Elisabeth King reports on major glossies reaching out to retail, Puig buying Jean Paul Gaultier Fragrances, Guerlain opening new global production facility, and Macy's acquiring Bluemercury luxury beauty chain for US$210 million.
Major glossies reach out to beauty retail
Anyone waiting for the death of print magazines could be in for a long wait. There's no denying that advertising has dropped in major markets as TV, outdoor and digital have siphoned off ad spend. But analysts are predicting that this year will mark a turning point for some of the strongest brand names in the world such as Vogue, Marie Claire, Elle, InStyle and more as they use their formidable beauty clout to forge new partnerships with retailers and brands and move strongly into e-commerce and digital.
In the UK, Marie Claire, part of the Time Inc stable, has partnered with Speciality Stores, a new subsidiary of the Ocado Group, the largest online food retailer in the world. Exact details are sketchy, but the agreement is related to the premium beauty and well-being retail business. Consumers will be able to buy beauty and health-related products online and from bricks-and-mortar stores.
The managing director of the new venture is Amanda Scott, formerly head of buying for beauty and accessories at John Lewis, one the UK's leading department store chains. According to Jackie Newcombe, managing director of Time Inc UK's luxury brands; "Marie Claire's influence in the beauty sector is unparalleled, both with consumers and beauty companies, and especially now that the way women are buying beauty products is changing rapidly. Our beauty proposition will reflect those changes and we will offer outstanding service, thanks to the partnership with Ocado, who have expertise in this area without equal".
Beauty is also a huge focus for InStyle magazine, especially on its home turf. The magazine claims that its US readers spent over US$2.1 billion on beauty and personal care products in 2014, equivalent to 9% of total US beauty spending. In a new team-up with JCPenney, Instyle will help to re-brand the department store chain's 850 hair salons.
By the end of the year, 15 existing locations will be re-launched as The Salon by InStyle. Two flagships in Dallas and LA will be upgraded with new equipment, furniture and decor, while the other 13 will receive an image makeover. All of JCPenney's hair salons will be re-branded with the InStyle seal of approval by 2016.
Puig to buy out Jean Paul Gaultier Fragrances
Puig has a long-term strategy to become the global number three in prestige fragrances. The Spanish perfume giant moved closer to its goal with the recent acquisition of Penhaligon's and L'Artisan Parfumeur and has upped the ante further with the announcement that it is in final talks to acquire the intellectual property of fragrances.
Puig became a major stakeholder in the Gaultier fashion house in 2011 but the fragrance license remained in the hands of Beaute Prestige International, owned by the Shiseido Group. Jean Paul Gaultier scents are sold in 110 countries, including Australia, and its two major blockbusters - Le Male and Classique - hold top rankings in several major European markets.
The buy-out price is $101.5 million but due to the fact that the license doesn't expire until June 2016, Puig will have to pay BPI an additional $29 million for the early exit plan. The deal is viewed as a major plus for Puig, who will move close to its target of a 12% global market share in prestige fragrances.
Guerlain opens new global production facility
Guerlain has been in business for 187 years but the global success of La Petite Robe Noire fragrance and the Orchidee Imperiale and Abeille Royale skincare ranges has reinvigorated the heritage French brand. Owned by LVMH, the world's largest luxury goods group, Guerlain exports over 75% of its 'Made in France' fragrances and skincare.
Following the lead of parent company LVMH, who inaugurated a new research and cosmetics centre in late 2013, Guerlain has opened a global skincare and fragrance facility near Chartres called La Ruche - French for the beehive. There will be plenty of buzz as 350 researchers and staff work on product updates and new launches. LVMH's perfume and cosmetics division posted a 5% rise in sales in 2014 to $6.38 billion, led by Dior, Guerlain and .
Macy's acquires Bluemercury luxury beauty chain for US$210 million
Like Mecca Cosmetica, Bluemercury was founded in the late 90s by Marla Malcom Beck and Barry Beck and the growth trajectory has been similar. Bluemercury has a spa services component but the luxury beauty chain stocks 100 brands including , , Diptyque, Laura Mercier and its own private label cosmeceuticals brand, M-61 Laboratories. With six stores in Manhattan alone, Bluemercury now operates 65 stores and outlets in upscale locations across the US, in contrast to the Mecca group's 61 across Australia and New Zealand.
More than fourteen new stores opened in 2014 and Bluemercury is planning to open a further 20 to 30 by the end of this year. A goal that now seems a certainty following its acquisition by Macy's, the largest US deparment store company by retail sales, in a US$210 million cash deal. The buy-out extends Macy's already extensive beauty footprint. According to Barry Beck; "With the mighty weight of Macy's resources, we will be able to accelerate our store penetration across the United States, bringing our specialty store format to urban and suburban markets throughout the country".
Snippets from the wires
- The balance sheets of the big US beauty and personal care multinationals from P&G and are starting to show the effects of a stronger US dollar. Nearly every major currency, including the Australian dollar, has fallen against the greenback in the past nine months. A stronger US dollar drives up the cost of US-made products, which weakens demand in more price-sensitive and emerging markets. Fortunately, a great holiday season in the US and the UK, solid performances from new products such as Pure Color Envy lipsticks and luxury niche brands such as , Smashbox and increased net sales for the second quarter by 1% to US$3.04 billion.
- Coty's revenues slipped 5% for the same period to US$3.1 billion, with mass fragrances taking the biggest hit. Power brands such as Sally Hansen, Rimmel London, , and philosophy strengthened - thanks to new launches.
- Viktor & Rolf have announced they will give up ready-to-wear collections and focus on haute couture. Jean Paul Gaultier made the same move last year for the same reason. Both designers make a motza from their fragrance franchises. In Viktor & Rolf's case, their partnership with L'Oreal has produced global blockbusters like Flowerbomb and Bonbon. Haute couture is, of course, one of the best promotional tools for perfumes.
- Stat of the Week: According to Datamonitor, consumers worldwide spend over US$1 billon A WEEK on colour cosmetics alone.
- To draw more customers into stores in North America, Sephora has appointed a 15-strong PRO team of elite makeup artists. like most makeup experts attached to brands and retailers, they will also help with new product development, share tips on Sephora's social media channels and talk to the media.
