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Layout within the retail space is also key. The store’s displays should complement the variety of brands offered, while providing direction within the store. “This year, we launched the Dial-A-Dilemma initiative that enabled clients to cite their immediate beauty concern and spin the wheel to fi nd their product solution. Another display device is our Beauty-to-Go section, located near our point of sale that features an assortment of travel-size packages of our clients’ favorite brands and products. This was particularly strategic in light of the travel regulations enforced earlier this year,” said Allison Slater, vice president of retail marketing. In this crowded marketplace, Sephora highlights the importance of the consumer experience in making a retailer stand out.
“I think we’re feeling good about the prospect of adding more brands to the beauty boutique, but also taking some traditional brands from the beauty boutique and putting them in the open-sell environment,” said Glenn Murphy, CEO. The company also expanded its selling space, up 10.3% to 8.2 million square feet. With a thirdquarter profi t increase of 15.1%, this drugstore/boutique format may be a glimpse of the future.
Browsing beauty products online gives customers the ability to read peer reviews and recommendations that provide credible assistance in making fi rst-time purchases. Beauty.com also offers a 100% color-back guarantee for color cosmetics. “The Internet gives people the opportunity to multitask from the comfort of home or work. Since drugstore.com and Beauty.com share a single cart, we allow them to one-stop-shop for beauty needs on both ends of the price spectrum,” said Kathleen McNeill, vice president of beauty, Beauty.com. “People can compare and contrast product benefi ts privately and pressure-free to make their own educated decisions.”
At the same time, the traditional retailer is limited by available shelf space. “As on online retailer, we have the ability to merchandise a diverse range of products without concern for the shelf space for display,” said McNeill. Online retailers often can become a destination for consumers looking for cult or hard-to-fi nd items. The Internet also gives retailers the ability to test services and offers that might not be affective in traditional retail environments.
In the end, this medium is about convenience for the consumer. Retailers need to design their Web sites with this in mind, thus creating a positive shopping experience to keep consumers coming back.
The retail environment has been shaken dramatically by a variety of developments, both local and global. In the mature retail environment of North America, the ripple effects are being felt by brands and retailers trying to balance consumers’ needs and wants with a changing global economy. As a result, alternate distribution channels are emerging, granting greater access to consumers.
Conversely, the traditional channels are altering through consolidation, even as retailers continue to blur the line between prestige and mass market.
“Retailers such as Target and Wal-Mart are creating more and more prestige-like methods and working to create private label brands with names. They also may be trying to buy directly from brands as opposed to finding alternative sources to buy from,” said Beth Ann Catalano, co-founder of twist.new.brand.venture. Department stores are fi nding themselves in the position to create exclusive lines, limiting distribution to stand out from the crowd. At the same time, a unique distribution channel has emerged in Canada, where the drug store meets the prestige boutique. “Retailing has become much more sophisticated due to the high level of competition and the need to differentiate brands on the shelf,” said Laura Setzfand, director of marketing for Jason Natural Products and Zia Natural Skincare. Additionally, consumers have diversified to find the shopping experience that works for them.
The current retail environment continues to erode the image of prestige products, as mass market products become more luxurious and prestige products become more accessible.
“Packaging has become a key factor in the retail market and often plays a signifi cant role in a consumer’s decision to evaluate a product, especially when product functionality is deemed to be equivalent across multiple brands,” said Setzfand. As a result, manufacturers are turning back to department stores and stand-alone boutiques to boost the prestige image of their products and differentiate them from mass-market variants. But as department stores and drugstores consolidate, a few buyers control large but fi nite amounts of retail shelf space.
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