CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL

 The leading publication on the international beauty industry November 29 - December 12, 2018 #179

CONFIDENTIAL

Comment

Inside

Online on top for Black Friday

This year's Black Friday was perhaps hard proof of the large transfer of brick-and-mortar sales to online in the US. Sales in brick-and-mortar stores in the US fell by between 4% to 7% on Black Friday, while footfall declined 5% to 9%, according to RetailNext. However, Adobe Analytics stated that online sales were up 24%.These figures saw analysts call Black Friday an increasingly online shopping spree--even before Cyber Monday, when most deals are done over the web. Online is only set to increase its share of these big shopping moments in the retail calendar. Despite strong consumer sentiment in the US, which traditionally means more shoppers in stores, growth online is shaping up once again to fast outpace that of brick-and-mortar for the upcoming holiday season. In addition, more consumers are not only opting to buy online rather than in store, but are also spending more on the web. Indeed, a key trend of this year's Black Friday was that consumers were more comfortable buying highticket items on the web. Overall, Black Friday this year has been deemed a success and this bodes well for the Christmas shopping period. However, with more sales done online, retailers will have to count the costs of the bait of free shopping or quick delivery, initiatives to entice shoppers into stores and of course the steep discounts offered.

Oonagh Phillips Editor in Chief ophillips@

News headlines daily on @BWCbeautynews

The buzz

2

News roundup

Netwatch

6

Social media monitor

Interview7

Shiseido Americas president & ceo Marc Rey

Insight9

South Korea

Show review

12

Intercharm Moscow

Store visit

15

Beautycounter, US

NEW Get the essential beauty news of the week in one quick-read email every Friday with BW Confidential's

THIS WEEK IN BEAUTY

ALSO IN VIDEO

A video highlight of the week's key news headlines in just under a minute

LL

CCOONNFFIIDDEENNTTIIAALL

The buzz

News roundup

At a glance...

n Advent International may be eyeing L'Occitane acquisition

n L'Or?al appoints new Luxe president

n Clinique launches customizable skincare system

Stay informed with our daily news headlines on

Strategy

Private-equity groups including US- and UK-based Advent International may be looking to acquire French beauty brand and retailer L'Occitane, according to reports. The retailer listed its shares in Hong Kong eight years ago and today has a market value of $2.7bn, says the Financial Times, which has received confirmation of Advent's interest from two insiders and says industry peers may also be considering a bid. Neither L'Occitane nor Advent International have commented on the matter.

Japan's Shiseido has named Grand Slam women's singles tennis champion Naomi Osaka as its new brand ambassador. The global agreement will start with Osaka as an ambassador for sunscreen brand Anessa and clean beauty brand bareMinerals.

US-based Procter & Gamble (P&G) is letting go of the alpha-male image of the past in a new communication campaign to win over millennials for its Gillette brand. Known for its `The Best a Man Can Get' tagline, Gillette is now taking a modern approach to target younger consumers, who are losing interest in the traditional market leader, according to P&G Global Grooming president Gary Coombe. Coombe spoke at a November 19 launch event in Paris for the new Gillette Skinguard razor. As part of its new communication strategy, which is already rolling out in the US, Coombe said the company also plans to focus on sports marketing for Gillette, while its female razor brand, Venus, is to concentrate on what it calls real women, with its My Skin My Way campaign including real women behind and in front of the camera.

Italian fashion house Dolce & Gabbana's founders issued an apology to Chinese consumers via a video posted on social-media platform Weibo following an ad campaign deemed as racially insensitive by the Chinese. Following the controversy, online retailers including , Taobao, and Yoox Net-a-Porter reportedly removed the brand's products from their sites. The videos at the origin of the controversy, posted on the brand's Instagram account, depict an Asian model clad in D&G who is trying to eat traditional Italian dishes such as spaghetti bolognese and cannoli with chopsticks

L'Or?al has teamed up with Swiss technology start-up Gjosa for a system that aims to let consumers use less water when rinsing shampoo. Gjosa has developed a showerhead that can rinse shampoo using 1.5 liters of water instead of the eight liters usually needed, says L'Or?al, while the French cosmetics company has created what it calls easier-to-rinse shampoos. Gjosa's low-flow showerhead uses two liters of water per minute, n n n

- November 29 - December 12, 2018 #179 - Page 2

L

CONFIDENTIAL

The buzz

News roundup

n n n breaking up the flow of water while accelerating the speed of droplets, making for an effective rinse, the company claims. Meanwhile, L'Or?al scientists have developed shampoos that are easier to rinse and applied directly through the showerhead.

Victoria Beckham is launching a YouTube channel dedicated to beauty. In a video with YouTube's new fashion and beauty director Derek Blasberg, Beckham said the channel will feature make-up and styling tutorials.

People

French group L'Or?al has named Cyril Chapuy (pictured) president L'Or?al Luxe and member of the group's executive committee as of January 1, 2019. He will succeed Nicolas Hieronimus, who was appointed deputy ceo in charge of divisions in April 2017. Chapuy joined L'Or?al in 1993 and was most recently deputy general manager L'Or?al Luxe, in charge of international brands. L'Or?al has also appointed Christophe Babule executive vice-president, chief financial officer and member of L'Or?al's executive committee as of mid-February 2019. He succeeds Christian Mulliez, who has spent 36 years at the group and is stepping down for personal reasons. Babule joined L'Or?al in 1988 and is currently administration and financial director for the Asia Pacific Zone.

Est?e Lauder Companies (ELC) has named Amber Garrison senior vice president and global general manager for Bumble and bumble. Garrison was previously ELC vice president, global strategy. The group also announced that Jean-Guillaume Trottier will add Darphin to his responsibilities, now as global brand president for Jo Malone London and Darphin. Anne Troussicot has been named Darphin senior vice president, global general manager. She most recently held the role of vice president, general manager, Est?e Lauder and Origins, EMEA and will step into her new role on January 1, 2019.

France-based Galeries Lafayette Group has appointed Marianne Romestain head of its newly created buying and merchandising department, which encompasses ready-towear, accessories and beauty for retailers Galeries Lafayette and BHV Marais. Romestain's responsibilities include differentiation between the retailers' online and offline stores, strengthening partnerships with brands and developing Galeries Lafayette's own brands. Romestain was previously ceo of Lancel (Richemont Group).

Retail

Coty-owned Covergirl opened its first permanent retail store on November 23, in New York's Times Square. Described as an `experiential beauty playground', the two-level flagship store focuses on digital tools, customization and product discovery. Digital tools include a `virtual greeter' named Olivia, powered by Google platform Dialogflow, and augmentedreality glam stations, by software company Holition, where customers can virtually try on lipsticks by picking different shades from a connected n n n

- November 29 - December 12, 2018 #179 - Page 3

The buzz

News roundup

n n n tray before completing with full virtual make-up looks.The store also features a customization station, where shoppers can personalize a lipstick and/or a make-up bag, plus make-up application by a team of `Covergirl BFFs'.

French department store Printemps has created an area focusing on natural beauty called Le Green Market at its flagship store in Paris. Set at the basement level of Printemps' beauty department, the space stocks cosmetics brands that boast over 99% natural ingredients. Le Green Market features skincare, haircare, make-up, fragrance and nutritional supplements from brands including Tata Harper, Pai, Antipodes, Patyka and 100Bon. It also has an experience bar for product discovery and testing as well as an aromatherapy concept. Another new addition is an in-house tattoo studio (pictured), by tattoo artist and founder of Paris studio D?sol?e Papa (French for 'Sorry, Dad'), Eva Edelstein. Edelstein's trademark is an open space and a focus on bespoke illustrations, created using vegan ink. Both Le Green Market and the D?sol?e Papa tattoo studio at Printemps opened on November 23.

Travel retail

Swiss travel retailer Dufry Group has signed a long-term contract with P&O Ferries to operate stores under the World Duty Free (WDF) banner on board 15 vessels. The operations will include 19 shops on routes across the English Channel, the North Sea and the Irish Sea. The concessions, representing a retail space of 3,600m2 (38,750ft2), are in line with Dufry's strategy of expanding its presence in the cruise and ferry channel.

Dior (LVMH) and Qatar Duty Free have opened a world-exclusive Dior Les Parfums podium at Hamad International Airport (HIA). The activation is designed as a tribute to fragrance creation and includes a virtual journey to Grasse. The installation features a 360? screen accompanied by aromas that take passengers on a virtual trip to Dior's gardens in Grasse. It features the brand's full fragrance catalog, as well as fragrances from the Maison Christian Dior Collection and gift-wrapping stations. This is the fourth Dior Les Parfums installation at HIA in partnership with Qatar Airways Group.

STAY INFORMED WITH OUR

DAILY NEWS SERVICE

News headlines daily on

@BWCbeautynews

Spanish company Puig has run what it calls its most ambitious travel-retail activation for Paco Rabanne in the Middle East. Located at Abu Dhabi International Airport and called Paco Market, the supermarketthemed concept ran throughout n n n

All major news on the industry published every day on our website

?? News headlines complement analysis and interviews in our Beauty Insight and print magazine

? BW Confidential is the destination for keeping up-to-date with what's going on in the industry and staying ahead of the competition BW Confidential, the inside view on the international beauty industry Thewebsite-dailynews BeautyInsight-everytwoweeks ThisWeekinBeauty ? ? ? ? Theprintmagazine-fourtimesayear TheCollector'sGuide-onceayear

L

CONFIDENTIAL

The buzz

News roundup

n n n October in partnership with DFS. Measuring 39m2 (420ft2), the space included barcodes projected onto the floor, a giant, selfie-friendly shopping trolley at its center and brand representatives dressed in retro US-style supermarket uniforms at mock cash-till stations. Interactive features included a touch-screen vending machine distributing Paco Rabanne samples and an iPad shopping game offering chances to win a gift-with-purchase.

Data

Sales of prestige foundation in France grew 4% to 110m between August 2017 and the end of July 2018, according to The NPD Group. During the period, there were 80 new launches in the category, up from 39 the previous year. Liquid foundations were the biggest sellers in the category in terms of texture, up 5%. However, new textures gained ground, with sales of gel formulations increasing by 211%, mousses by 672% and foundation sticks by 93%. Sales in matte finish foundations increased by 38%. NPD also highlighted the increase in new foundation shades, with 330 new colors available in the year ending July 2018, compared to about 100 in the previous-year period. All of the top-five best-selling foundations in selective distribution in France in the 12 months ending June 30 2018 offered at least 15 different shades. The top-five foundations sold in the 12 months ending June 30 2018 were (in alphabetical order): Dior Diorskin Forever SPF35, Est?e Lauder Double Wear SPF10, Lanc?me Teint Idole Ultra Wear SPF15, Lanc?me Teint Miracle Foundation SPF15, YSL Touche ?clat Le Teint SPF19.

Launches

Clinique (Est?e Lauder Companies) launched a customizable skincare system called Clinique iD on December 1. The system includes a hydrating base that can be mixed with an active ingredient to create 15 different possible combinations. The system is based on the brand's Dramatically Different moisturizer, with customers choosing between three textures of the formula: A jelly, lotion or oil-control gel version. One of five different active concentrates in a cartridge format is then inserted into the base to create a personalized product. The concentrates each contain a main ingredient that targets a specific concern. The product is priced at 52.

French brand Nuxe is to launch a new anti-aging range, which it claims improves women's self esteem. The new line is called Nuxuriance Gold and targets older women, and for it Nuxe embarked on a study in collaboration with a neuroscience research lab that showed use of the products result in more positive self-perception. The line claims to firm, densify and add radiance to the skin. The formula boasts four patents and ingredients that are said to be 92% natural. The packaging was eco-designed, is lighter and can be recycled. Nuxuriance Gold comprises four products, with prices higher than the brand's average, in line with its premiumization strategy. The 30ml serum retails at 65, while the 50ml day cream-oil and night balm are priced at 59, and the 15ml under-eye balm costs 46. The line rolls out in January. n

BW Confidential 17 rue Louis Rouquier 92300 Levallois-Perret, France contact@ Tel: +33 (0)1 74 63 49 61 ISSN: 2104-3302 Publisher: Nicolas Grob ngrob@ Editorial Director: Oonagh Phillips ophillips@ Journalist & Copy Editor: Katie Nichol knichol@ Journalist: Monica Defrances mdefrances@ Contributors: Sophie Douez, Alex Wynne, Renata Ashcar, Mayu Saini, Corinne Blanch?, Naomi Marcoulet, Kevin Rozario, Tina Milton Subscriptions 1 year: Beauty Insight (20 issues) + Print Magazine (4 issues) + This Week in Beauty + Daily News + Collector's Guide + Beauty & Travel Retail Special Edition: 549/US$769 subscribe@ Advertising advertise@ BW Confidential is published by Noon Media 513 746 297 RCS Nanterre Copyright ? 2018. All rights reserved. Reproduction in whole or in part without permission is strictly prohibited.

- November 29 - December 12, 2018 #179 - Page 5

Netwatch

Social media monitor

BW Confidential reports on what's being said about beauty on social networks

The topic of fake reviews on social media has come under the spotlight. This follows skincare brand Sunday Riley's admission to posting fake reviews on Sephora's website, and has prompted commentators to demand websites to take a firmer stand to prevent this.

The new Glossier flagship in New York is liked for its Instagrammable setting. Popular features include the Wet Room for sampling skincare products and 'experiential' Boy Brow Room, designed as a tribute to the brand's best-selling brow gel.

Castor oil is said to be the new must-have ingredient. Commentators say castor oil is set to become even more popular than coconut oil, especially in the haircare category, where it has been included in many recent launches.

Benefit Cosmetics' collaboration with homeware brand PBTeen has been liked for its nod to Art Deco and retro styles of the 70s. The blush pink and gold color scheme and beauty-inspired take on products like the Hollywoodstyled vanity mirror (pictured) have also found favor online.

The views expressed in this section are those of bloggers and do not represent the opinions of BW Confidential

NEW

Collector's Guide

Beauty & Digital

more than 100 pages of insight and analysis on

How digital is disrupting beauty

? Artificial Intelligence ? Online sales ? New distribution channels ? Voice technology ? Data and CRM ? China's tech trends ? Blockchain ? Big tech ? The future

Plus all the latest data, industry predictions and trends order your copy by email: subscribe@

LL

CCOONNFFIIDDEENNTTIIAALL

Interview

Shiseido Americas president & ceo Marc Rey*

Digital first

Marc Rey, who heads up Shiseido's Americas business and also oversees the company's Centers of Excellence for Makeup and for Digital in New York sat down with BW Confidential in October to talk about digital, data and social media

How can Shiseido improve profitability in the Americas? All our brands are growing in double digits year-to-date apart from Bare. For Bare we had 180 of our own stores and we are closing almost 100 of them, so that is impacting us. But apart from the closures, Bare at retail is also growing. The issue in the US is the level of profitability. If I just look at the commercial region (so not the make-up and digital Centers of Excellence), we are at between 6% to 9% profitability. In the US we would like to have double-digit profitability. So how am I going to grow? By crossing the portfolio of brands with the channel dynamics in the US, and we now have a rich, well-balanced portfolio of brands and it is a question of putting the right resources behind it. We are also rebalancing distribution channels, as in the US there are lot of changes in distribution. We have closed a number of our Bare stores, increased our presence in self service, where we were already very strong with Sephora and are growing very fast with Ulta. And the most important thing is that we are boosting digital sales--e-commerce and m-commerce is now between 20% and 30% of our sales in the Americas. Online is growing very fast, between +25% and +50% depending on the site, so it is not marginal any more. The problem with the US is that a lot of malls are losing traffic and there is a huge transfer to digital. But with online there is a triple whammy: Growth, profitability and access to consumer knowledge.

What is the ambition for the recently acquired Laura Mercier brand? We think it should reach a billion dollars at retail pretty soon--by 2022. [Sales today are estimated to be around $400m]. The brand is growing 12% year-to-date in the US in a flat make-up market, and it is strong in the UK,Thailand and Korea and we are opening travel retail. There are also a lot of categories we can develop, so I am very bullish on this.

How do you see digital impacting the business? First, digital is mobile. In the US, 83% of beauty buyers use their phone before or during the purchase in-store. Prestige brands are no longer involved in monologue marketing, but are in a dialogue marketing with users and influencers. Digital is not just e-commerce or m-commerce, but social media, data marketing and CRM. In the US, 95% of our media spend is in digital, and in make-up it is 100%. [With digital] you target exactly, you do CRM and you build your database. But data by itself is nothing; what you want is knowledge and action and consumer intimacy. [By exploiting data] you move from just a transaction to a long-term relationship with your consumer.

"Amazon is raising the

bar for everyone. In New York, Amazon orders are delivered in two hours. So Amazon is defining the benchmark for Gen Z and millennials

" Shiseido Americas president

& ceo Marc Rey

Why did you take a minority stake in online beauty retailer Violet Grey? First, we liked the team and we think they have the capacity to create content around beauty products that is very interesting. They are very good at telling stories and we liked the way that they curate assortment. n n n

*At the beginning of this month, Shiseido announced that Rey would also take on the role of chief growth officer from January 2019

- November 29 - December 12, 2018 #179 - Page 7

Interview

Shiseido Americas president & ceo Marc Rey

How do you see retail evolving? There is an evolution of retail. We grew up in an environment where retailers had the consumer information, and that is no longer the case. [Retailers] are going to adapt like everyone. Retailers are very active in digital. There are two ways to do it: Have a multibrand view, or a wrong way focused on price and promotion, which is happening a lot and is a losing battle. The right way is to understand [the consumer] better and have a long-term relationship with her rather than a transactional one or promotional one.

You acquired AI specialist Giaran and MatchCo focused on personalization. Is there a risk in acquiring technology that could become obsolete? In technology there is always a risk of obsolescence. We are not going to always make acquisitions; sometimes we will do partnerships. But in the case of Giaran, we thought [an acquisition] was important, because we think AI-driven AR and VR is major. There are a lot of applications beyond just virtual try on. There is access to information and when I have this information I get into a relationship with the consumer that is not transactional and have consumer intimacy. This is a testament to the ambitions we have. It is a way to think about beauty differently. Our key competitors in a few years will be Amazon and Google.

What is your stance on selling on Amazon? Before even talking about whether we go on Amazon or not, one of the most important things [to realize] is that it is raising the bar for everyone. In New York, Amazon orders are delivered in two hours, and consumers in the US now expect to [receive online deliveries] the next day. So Amazon is defining the benchmark for Gen Z and millennials. Amazon is a force that we will have to deal with one way or another. For prestige beauty, Amazon may want to adapt its model, as many brands today are reluctant to go there as they are not sure that the brand will be presented as it should be. This is an area Amazon needs to address. But there is a dilemma: You want to be where your consumers are looking for your brand--and they are certainly looking for it on Amazon--but you also want your codes of prestige to be respected. Everyone is looking at how to reconcile this. [...] We are in an industry where there is a product with a strong aspirational and emotional benefit, and Amazon needs to find a way to deliver that also.

"Personalization

is a fundamental [consumer] expectation, and it is a also a way to have a better knowledge and understanding of the consumer. Women want personalization, but they want it now, and that is what we need to crack

Is that not against Amazon's DNA of offering consumers low prices? This is the tension. But if you lower pricing in prestige, they are no longer prestige products. So at some stage, one of the equations in the model will have to change so there is a fit. But Amazon's model is evolving and the company does 10,000 things a minute, so if it manages to find a way to respect the prestige codes there could be a way.

" Shiseido Americas president &

ceo Marc Rey

How do you see personalization, especially since the acquisition of MatchCo? We have an app [to create personalized foundation] for bareMinerals, and this will go to almost all of our brands. Personalization is a fundamental [consumer] expectation, and it is a also a way to have a better knowledge and understanding of the consumer. Women want personalization, but they want it now, and that is what we need to crack. This is complicated as it means either putting machines everywhere or delivering right away. Today we deliver two or three days later, but for some women it is too late, so we are trying to figure that out. n

L

CONFIDENTIAL

- November 29 - December 12, 2018 #179 - Page 8

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download