Forever 21 enters the beauty space

The Forever 21 team is testing a new beauty concept (“Riley Rose”) in a number of GGP malls around the country. I commented at RetailWire about this news before seeing one of the prototype stores:

As the article says, the beauty space is crowded and getting more so. New entries like Riley Rose point out the core issue: Weak traffic in department store anchors (and their aging demographics) force the cosmetics business to find new avenues. Sephora and Ulta have been the biggest players so far, but don’t ignore the huge beauty business being done by discounters, drug chains and even Amazon.

So the jury will be out until Riley Rose opens its doors. (One of the first locations is at the Mayfair Mall here in Milwaukee, part of the GGP rollout.) Will the Forever 21 customer recognize Riley Rose as a spinoff? And will Riley Rose look and feel different enough from Sephora to succeed? Stay tuned.

Postscript: I shopped the Riley Rose location at the Mayfair Mall in December, and it’s a fresh alternative to Sephora and traditional mall anchors’ cosmetics departments — complete with an assortment of snacks and toys. I expect to see the concept evolve and expand over time…it was definitely attracting traffic and shoppers.

Discounting finds the cosmetics department

A topic near to my heart, from a recent RetailWire panel discussion:

Speaking as a former buyer of cosmetics (going back to 1980) and then as a merchandise manager with oversight of the category, the beauty business has been the last refuge of full-price selling in department stores. But the temptation to put these goods on sale has migrated from discount stores and mass merchants to those department stores — with the added impact of Sephora, Ulta and online sales. And like anything else related to price promotion, retailers will find it hard to stop taking this particular drug once they start.

A long time ago, cosmetics fed off the traffic that the traditional department stores enjoyed. Then they became “headquarters” businesses in their own right given the strength of brands like Lauder, Clinique and Lancome. Eventually customers were trained to “wait for the gift-with-purchase,” just as they were trained to “wait for the sale” elsewhere in the store.

Those legacy brands are aging, just like the legacy department stores that carry them. This pattern is being repeated throughout the retail industry and the entire CPG world. So the conventional wisdom — that discounting cosmetics will only commoditize the business — may be true but may not be relevant anymore.

Can JCP leverage its Sephora success?

It’s probably note the first time (on RetailWire or elsewhere) that I’ve talked about Sephora at JCP. It’s clearly a win and continues to be rolled out or expanded in more and more locations. So how does Penney use it to attract new shoppers and convert them to JCP loyalists? Here are some recent thoughts:

When Mike Ullman (formerly of LVMH) partnered with Sephora (owned by LVMH), he realized that JCP needed a critical mass of cosmetics even though the legacy department store brands like Clinique, Estee Lauder and Lancome wouldn’t sell Penney. (Lancome is now part of the Sephora assortment.) At the same time, Sephora was growing as a mall-based alternative to the anchor stores’ beauty departments with a unique approach to open-sell layout and fresh assortments. It’s turned out to be a win for both companies, especially as those traditional department store anchors lose share and traffic.

Certainly omnichannel is another opportunity for JCPenney, as Amazon continues its inroads into the beauty business. But perhaps the biggest unmet opportunity for JCP is to convince the (younger) Sephora customer in the store to buy more apparel, shoes and accessories on her visits to the beauty department.

And to add some recent comments posted after a store visit, there is visible sign of improvement in JCP’s assortments:

I’ve been critical for several years of JCP’s women’s assortments — too many brands, too many styles, too much overlap between brands. But credit where due: I shopped a Penney store in the past couple of weeks on behalf of a consulting client, and I saw a marked improvement in key item focus and brand clarity. Shoes were merchandised in a more effective way, and fashion jewelry looked improved too (although not yet handbags).

Penney promoted its men’s GMM last year to the head merchant position, and if what I saw is any indication, he’s got things heading in the right direction. It’s a small sample size but perhaps a leading indicator. JCP isn’t going to solve its sales problems until it figures out how to drive its apparel business, no matter how well it’s doing with Sephora or even major appliances.

Can JCP keep expanding Sephora?

Penney has been aggressive about expanding Sephora shops to its full- and mid-sized stores, even while rebounding from its missteps in 2012-2013. The question posed on RetailWire is whether JCP should expand the concept to its small-town, small-footprint locations. Here’s my take:

I regularly shop a midsized JCP store in Menomonee Falls, Wisconsin. (The home of Kohl’s headquarters…not coincidentally.) Penney built this and other roughly 90,000 square foot locations before the Ron Johnson era, to see if it could operate Kohl’s-sized off-mall stores successfully. This location does contain a Sephora shop, although not as big as the one just installed at a local anchor store in a Simon mall.

I think it’s essential that Penney and Sephora develop a more “curated” version of their collaboration for the many even smaller JCP stores around the country. It’s arguably the most successful part of Penney’s business for the past several years; in many of the smaller communities where these stores are located, Sephora will be the only game in town for shoppers who want more than their local discounter can offer.

Target tests more staffing in the infant department

From RetailWire, my point of view about a news story that Target is testing more staffing in its infant department. It’s a small-scale test, so there is no harm in experimenting — something that Target is known for:

A ten-store test is a relatively risk-free way for Target to study the economics and payback of the extra expense vs. incremental sales. But the store needs to be careful about expanding full service areas too fast or too broadly, if it is also committed to competitive pricing and cost management. (And the Geek Squad test was ended, as RetailWire reported a few months ago.) Areas like cosmetics seem to demand at least some assisted self-selection, if Target plans to gain share vs. competitors like Sephora and the big drug chains.

“Store within the store” idea gains traction…a good thing?

How useful is the “store within a store” idea? Retail Wire panelists recently weighed in:

The answer to the “store within the store” concept is, “It depends!” For example, Sephora has given JCPenney some critical mass and credibility in the cosmetics business that it was unable to achieve on its own, and it continues to surprise me that they have not rolled out this initiative faster. For other areas, such as toys, it makes sense for a retailer who is not a “category killer” to give itself the halo effect of a well-known specialty concept.

On the other hand, the concept can be carried too far. I still believe that traditional department stores have taken the European-style idea of branded “shops within the store” too far in apparel areas, causing a lot of duplication of assortment and navigation issues for consumers.