Related Articles
Clinique plans to blaze a new retail path in Canada that could provide a bit of relief from claustrophobic U.S. department store consolidation.
The Estée Lauder Cos. brand, which according to the company is the number-one prestige beauty brand north of the border, has entered into a long-term agreement with Canada’s largest drugstore chain, Shoppers Drug Mart.
As part of the deal, Clinique will begin to roll out to the drugstore’s Beauty Boutiques, assisted-sell departments that stock a host of prestige brands, including Lancôme, Guerlain and Christian Dior.
“Clinique is excited about entering the Beauty Boutiques in Shoppers Drug Mart,” said Lynne Greene, global president for Clinique. “We join other prestige cosmetics companies in this venture. We are now going to be able to reach a remote customer who has been asking for Clinique for years.”
There are plans for at least 10 Beauty Boutiques to carry a 9-foot section of the brand by next fall; Clinique will enter the first store by December, said Debra Hartwell, field sales vice president for Clinique. Commenting on the unhurried pace of the rollout, Hartwell said, “It’s what we felt was right for the brand.” Shoppers Drug Mart currently sells a number of Lauder’s fragrance brands, including Sean John, DKNY and Tommy Hilfiger.
But for some, the move isn’t bold enough. Lehman Bros. analyst Lauren Lieberman wrote in a research note Thursday, “The pacing of the Clinique rollout does not exhibit much of a commitment or particularly high conviction from Estée Lauder.” She continued, “If anything, the company’s prolonged reluctance to participate in the Beauty Boutique concept confirms our thesis that Estée Lauder’s strategy is driven more by risk aversion than the pursuit of meaningful growth.”
However, several analysts applauded the move, and said that because Shoppers Drug Mart is an established purveyor of prestige beauty brands, it could prove to be a more prudent alternative than setting up shop in J.C. Penney’s Sephora boutiques.
During an investor conference hosted by Prudential Equity Group last week, Dan Brestle, chief operating officer of the Estée Lauder Cos., said that Clinique would not participate in the Penney’s venture.
You May Also Like
Shoppers Drug Mart, a chain of nearly 1,000 stores across Canada, bears little resemblance to the average U.S. drugstore, and places a greater emphasise on beauty. Its Beauty Boutiques are awash in white, from the titled floors to the lighted wall displays. The minimalist setting is complemented by black-clad sales associates, who make product recommendations in all brands. Cosmeticians note shoppers’ purchases in client books to keep track of what they’ve purchased, said a Shoppers Drug Mart spokeswoman. She added that one out of every two women in Canada is a member of the chain’s Optimum loyalty card program.
Shoppers Drug Mart expects to end the year with nearly 100 Beauty Boutiques and plans to open 40 to 50 more in 2007. The drugstore chain opened its first boutique, which is located adjacent to its stores, in 2003 to gain a foothold in prestige beauty.
The experience is similar to a Sephora store, noted Hartwell, adding that next month, Clinique will be launched in its fourth Sephora store in Canada.
Clinique’s Canadian expansion, however modest, signals a move in the right direction, noted several analysts. “And, while we certainly do not expect to see Clinique on shelves at U.S. drug retailers any time soon, we are nonetheless encouraged that Estée Lauder Cos. appears to finally be thinking ‘out of the box’ at bit when it comes to one of their core but mature and slower-growth brands,” Citigroup analyst Wendy Nicholson wrote in a research note Tuesday.
Clinique has committed to 10 doors initially, but should it widen its scope to all 100 Beauty Boutiques, Nicholson estimated it could generate an additional $20 million in sales.
Morgan Stanley & Co. analyst William Pecoriello stated that the additional stores are not likely to have a material impact, but that the move is a positive sign. “Recent initiatives [BeautyBank] have gained modest traction, but selling Clinique in Shoppers Drug Mart’s Beauty Boutiques and accelerated MAC store openings suggest that a greater focus on expanding distribution may be realized,” wrote Pecoriello.
He added that he expects the brand’s productivity in Shoppers Drug Mart will be closer to that of its Sephora stores, rather than its department stores sales. During his talk at the Prudential conference, Brestle said that, on average, Clinique generates sales of $150,000 per Sephora store, compared with $900,000 per department store.
Clinique is sold in 224 doors throughout Canada, including 98 Bay stores, 109 Sears units, nine Holt Renfrew doors, three Sephora doors and five independent boutiques.