While P&G and Coty Shuffle the Deck, Unilever Does Some Stealth Scooping of Its Own

RR_While-P&G-and-Coty-Shuffle-the-Deck_2“Portfolio reshaping.”

Apparently that’s now beauty-biz code for: “Let us take whatever wasn’t working for you – including some stuff that really and truly wasn’t working for you – and see what we can do with it.”

Presumably that wasn’t the way the talks around Coty’s jaw-dropping, $12.5 billion purchase of 43 P&G brands went down in early July. But to the average armchair industry-watcher, it’s easy to think it might have.

Why? Because along with semi-gems like Wella and CoverGirl (and let’s be frank – if they were genuine growth-potential gems P&G would have hung onto them, as it did with Pantene, Olay and SK-II), Coty, come mid-2016, will be tasked with absorbing not only dozens of tiny underperformers, but also the thousands of employees attached to those brands.

Taking the Talent, Too

And for the moment at least, that’s Coty’s official stance: We want and need the management teams of our newly acquired brands, too.

Of course it does; by snapping up a raft of salon brands (Sebastian and Nioxin, in addition to Wella), it’s instantly in an entirely new distribution channel. And with the purchase of Clairol and Sassoon, it’s suddenly a player in at-home hair color, too. That’s a lot of heads to keep happy; although the percentage of women coloring their own hair bounces around a bit with the ups and downs of the economy, roughly half of U.S. females go the DIY route. The rest are all but welded to their favorite salons.

So what else did Coty nab from P&G? On the cosmetics side, Max Factor, a storied, 106-year-old brand in need of a refresh. And fragrances. Lots and lots of fragrances.

While one of Coty’s stated goals for this bulk P&G acquisition was to round out its existing portfolio, which is heavily weighted toward fragrance, it has nonetheless added 13 scents to its roster.

Talk about a mixed bag. Coty’s new fragrance babies range from the vibrant and viable Hugo Boss, Dolce & Gabbana and Gucci, to the chic-but-small Stella McCartney and Alexander McQueen, and the undoubtedly troublesome Christina Aguilera and Gabriela Sabatini. As for the latter two, that’s the problem with the celebrity-scent game; they’re all too easy to get into, but how – and when – do you get out?

At the Top of Fragrance Mount Olympus

Already a bit of a Goliath in fragrance – thanks to its Calvin Klein, Marc Jacobs and Chloe brands, among others – Coty, with the P&G buy, has solidified its position as the global leader in this category. But what troubled turf! Those tricky celeb scents we mentioned earlier? Coty already owns a sizeable fleet of them, including Halle Berry, Enrique Iglesias and the one that started it all – Jennifer Lopez. For a good decade, in fact, Coty was the go-to for star scents.

In mass-market makeup, Coty, which already owned the edgy, Georgia May Jagger – and Kate Moss-fronted Rimmel brand, will now also be a force to be reckoned with. That is, if it’s willing to invest, invest, invest in Max Factor and tighten up the marketing around CoverGirl.

With a spokesmodel roster bursting to the seams including Sofia Vergara, Pink, Katy Perry, Ellen DeGeneres and Queen Latifah, CoverGirl – long the purveyor of some of the best budget-friendly beauty products of all time – could benefit from a more focused, disciplined message. One that – gasp – maybe even shifts some of the spotlight back onto the merch itself.

Hair, fragrance, makeup. What about skin? Well, as noted, P&G’s biggies in this category – the decidedly buzzy SK-II and the slightly wobbly but highly innovative Olay – weren’t up for grabs. So for now, Coty will just have to keep its laser focus on Philosophy, which it acquired from Carlyle Group in 2010 and has been working very, very hard on of late.

Meanwhile, Over at Unilever…

And shocker of all shockers, Coty might even have to cede a little ground in prestige skincare to the most unlikely mega beauty corp of all: Unilever. Yes, Unilever, home to supermarket skincare brands like St. Ives, Pond’s and Noxema, has suddenly decided it wants in on the high-end treatment action. In the past year, after forming a Prestige personal care unit, it has scooped up REN, Kate Somerville, Dermalogica and Murad in rapid succession.

Oh to be a fly on the wall in Rotterdam, as Unilever plots its stealth infiltration of this red-hot sector. Clearly, there’s wizardry at work here. Not only is Unilever now covering the organic angle with the acquisition of REN, it’s tapping the L.A. celeb market with star aesthetician Kate Somerville, who is developing quite a following in Asia, particularly South Korea.

With Murad, Unilever adds not only a brand with a solid foothold in Sephora and QVC, but also access to Howard Murad himself, a well-regarded skincare doc and professor of dermatology at UCLA. And Dermalogica? Well, it’s only the leading professional and spa skincare brand in the world.

Upsizing, downsizing, coming out of left field and sideways-sizing. The era of portfolio reshaping is upon us.

At Your Service: Two Case Studies

TOP Shop John Lewis combo FinalIn the developed world, retailing remains under siege. As we know, a steady flow of new Internet competitors vie for consumer dollars, frequently undercutting prices of the brick-and-mortar stores. Meanwhile, amidst a sea of sameness with parity products, traditional retailers too frequently compete merely on price. In-store service levels have evaporated in all but the most high-end luxury houses or new entrepreneurial and tech brands, further propelling the “race to the bottom,” an industry trend Robin Lewis coined back in 2012. [Read more…]

There Is No Gap Déjà Vu

gap_RL_RR_7-15-2015More Like A Slow, Sears-Like Descent To The Bottom?

Glenn Murphy exits.  Art Peck takes over.  It matters not who the players are because there has been a revolving door full of them for the past 15 years, all declaring how they would return Gap to its once dominant position as the cool apparel brand for America’s youth.  All of them failed to do so, and there is no reason to believe Art Peck will have any better luck.  Actually, even luck would not be enough to reverse the ultimate fate of this storied brand.

I say this because the brand was driven into ubiquity (the anti-cool for young consumers, and therefore, the beginning of its end) in the late ‘90s and first two years of the Millennium under the watch of then CEO, Millard “Mickey” Drexler.  With a Gap on every corner, so to speak, cool turned to cold and its descent began. Ironically, Drexler would leave the helm of the brand that he guided through two decades of meteoric growth from $480 million in revenues upon his arrival in 1983 as president, to almost $14 billion in 2000, an amazing 2,400 percent increase when he left.  Indeed, his success earned him the moniker of the “prince of all merchant princes.” Unable to right the ship when it started to sink, Drexler retired in 2002. Comp store sales dropped 5 percent in 2000, their first decline since 1989, and then a whopping 13 percent in 2001, with the overall Gap brand down 12 percent. [Read more…]

Staying Hot (AKA The Other Kind of Sustainability): Can Frédéric Fekkai Get His Mojo Back?

lead_frederic_bioIf you’re older than a minute, and in the beauty biz in any way, shape or form, you will remember the epic hotness of one Frédéric Fekkai.

There was another guy named Oribe who was equally epically hot at the same time, circa 1995, and we’ll circle back to him later. But in the spirit of serving short Internet attention spans, our task today will be to focus on Monsieur Fekkai, and how his once ground-breaking product and salon business has changed hands more times than a blackjack whale on a bender in Vegas.

While much has been made of Fekkai’s swarthy good looks and devastating French accent over the years – and there is zero question that both factored mightily into his early success – the fact of the matter is that the guy is really smart and incredibly driven. You don’t get from Aix en Provence with a pair of scissors in your hand to acquisition by P&G for north of $400 million simply by trading on your own charm and pulchritude. The beauty industry isn’t Hollywood. (But then again, judging by all the A-list actresses launching lifestyle brands, Hollywood isn’t even Hollywood anymore…) [Read more…]

Retail’s Walking Dead: These Brands Have Been Revived, But Will They Survive?

zombiesThere’s a hit TV show, “The Walking Dead,”  in which a nasty plague wipes out almost the entire human race, then allows some of the decaying departed to get up, roam around, and attempt to eat the few still-living folks, who from then on spend their days and nights in a constant, terrifying quest for survival.

It’s hard not to see the parallels in retail.

Over the past year or so, several defunct retail brands, like Radio Shack, Fortunoff, and others, have been reincarnated. But unlike in the AMC show,  where we don’t know what’s allowing the zombies to keep stumbling forward, we do know what’s allowing these retailers to start moving again: all the cash sloshing around in the coffers of investors who seem to believe these brands still have a future. [Read more…]

Retail Reality Check

retail_realityOn June 4, 2015, The Robin Report and FGI co-hosted a retail symposium focusing on new approaches and technologies that are changing the way retailing is done. The panel moderated by long time industry icon, Paul Charron, with a cross section of seasoned industry veterans representing brand, ecommerce and luxury retail, had a lively discussion. Despite varied points of view and the irrefutable and growing impact of technology on everything we touch, two lasting truisms of retail were underscored: product and service. What has changed is the way retailers and brands address these requisites to meet new consumer expectations and demands; plus developing the new systems that support communications and commerce. [Read more…]

The Elevation of Denim

denimelevationIt is the Go-To for Going Out

Denim has seen its share of evolution in the 140-plus years since Levi Strauss started selling blue jean overalls. In its modern iteration, it may be the item of choice for the smart, stylish dresser. With the rise of “athleisure” in casual apparel, the denim category is becoming elevated, with designers showing it on their runways, and brands offering it in custom fits, new finishes, and looks that are geared for the club as well as the office.

The Rise of Denim in Workwear

Eric Goldstein, owner of Jean Shop, a bespoke denim store in Manhattan, says a big part of his business is for men who want denim for “going out” or for work. “We do a tremendous amount of raw denim, and you can wear that with a leather shirt or jacket on top,” Goldstein says. “Our typical customer is the more articulate man, like the banker who wants to look casual, but cool and clean. Denim is being worn to work everywhere — New York, London, and the financial world. It’s not just for casual Friday anymore. Part of the staple work wardrobe is dark, crisp jeans. Our customers come into our store specifically looking for it.”

Goldstein’s customers reflect data that show denim remains consumers’ top apparel choice for a variety of occasions, from work to going out to dinner to running errands. More than a third of all consumers (36 percent) prefer denim jeans for work, followed by casual and dress pants (27 percent each), according to the Cotton Incorporated Lifestyle Monitor Survey. Men are significantly more likely than women to prefer denim for work (41 percent versus 32 percent).

WGSN’s junior’s editor, Sarah Owens, says denim has become an acceptable look in the workplace, especially given the premium options now available both in fit, finish, and feel. She says, “It’s quite common now for women to wear a pair of relaxed, boyfriend jeans with a tailored black blazer — creating a high/low aesthetic that has been circulating among Fashion Week street style trends for the past few years.”

Lorna Buford, editor of DenimBlog, says jeans are such a wardrobe staple that consumers will wear denim as a standard work item, unless they have to wear a uniform. “Plus, with the added comfort that jeans now have, it’s a bonus,” she says. Women have the option of pairing them with heels and a dressy jacket or smart sweater, while men just need to think “dark and neat.” AskMen advises male readers to leave their club denim with intricately stitched pockets at home.

The premium denim company DL1961 even has a category named “Office Denim” on its web store to help consumers make the right style choice for their particular job situation. The brand has also added to denim’s comfort factor by introducing lines like “hybrid” “intelligent,” and “DLX” denim that increases movement, retains shape, and even protects from odor-causing bacteria.

“The other direction we see denim headed is a workwear story with raw constructions in rich indigo reworking classic silhouettes in more elongated fits,” Owens says. “This has also been executed in black to give a more contemporary touch to workwear themes.”

On the Streets to on the Go

As favored as denim is for work, it’s preferred even more for shopping or running errands (61 percent), according to Monitor statistics. That’s distantly followed by casual pants (15 percent), athletic pants/shorts (10 percent), shorts (7 percent), and leggings (5 percent).

Click to Enlarge

Click to Enlarge

Of course, the idea of looking fashion forward when shopping or running around town with the kids was made popular by celebrities. Whether it’s Jessica Alba pushing her baby carriage or Justin Timberlake grabbing a coffee, the look is about the right jeans paired with the right shoes and accessories. That may be why more than four in 10 consumers (41 percent) say they prefer to wear denim jeans when they want to look and feel good in an outfit, followed by casual bottoms (20 percent) and dress pants (17 percent), according to the Monitor data.

Of course, looking good is important when going out to dinner, and denim is also the top apparel choice among both men and women combined (37 percent), the Monitor survey shows. That’s followed by casual pants (26 percent), dress pants (17 percent), dresses (11 percent) and skirts (4 percent) for women, and athletic pants/shorts (2 percent).

“The demand for denim in a more formal or ‘going out’ setting has been increasingly apparent, even before the athleisure trend started to gain momentum,” Owens says.

Buford says she sees both men and women wearing denim in a dressier setting. “I still see people wearing their favorite black or indigo blue skinny jeans with heels and blazers — those are popular for going out.”

Denim Hits the Runways

More denim is also being shown in current designer collections. “The designers really promoted denim on the runways for pre-fall and pre-spring,” says the Doneger Group’s fashion director, Roseanne Morrison. “There’s been a ’70s vibe with the flare leg, the one-piece denim coverall, denim dresses. There’s also been some ’80s styles with the high waist and baggier fit. So it’s a new collection of denim looks that are coming out. We’re also seeing some lighter washes and original indigo without stretch,” she adds.

Owens says the runway has had an influence on the denim category, giving it a wider, dressier appeal. Men and women will continue to see it as more of a “going out” item, she says, “as we enter into the more premium aesthetic that is currently being influenced by current catwalk and trade show trends. From the catwalks, we have been seeing denim take on a more premium aesthetic, with elevated and glossy constructions on more sophisticated pieces such as the tailored denim set at Rag & Bone, Bottega Veneta, and Michael Kors.” Owens continues, “This new renaissance for the denim market gives it a polished identity originally established back in spring/summer 2011 by designers such as Celine and Derek Lam.”

501 Ascending

Levi’s is the originator of denim jeans. At the last National Retail Federation show in New York, James Curleigh, Levi’s global president, said the company is focusing on its core, but “going for more.” “There’s this notion of should you just do what is expected or should you do more?” he said. “Well, guess what? We’re going to do both.”

Levi’s is still the worldwide leader in denim. In fact, it tops the list of favorite brands of denim jeans among Monitor survey respondents at 32 percent. Levi’s is continuing its traditional 501 jean, and last month introduced the 501 CT (Customized & Tapered) line. The 501 CT is offered in a range of authentic denim washes inspired by San Francisco and California style, the home of Levi’s and the original 501 jean.

The brand is also expanding both high and wide. At the high end, it’s offering its $750 Lot 1 custom, made-to-measure jeans. At the same time, its Commuter Series, featuring reflective seaming and U-lock storage on the waistband, is one of its fastest-growing denim platforms. “Icons don’t remain icons forever unless you continue to innovate around them,” Curleigh said in his presentation.

Trend Tracking

At the recent PROJECT menswear show at the Jacob Javits Center in New York, many denim brands were on display, including Anonymous Jeans of Los Angeles. This maker featured innovative styles such as a 100 percent cotton skinny fit jean with a sarouel drop -— à la the harem pant. Among the many vendors, buyers could also find denim with waxed and leather-look finishes, as well as jeans in a range of colors.

The evolution toward better finishes and different fits is important, especially as denim is the top apparel item among consumers (28 percent), for times when they want to “be stylish or fashionable,” according to the Monitor data. That’s followed by dress pants (25 percent) and casual pants (17 percent).

Those looks are right on time for today’s customer. “Denim is here to stay,” says Jean Shop’s Goldstein. “And in men’s, the classic 100 percent cotton denim is favored. It’s a product you wear your whole life. You can wear clean and crisp with a jacket and tie, and then three years later use it to paint the house or do some other DIY project. We collect jeans in the store. So people can wear their jeans for years, then trade them in when they buy a new pair. They become vintage. And they all tell a story. And with the new pair, the next story begins.”

Catherine Schetting Salfino
Fashion Retail Reporter

Catherine Schetting Salfino covers fashion and retail. Her work has appeared in the menswear
publications Daily News Record, Women’s Wear Daily, Saks POV, and the Sourcing Journal.

Don’t Fall for It, Macy’s

Beware of The Eddie Lampert/Richard Baker REIT Syndrome

Macy’s is not in the real estate business; it is in the business of satisfying consumers’ dreams as one of the largest retail brands in the world. If Macy’s reduces one iota of focus on doing just that, they do so at their own risk. Therefore, it should not fall for the dubious pitch reportedly being made by some greedy hedge funds that Macy’s should form a REIT (real estate investment trust), an entity to which it could sell many of its valuable real estate assets and then lease the space back to the stores currently sitting on the space. In this creative financing scheme, the REIT profits as Macy’s cost of doing business increases. [Read more…]

Tracking and Winning the Revolution

revolutionHey, are we having fun yet? Let’s think about where we are today. Is it somewhere in the early exciting phase of the retail transformation that we know is possible? Or are we held back by the fear of failing to make this shift and ultimately be snuffed out?

Here is where we really are: At the intersection of the art and science of retailing, converging on technological steroids, serving an omnipotent consumer who expects and demands the satisfaction of their dreams wherever they may be, whenever, how and how often — and instantaneously.

Daunting, complex, disruptive — these are just a few of the ideas describing the awesome challenges facing us in this profoundly transformational era.

Traditional brick-and-mortar retailers across all channels are in the process of seamlessly integrating technology, the Internet and m-commerce into the omnichannel model, while at the same time mining big data, configuring apps, and selecting from the endless stream of experience enhancing gizmos, gadgets and augmented reality for the delight of their shoppers. [Read more…]

The Grooming Boom: This One’s Gonna Stick

Martial Vivot at his salon on West 39th Street in Manhattan, Friday February 11th, 2011.

Mampering. Manscaping. Guy-brows. There are lots of lame new monikers attached to a bonafide beauty movement with big-bucks potential: The rise of guys as committed, trend-savvy – and, dare one say it, glamorous – consumers of product and services.

Have we been here before? Kinda. Since the mid-Aughts, there have been a handful of ship-on-the-horizon upticks in the men’s grooming market, enough to embolden such establishment brand behemoths as L’Oréal Paris and Dove to roll out initiatives like Men’s Expert and Men+Care, respectively.

But while L’Oréal SA and Unilever (the corporate papas of L’Oréal Paris and Dove) can afford to take a flyer on a new product range that may or may not jibe, here’s how you know when the rising guy tide is poised to lift all boats:

A) When tiny niche brands gain traction right out of the launch gate; [Read more…]

I’m Worth it!

Worth Summer Campaign_My House is More Than a HomeBrand’s High-Touch, High-Tech Service Business Model Attracts Busy, Fashion-Conscious Women

As the apparel sector gravitates toward cheaper products, relentless promotions, and declining service, a very different microtrend is taking hold. Direct-to-consumer luxury apparel company Worth Collection Ltd. is providing hands-on service with a high-tech twist — and no discounting.

When she answered the door at the Worth New York showroom on New York’s West 57th Street, Dana Kendrick took only a few minutes to size me up — literally and figuratively. “You’re a size 2,” she announced, “and you like classic, updated styles and dark or neutral colors.”

The stylist ushered me into a beautifully paneled room lined with racks of clothing samples from which she began to pull a selection of items. Then the questions started. Was I looking primarily for clothes for work or for social events? Have I thought about wearing color around my face? What are my most urgent wardrobe needs? [Read more…]

The New Normal: NORMCORE

PrintFirst it was Nikes replacing ballet flats. Then it was Birkenstocks replacing Nikes. Then Patagonia and Tevas became a thing. Then George Clooney’s fiancé was wearing mom jeans. Baseball caps, sports jerseys, mall chic, Jerry Seinfeld. What can we make of the anti-fashion trend that has bypassed hipsters and has translated into real market value (as we saw with this winter’s L.L. Bean boot selling out nationwide)?

More than any style trend, “Normcore” is a pervasive movement among Millennials to appear as bland — and as normal — as possible. It first surfaced in late 2013 in New York-based brand consultants K-Hole’s report “Youth Mode: A Report on Freedom.” In the report, K-Hole described an evolution of Millennials’ legacy in defining themselves as individuals, moving towards “liberation in being nothing special.” This is a very new concept for the second Generation Me — to find freedom in the commonality of underachievement, and lowest net worth. And while this sentiment may come from the Occupy’s I-am-the-99%, it is a decidedly non-political statement, but rather one that is a bellwether ofthe predilections of the Millennial consumer.

[Read more…]