I was very aware of all my surroundings and how as I thought it everything felt on me. would be. But I wish my mom WWD: Did it help that you and Sofi a are friends? [actress Ta l i a K.D.: When I watch movies that I’m in, I know when I’m being honest or not. Usually, Shire] could that’s what everyone responds to the most. But that doesn’t always happen throughout be here.” a whole movie. Sofi a wants me for the beauty and the ugliness, too. It’s not about being Everyone the perfect lady or the girlfriend who does the right thing all the time. This is almost opted for French like watching a home video. All my feelings and how I was feeling about Paris and the fi nery — from movie, I can see that, which I had never experienced before. Coppola, in a Givenchy minidress, WWD: How about the corset? to Schwartzman, in a K.D.: Everything changes: your breathing, your posture, how stifl ed you feel. It changes Dior Homme tux. And, the way you move. There was something fun about it, too, because she probably always Chloë fi ttingly for a Coppola wanted to get out. In Petit Trianon, I didn’t wear corsets and I had bare feet. I tried to Sevigny affair, there were plenty contrast that with how I felt in Versailles. of cool kids in the mix who later rocked out to a performance by Phoenix. Penélope Cruz and Pedro Almodóvar, however, stuck to themselves at a private table. CANNES, France — “When I got the call for the role, I knew it Meanwhile, at the restaurant at the Eden was a big deal as it meant I was going to be kicking Halle Berry’s Roc in Cap d’Antibes, Palisades Pictures chief ass,” says Dania Ramirez, one of the latest additions to the Vin Roberti and Kimora Lee Simmons teamed gorgeous gang of “X-Men” superheroines. up to host a dinner with Harvey Weinstein and It’s a day before the premiere here of “X-Men: The Last Kenneth Cole. Guests, including Chloë Sevigny, Stand,” and the ladies are lounging in a villa in the hills Rosario Dawson, Cuba Gooding Jr. and Stavros above Cannes, comparing war wounds. “I think I had the most Niarchos, were so busy revealing costume,” says Ramirez, referring to the skimpy schmoozing that they attire worn by her character, Callisto. The costume featured didn’t notice dinner two built-in belts under a corset and latex pants. “It was the

PARTY PHOTOS BY ERIC CHARBONNEAU/WIREIMAGE; BERRY BY GEORGE PIMENTEL/WIREIMAGE; PAQUIN BY PETER KRAMER-GETTY IMAGES; RAMIREZ B PETER KRAMER-GETTY IMAGES; RAMIREZ BY GEORGE PIMENTEL/WIREIMAGE; PAQUIN BERRY BY ERIC CHARBONNEAU/WIREIMAGE; PHOTOS BY PARTY wasn’t served until most uncomfortable suit I’ve ever worn, but it’s certainly a very midnight. “This is my authentic way of stepping into the character’s shoes,” adds fi rst Cannes, so I’m just the actress, who will also appear in the series fi nale of “The trying to soak it up and Sopranos” on June 4. live it up,” Simmons Others had it a little easier in the fi lm, which opens in said. Apparently so the U.S. today. “I didn’t have to lift a fi nger for the fi lm,” was Roberto Cavalli, muses Famke Janssen, feeding a strawberry to her black pit who was inviting bull, Licorice. Soon Janssen will be shedding her character everyone and anyone Phoenix’s capes for an untitled fl ick in which she plays

to his iridescent green CHIC HEROINE a working-class pool player. “The role’s not that far from and purple yacht the playing Phoenix, as I following day. Dania Anna didn’t look at her as a Jason Ramirez Paquin superhero, I looked — Marcy Medina Schwartzman at her as a woman,” she says. Sofi a Coppola Kimora Lee Out on the and Thomas Mars Simmons terrace, Anna and Rosario Paquin and Ellen Dawson Page share a drink, despite playing archenemies Rogue and Kitty Pryde, respectively, on Halle Berry screen. Having wrapped her third “X-Men” fi lm, Paquin has moved on to producing movies with her brother Andrew, including the recently shot “Blue State,” in which she stars. “X-Men” fi rst-timer Page, however, is still recovering from what she refers to as a “dreamlike” adventure. “Entering the set on the fi rst day of fi lming was probably the most terrifying experience of my life,” she says. “There were real-life explosions and giant props — it was like living in a comic book.” — Katya Foreman LEE, DAWSON PHOTO BY JEFF VESPA/WIREIMAGE; CRUZ BY STEVE FINN/CAPITAL PICTURES/GAMMA; DUNST BY TONY BARSON/WIREIMAGE; PICTURES/GAMMA; ALL OTHER DUNST BY STEVE FINN/CAPITAL CRUZ BY JEFF VESPA/WIREIMAGE; PHOTO BY LEE, DAWSON 26 WWD, FRIDAY, MAY 26, 2006 WWD.COM All Dressed Up With No Place to Go NEW YORK — The International Contemporary fabric over a wooden frame and illuminated it from be- Furniture Fair has come and gone, but not without leav- hind with a light. ing some indelible impressions on visitors. In every- “I loved the idea of a blank canvas because it has so thing from graffi ti-inspired rugs to intricate prints for much potential,” he said. “I like to work more on the wallpaper, the stylishness of an object appeared to be as process.” much a selling point as the design, whether the category was eco-friendly pieces, modern children’s furniture, CHA CHA SUPERMARKET transportable homeware or experimental furniture. With its graffi ti-type graphics splashed on rugs, runners, Many fl ocked to Herman Miller to check out the updat- pillows, lamp shades and low-level seat cushions, Cha ed version of the lounge chair that Charles and Ray Eames Cha Supermarket caused the occasional pedestrian traf- designed 50 years ago, and some went off the beaten path, fi c jam with its “homeware with attitude.” Last year, the looking for whimsical pieces like Mathmos’ space projec- London company made its debut and this year it camped tors, Lite Brite Neon Studio’s chandeliers, Ridgley Studio out at the ICFF for the fi rst time. Its bright-colored rugs, Works’ cube of illuminated stones and DouglasHomer’s with catchy names like “Gossip” and retailing from HairyBertoia (onomatopoeiac) $1,548 to $3,172, were the chair. There was also plenty show standouts, according A Mathmos of action beyond the Jacob to Cha Cha Supermarket di- Duffy London’s stretched canvases. K. Javits Convention Center, space rector Ron Aslan. Selfridges thanks to the “Everyday projector. liked the looks of Cha Cha Fabulous” contemporary Supermarket so much that “home” Ikea set up in a ware- the label landed in a win- house across the street. Martha dow display in the retailer’s Stewart Living Omnimedia Oxford Street store. provided an added punch in its corporate offi ces 10 blocks VITRA south, where experimental fur- Adhering to her design niture created by Rhode Island philosophy, “Form fol- School of Design students and lows feeling,” Hella alumni was displayed. Jongerius whipped Here’s a look at some of the up the Worker arm- more eye-catching pieces at chair, the Polder the Jacob K. Javits Convention couch and the Bovist Center. fl oor cushion for Vitra, the Swiss home collec- DUFFY LONDON tion. Comfort was not lost Chris Duffy, director of Duffy for the sake of design. Fabric London, said he was “to- and leather are used for the tally shattered” by the re- chair’s double-layer back Cha Cha Supermarket’s graffi ti-inspired rug. action to his illuminated cushions and the intricately that looks more like something from “2001: A Space framed stretched canvases. designed Bovist can be used Odyssey” than “Romper Room.” The $900 fl uted chair Environmental 337 in Brooklyn and ID in Chicago were as a stool or a pillow. “Lacemaker” is one of the motifs has an Always-On braking system but the “quiet” poly- among the boutiques that picked up his wall hang- Jongerius used for the Bovist, borrowing from a Vermeer urethane wheels can be put in motion by squeezing a ings and tables. He came up with the idea while at a van Delft painting of a girl engrossed in her embroidery. handle, said co-founder Steve Granville. The chairs, friend’s house. London said he was wondering what to which have molded cushions called “body envelopes” draw on the blank canvas he had stretched over a frame FLEURVILLE that can be removed for cleaning, are Fleurville’s fi rst and leaned against a lamp, and liked the way the light Fleurville, a San Rafael, Calif., company, called on at-home products. The two envelopes are geared for graded on the canvas so much that he decided to create product designer Yves Behar to overhaul the stan- children between the ages of four months and one year, just that. So the British designer made printed fabrics dard high chair with a modern twist. What he came up and one year and two years old. of designs he’d photographed, stretched the fi reproof with is a bright yellow futuristic, ergonomical design — Rosemary Feitelberg

Getting a Handle on Baggage Design

PARIS — It is impossible to have too much baggage in the U.S. According to David Beiber, president and these days. That’s because after years of somber ceo of Delsey, what will set this new model apart is colors and humdrum design, luggage is becoming that the four wheels will not work independently of Patricia Urquiola’s bright, beautiful — and fun. one another. All too often, suitcases with wheels can Antibodi chaise longues. “Overall, there is a fair amount of novelty being go the way of supermarket carts — each wheel has brought to the market in an attempt to stir more a different direction in mind. Delsey’s four wheels interest into the category, which historically will be attached by lightweight tubes made of air- has not had a lot of emotion,” said Laurence craft aluminum. Franklin, chief executive offi cer of Tumi, based “We don’t have to do all the reinforcing,” Giving Fabrics All the Fixings in South Plainfi eld, N.J. New colors, he said, explaining that adds extra fabrics, shapes and designs, plus pounds — a real hassle when more PARIS — Industrial design is getting dressed up. technological innovations, are key to weight means more dollars spent at Recent innovations in textiles have prompted de- making people dream, he said. check-in counters these days. “Four signers to use fabrics in new ways — from covering Tumi went into overdrive for its wheels are very important. One’s garden furniture to building wall partitions. new line, created with the Italian mo- arms and shoulders never get the Take Ronan and Erwan Bouroullec’s textile “Tiles” torcycle company Ducati. The slick- brunt of the weight.” for the Kvadrat showroom in Stockholm. The colorful looking, streamlined Ducati collec- A new collection for Mandarina compressed fabric and foam tiles can be assembled tion includes rolling suitcases with Duck, of Cadriano, Italy, was in- to create soundproof wall partitions. “It is an innova- handles that can easily be swiveled spired by the Mini car. The MD tive method of using textiles as a medium or material, to the left or right. “It’s a comfort Tumi’s for Mini line has brightly colored rather than just a decoration,” said Loic Bigot, owner function,” explained Franklin. Ducati pieces, including a trolley, city bag, of the trendy Tools gallery in Paris. Also in the Ducati line is a luggage. travel bag and backpack, each de- Bouroullec’s “Slow” chair for Vitra — steel frames cov- compact backpack with an exte- signed to fi t into the tiny, sporty ve- ered in knitted sheaths — also illustrates innovative textile rior pocket that can be expanded hicle. There’s even a CD holder in technology. The chair seems weightless compared with tra- dramatically — thanks to a patent- the mix. ditional heavy living room furniture. While currently still a pending system — to fi t a motorcycle Mandarina Duck is going designer, prototype, the chair will be produced next year by Vitra. helmet or bicycle helmet. too. As reported, it has just announced a collabora- Using colorful materials for a custom-made look, Tumi’s zipperless system, introduced last year, tion with Yohji Yamamoto. Hella Jongerius designed cushions, dubbed the was conceived with versatility in mind. Small push- Of course, not all luggage need to be solely prac- Handles, by attaching leather grips to create handbag- buttons were developed for enlarging the cases’ tical. Delsey is working on a new wheel that should like forms. Jongerius-crafted creations like the Polder frames. hit the market around November. Simply eye candy couch use various fabrics in different colors to give the Making travel easier is the philosophy at Delsey for the consumer, its center hub continues to spin sofa a textured look. Luggage Inc., of Elkridge, Md. This August, the com- even after the wheel hub doesn’t, just like wheel Meanwhile, at Italy’s Moroso, Patricia Urquiola pany will launch a four-wheel suitcase system under covers on hot cars. gives a soft touch to her Antibodi chaise longue. The its Helium Breeze brand, then roll out (literally) the “We’ll be putting them on more youthful bags, for lounge chair uses reversible felt and wool fabrics to technology to its other Helium collections. consumers under 40,” said Beiber. “I think people form three-dimensional fl ower petals to create a kalei- Four-wheelers have long been a hot commodity look for design. And newness sells.” doscopic patchwork over a chrome-plated frame. in Japan, but only recently have gained momentum — Jennifer Weil — Emilie Marsh WWD, FRIDAY, MAY 26, 2006 27 WWD.COM RFID Aids Inventory Control at Wal-Mart Sales of Gold Jewelry Up in ’05 CHICAGO — Wal-Mart reduced out-of-stocks tive director of the Information Technology NEW YORK — Sales of gold jew- 4.1 percent gain from last year. by 62 percent in some product categories Research Institute at the Sam M. Walton elry in the U.S. rose 4.4 percent in Earrings were next in line, with through the use of radio frequency identifi - College of Business, University of Arkansas, 2005 — a six-year high — reach- $3.39 billion in sales, a 5.5 per- cation technology, according to Randy Salley, told WWD. Hardgrave supervised the research, ing $17.7 billion, according to cent rise. Bracelets saw the big- vice president, supply chain. commissioned by Wal-Mart, which was based figures compiled by GfK Audits gest percentage hike, 6.5 percent, Salley gave a peek into new research fi nd- on a 29-week study of 12 Wal-Mart test stores & Surveys and released by the for a total of $2.6 billion in sales. ings during a sparsely attended session at the equipped with RFID for tracking merchandise World Gold Council on Thursday. Other classifi cations include fash- Retail Systems conference here Wednesday. movement and 12 Wal-Mart “control” stores not It is the 15th consecutive year of ion rings, which gained 5 percent, The study, results of which are due out in the using RFID. gold jewelry sales increases. for a total of $1.74 billion in sales; next two weeks, examined RFID’s ability to Salley said the latest study results are im- John Calnon, the World Gold wedding rings, which accounted reduce out-of-stocks on products that sell at portant because they identify specifi c oppor- Council’s managing director in for $1.31 billion in sales last year, different rates of speed. Initial test results re- tunities to combat the out-of-stock problem. the U.S., attributed the increase and charms, which posted $1.17 leased in October 2005 estimated RFID could He also noted that the 300 Wal-Mart suppliers to the trend in fashion for yellow billion in sales. reduce out-of-stocks by 16 percent on average, already tagging cases and pallets are expect- gold, as well as the introduction While traditional jewelry stores a fi gure Wal-Mart and the researchers are now ed to begin using the new type of RFID tags, of a broader range of jewelry de- reported sales gains of 3.9 percent, calling conservative. called Generation 2, by the end of June. sign in the U.S. to $8.63 billion, nonstore retail RFID tracking technology has virtually no Wal-Mart receives about 3 million RFID- “It has rekindled the consum- led the way in gold jewelry sales impact on in-stock levels for products selling at tagged cases each week, “and that number er’s love affair with the yellow growth. Stronger consumer confi - a rate of more than 15 items daily, because store keeps growing week by week,” Salley said. metal,” said Calnon in a statement. dence in purchasing on TV or via associates already monitor those fast sellers “This is no longer a pilot,” he added. “We He also cited rising gold the Internet led to gains of 7.1 per- and replenish shelves as needed, Salley said. are in active rollout.” Salley noted that the prices. The metal has increased cent in that segment, to $1.67 bil- Low-velocity merchandise — items selling at a company will double the number of Wal-Mart in price 30 percent this year, lion. Mass merchants raised their rate of one unit every three days, for example stores and distribution centers using RFID reaching a 26-year high of $732 gold jewelry sales by 5.1 percent, — also are not affected much by RFID, because — from the current 500 to 1,000 — by the end an ounce on May 12. for a total of $4.07 billion, while there’s no major out-of-stock problem there. of this year. In January 2007, another 300 sup- Out of all gold jewelry items, department stores showed the However, for items selling at a rate of seven pliers will be expected to apply RFID tags to necklaces remain the most im- least growth, with a 3.7 percent to 15 units daily, RFID reduced out-of-stocks their shipments, he said. portant classification, account- gain to sales of $3.36 billion. by 62 percent, William Hardgrave, execu- — Denise Power ing for $6.74 billion in sales, a — Jennifer Hirshlag

PATTERN & SAMPLE MAKER Production Couture House seeks experienced Pattern Maker and a Sample Maker. Men’s Production Asst BUYER Fax resume to Dorothea 212-268-8746 Legendary NYC Co. seeks individual Beauty Brands E-mail [email protected] to compile tech-packs, track overseas 57th St. - Full Floor - 3000 ft. , a rapidly expanding revolu- production, spec garments & make Soho Penthouse live / work skylights tionary beauty superstore and full service Product Development approvals. Good communication skills, Bryant Park Duplex - All Great Deals salon/spa is seeking a Buyer. If you are Toy Company Seeks minimum 3 years experience with Sales Exec (Children’s) Prime Manhattan Jon 212-268-8043 an organized person with retail buying Illustrator and Photoshop. A leading children’s wear importer has For Space in Garment Center Director of Product E-mail res to: [email protected] immediate opening for top level sales experience, we want to hear from you. or call Chris at:1-800-631-5407 ext 124 executive with good access and con- Helmsley-Spear, Inc. Development & Design nections to chains and mid-level stores. 212-880-0410 Qualified candidates will be detail oriented, self motivated, and have The individual will be based in NY but Sample Cutter Please E-mail resumes to: advanced planning and organizational skills. Three years of retail buying will oversee and direct plush design Fashion Designer seeks exp’d sample [email protected] Showrooms & Lofts rooms internationally as well as work cutter with knowledge in grading and BWAY 7TH AVE SIDE STREETS experience required, preferably in the beauty industry. Candidates should be highly skilled in negotiation, be familiar with replenishment, and have a with the CEO and President to define custom couture eveningwear. Great ’New’ Office Space Avail project milestones & ensure execution Call 347-439-5200 Showroom Sales ADAMS & CO. 212-679-5500 working knowledge of distribution centers. of plans and schedules for successful Import Co. is seeking a Salesperson for product release. Extensive computer experience and exceptional oral and written communi- Samplemaker its New York Showroom. Experience in The individual will have 5-7 years of Fashion designer seeks exp selling Jeans & Jackets is a must. cation skills are a must. Experience with JDA’s Merchandise Management managerial experience in the design samplemaker for custom couture Tel: 213-7659760 / Fax: 213-7659716 System a plus. If you have the desire to be an important part of the Beauty and production of plush toys, a solid eveningwear. Manhattan location. E-mail: [email protected] track record in R & D concept creation, Great opportunity. Call 347-439-5200. Brands team and are ready to take a dramatic, exciting step in your sketching, pattern making and proto- career, submit your resume to: type construction. Direct or indirect Human Resources experience in related disciplines such Secretary to CEO as fashion, fine arts, illustration, in- Garment Importer seeks organized BUYER dustrial design, licensing, etc... as well and self-motivated applicant with 3 PATTERNS, SAMPLES, 4600 Madison Avenue, Suite 1500, Kansas City, MO 64112 as a familiarity of the newest materi- years of garment experience. Fluent in _ als, manufacturing techniques, pack- English & Mandarin a plus. Must be PC PRODUCTIONS E-mail: human [email protected] aging and industry requirements. literate (Excel, Word, Photoshop) req’d. All lines, Any styles. Fine Fast Service. S(he) must understand the production Fax resume to 212-869-8961 Call Sherry 212-719-0622. EOE process to ensure that designs can be manufactured at a reasonable cost to PATTERNS, SAMPLES, Designer to $125K Min 5-7 yrs exp in allow competitive retail pricing. Jr. blouses, Jr. skirts, Jr. dresses. Must Handbags/ Accessories PRODUCTIONS Strong organizational, interpersonal SUCCESSFUL EVENING WEAR CO IND REPS - AGENTS hang with Fang, Eyeshadow, Speech- Office Assistant and managerial skills are required. Looking for an exp’d individual to run Full service shop to the trade. less, My Michelle, Passport, etc. Inception USA based Major Handbag/Access. Fine fast work. 212-869-2699. General clerical office person wanted Salary: negotiable. a bridesmaid division. Must have Manufacturer, LA & NY Showrooms, to completion. Travel India, China, Europe. for routine office tasks, light customer min10 years experience in this field. Call 973-564-9236 Jaral Fashion Agcy. To reply to this position, please email adding independent reps and agents service duties & data entry. Ideal skill your cover letter and resume to Fax resume to: 212-302-9325 looking to expand offerings with fast set would also incl. Microsoft Office, [email protected] paced fashion and trend bag supplier. Executive Asst/Office Admin Adobe, the use of digital cameras help- Immediate opening for an energetic Are you self- motivated and connected ful, telemarketing & bulk mailing exp. with key accounts, any and all channels, Office Admin/Executive Assistant in Email: [email protected] midtown NYC. You need to support the understand volume selling, FOB & functioning of the office; in addition to OEM opportunities and enjoy making managing the agenda of the Regional money. Regional distributors also Director. The right candidate is detail encouraged. oriented and possesses excellent time Send brief sales history & Accts served management and organizational skills. to: [email protected] Designer (accessories) If you are a positive, dependable person Accessory company looking for a free- with a customer focused attitude and lance designer for variety of accessory can work independently, please send projects. Must have exp in straw bags, your resume and salary requirements & be able to identify emerging trends. to: [email protected] E-mail resumes to [email protected] Order Entry/ Customer Service DESIGNER Great opportunity w/ fast growing babywear/layette importer. Exp a must. Senior Designer Manager/Buyer MAS90 experience a +. Data entry speed/ Los Angeles fashion designer seeks Linda Loudermilk, luxury eco designer accuracy important, must be able to Lead Designer with min 4+ yrs exp as seeking professional Mgr/Buyer for communicate effectively with sales Sr Designer. Exceptional knowledge Melrose Boutique. Min 5 yrs managing staff, reps and customers. Fast pace and eye for garment construction, retail operation w/ buying experience. but pleasant work environment. Outstanding Sales Leader! detail, finishing techniques. Able to Must know designer market. Will work Fax 212-695-0203 Accessories oversee & coordinate a team. Draping directly w/ designer. Great opportunity Email: [email protected] I Will Build Your Business, and Concept Sketching skills required. for growth. Respond to: Well Connected W/All Majors. Respond to [email protected] [email protected] Call 215 360 7411 ®

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