Monday, March 8, 2010

Estée Lauder tackles taboo of showing prices

Estée Lauder Cos. CEO Fabrizio Freda gave an interview with the Wall Street Journal revealing a significant shift in the way the company’s products will be shown in department stores. For the first time pricing will now be visible.

The main reason Freda stated that Lauder wants to show pricing is to illustrate the affordability of the products. This might also make the initial conversation easier for the shy and price conscious shoppers.

For example- Clinique’s Radiance chemical peel product is the most expensive item in that brands line at $55.00. A 2 oz. roll-on antiperspirant is $9.00. The most popular item sold at Macy’s is the 4.2 oz. Dramatically Different Moisturizer at a modest $24.00.

This follows other recent shifts in the way people are buying beauty products. Sephora has grown into a giant powerhouse with 750 stores in 21 countries. It is a force to be reckoned with since it has only been in the U.S. since 1997. The chain is well known for their generosity with samples, a lenient return policy, ease of one-stop shopping, and the option of self-service. Here you can see each product's retail price posted clearly from six feet away. As a way of taking department stores head on it has also opened 155 shop-in-shops inside JCPenny locations since 2006.

There are other reasons to watch Sephora. The cosmetics chain has a two level customer rewards program. Spend $100 dollars and you get a free gift. Spend $350 in a calendar year and you become a V-I-B which means Very Important Beauty Insider. And among the extra perks for this level include invitations to events at different stores. They also get exclusive dibs on new product launches and what is promoted on the company website as “total red carpet treatment”.

Combine all this with recent news of prestige and salon brands being reformulated and offered at mass merchants, like Frederic Fekkai heading to Target where they already sell Bumble and Bumble. So it’s no wonder that a company like Lauder needed to prod department stores to do something to be competitive.

For some time now the design of more inviting cosmetic spaces has replaced the traditional glass fixture counter top that divided buyer and seller. Prada was a leader a few years ago where their space was wide open and fully interactive. Other make-up counters shifted to a more spa / salon environment adding comfortable chairs that replaced barstools.

If all the department stores are agreeable to this shift it could lead to some healthy competition from brand to brand. I have a feeling the GWP promotions are about to become both more frequent and a little more compelling too.

The WSJ interview can be found here:

No comments:

Post a Comment