The Italians have landed.
Kiko Milano, a rapidly expanding Italian beauty power, is staking its claim on U.S. shores.
Kiko isn’t the first European beauty format to invade the U.S., which instantly latched onto France’s Sephora. The difference is Kiko comes heavily armed with strong support from parent Percassi Group, a commercial and real estate giant, and with products made by some of the best Italian suppliers. Unlike Poland’s Inglot, which focused only on cosmetics, Kiko’s 1,500 items include all beauty categories, from skin care to hair care and tanning to fragrances.
“There really hasn’t been anything new here in U.S. beauty for a bit. It [Kiko] has four stores now with more on the books and is really shaking things up,” said Wendy Liebmann, the chief executive officer of WSL Strategic Retail.
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According to a beauty manufacturer, the stores are “just killing it” in parts of Europe, “Everyone here is talking about them, worried they’ll siphon off sales. Imagine a store just stocked with Sephora private label at lower prices — that’s what’s creating the buzz.”
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Already a force in Europe with more than 650 stores, Kiko quietly opened four U.S. units since last summer with a fifth planned before the year-end. Industry sources estimate the stores, which are about 1,300 square feet, will pump out sales averaging $1,000 per square foot. “They can be to beauty what H&M, Zara or Forever 21 are to fashion,” said one industry expert who operates retail stores. He thinks Kiko could hit 300 to 400 stores in America. Kiko did not respond to requests for an interview.
The first U.S. Kiko store opened in the high-fashion Westfield Garden State Plaza in Paramus, N.J., amid competition from Aveda, bareMinerals, The Body Shop, Kiehl’s, Inglot, Make Up For Ever, Lush, Origins, Neiman Marcus, Lord & Taylor and Sephora.
Other stores open for business are at the Woodbridge Center in Woodbridge, N.J., the reinvigorated Lincoln Road shopping district in Miami and the Staten Island Mall. Another store will open in Elmhurst, N.Y., and then in New Haven, Conn. While most European shops are on high streets, Kiko is trying out shopping malls and major downtown shopping districts to reflect the different forms of retail in America. Throughout Europe, Kiko often opens in proximity to MAC or Sephora. “In Milan, there are three stores within a few blocks of the Galleria Del Duomo, a major shopping arcade with the likes of Prada and Tod’s,” said one manufacturer who travels Europe extensively. The company, he said, likes to feed off traffic to high-end merchants.
Kiko has plenty of potential, Liebmann said, because the format fits snugly between mass and class. With locations mostly in malls in America, she suggested MAC, Sephora or department store shoppers could be lured by the prices — many items are less than $20 — while traditional mass customers might like the value proposition and the convenience of buying at a shopping center. Most malls today no longer offer moderately priced beauty since drug chains moved out more than a decade ago.
“The beauty business is shifting,” Liebmann said. “Mass is going more prestige and prestige is trying to be more price-appropriate. This is one more beautiful thorn in the competition. And what’s different is this is not a start-up company,” Liebmann said, referring to Percassi, which founded Kiko in 1997 and operates a joint venture with Inditex Group, the force behind expanding Zara in the U.S.
Visits to U.S. stores reveal a slow start to traffic. However, Liebmann said the London Regent Street flagship store she visited last year was “mobbed.” As more stores are unveiled in the U.S., Kiko should gain traction, she said. Added another source, “There’s something to be said for popping in and buying a mascara instead of dealing with all the cacophony of a department store.” The biggest challenge, those who know Kiko said, will be if the products are good enough to wrench loyal shoppers from MAC, Sephora or department stores.
Those familiar with Kiko praise its shopping environment punctuated with blaring music, vibrant graphics, makeup tables for experimentation, mirrors attached to shelves for closer views and well-trained, but not pushy, sales help. A recent visit confirmed the expertise of sales associates: several had formerly worked at Sephora or MAC. In particular, the advisers did a good job telling the quality-manufacturing story and nudging shoppers to high-margin skin care.
Some competitors fret the appeal to young girls and Millennials. “What department stores fear is that moms will buy with them — and their daughters will go to Kiko,” said a U.S. manufacturer.
Trendy, new items come in and out of stores and there are frequent promotions. One shopper recently purchased a Precision Eyeliner, regularly $10, for less than $6 on sale, and a cleansing eye-and-lip wash, regularly $9, for $6.30. E-commerce is a big part of the European appeal, but online shopping is not yet available in the U.S. Items are merchandised by category and there’s great use of angled displays and illuminated fixtures to highlight the huge range of colors.
The timing could be good for Kiko as shoppers continue to pull back on what they spend on beauty. At a recent Cosmopack symposium in New York, Italian and U.S. suppliers as well as retailers murmured about how competitive they feel Kiko will be in America, especially since prestigious third-party manufacturers make some of the items.
Italian publication Corriere della Sera reported that Kiko is expected to have 656 stores total by year-end, breaking out with 310 in Italy, 94 in France, 121 in Spain, 40 in Germany and three in the U.K. The majority of the store openings were outside Italy, a trend that is expected to continue as Kiko sets sights on new markets such as the U.S. The article also suggested the advent of an initial public offering in the next two years.