Behind the scenes in cosmetics areas of department stores, a high-powered game of Monopoly is played every day--whoever owns the most real estate wins. Instead of getting houses and hotels, however, the cosmetics manufacturers acquire counter space in prime, high-traffic locations. And instead of collecting rent, they collect shoppers.
Estee Lauder, Lancome and Clinique have controlled the board for years, commanding the premium positions in highly profitable cosmetics departments. But an aggressive player just made a major move.
Revlon, one of the world's largest cosmetics corporations, has consolidated nine of its divisions at one super-counter, the Nines, as the new merger will be called. It will demand prime real estate too, challenging the other big three for space and location.
Sold in One Area
Instead of being scattered throughout the department, Revlon-owned firms--including Princess Marcella Borghese, Ultima II, Germaine Monteil, Charles of the Ritz, Revlon, Lancaster, Alexandra de Markoff, Jeanne Gatineau and the prestige fragrance division--which includes perfumes such as Bill Blass, Halston and Norell--will all be sold in one area and serviced only by Revlon-trained salespeople.
Robert Nielsen, chairman and president of Revlon's fashion and designer group, said the benefit to the consumer will be improved customer service. "This was a consumer-driven move," he explained.
Nielsen added that focus-group studies conducted by Revlon indicated that some of the biggest complaints from consumers were poor service and the high turnover rate of salespeople behind the counter. Many of the focus-group participants also complained that salespeople are too aggressive.
Typically, cosmetics salespeople receive salaries from the department stores augmented by commissions that are paid by the cosmetics firms. Clerks tend to switch jobs frequently to increase their incomes.
The monetary incentive also results in aggressive clerks who often pressure customers into lucrative multiple-product purchases and pay little attention to the smaller-commission sale.
Nines salespeople will be paid higher salaries and no commission, Nielsen said.
"Having the collections together will allow us to have four to seven salespeople in the area," he explained. "We will concentrate on service. I'm more interested in seeing an increase in the number of transactions than in the single $300 sale. More transactions means we're serving more people."
More Than 400 Colors
The downside is that clerks will be responsible for understanding nine lines of products, each of which has its own identity and inherent strengths. When a shopper wants something as simple as a lipstick, for instance, the clerk will have to decide which of more than 400 colors to show.
At any one time, Nines clerks may be responsible for more than 2,500 products. Because of this, many industry observers are asking how any clerks can be expected to familiarize themselves with that many items.
Salespeople are taught to recommend certain collections for certain needs, Nielsen explained. Borghese is known for its high-fashion design and color products, as well as body-care products, and will be marketed as such at the super-counter. De Markoff will be suggested as the best source for foundation, Ritz for powders and Lancaster for sun-care products. Ultima and Revlon will be promoted for their extensive color collections. Customers will be referred to Monteil and Gatineau for skin-care products.
With this approach, customers could easily end up purchasing products from two or more of the collections, rather than establishing a loyalty to one brand. This doesn't trouble Nielsen.
"I've yet to see the woman who buys all of her cosmetics from one company. Even my wife," said Nielsen, who was president of Prescriptives before coming to Revlon last year.
Does this mean that eventually women will think of the Nines rather than each of the existing brands? Will each of the divisions fade into one mega-brand?
Nielsen says no, that he'll take the General Motors approach, marketing each brand for its own strengths. That approach has worked for Estee Lauder Inc., which owns the Lauder line, Clinique and Prescriptives, each of which is tremendously successful in its own niche.
But Nielsen admits that eventually each of the nine collections will be streamlined.
"We can afford to let some of the products go," he said. But for right now, since many stores have not accepted the Nines concept and still carry some of the lines individually, "our highest priority is to keep each line existing on its own."
Nielsen projects that the Nines will be established in about 175 store locations by the end of 1989. Currently six counters are in place at selected Bullock's, May Co. and Robinson's stores in Southern California.