Continuing this weekend's celebration of the life and music of Michael Jackson, Greyson Chance paid tribute to the King of Pop with a rendition of "I Wanna Be Where You Are." Similarly to his approach on the song that turned him into a viral goldmine, Chance reworked Jackson's '70s dance tune into a deeply emotional, piano-heavy ballad. Nicely done, kid. Although we would have preferred an equally colorful ensemble.
NEW LOOK OF BEAUTY: SEPHORA UNITS DEBUT WITHIN PENNEY'S DOORS.
WWD October 2, 2006 Byline: Pete Born, With contributions from Molly Prior Fort Worth, Tex. - Hip urban chic met the broad reach of Middle America here Sunday as J.C. Penney Co. Inc. and Sephora teamed up in a bold attempt to reshape the landscape of beauty.
Penney's was giving a preview of its first new store to contain a Sephora ministore nestled up front in the core of the fashion assortment, the merchandising heart of the 103,000-square-foot Penney's. The 2,000-square-foot Sephora offers a concise array of more than 50 brands, ranging from cool-girl staples such as BeneFit and Bare Escentuals to high-brow dermatologist lines such as N.V. Perricone, with a selection of upscale designer and celebrity fragrances in between.
The new Penney's, located in what will be the Alliance Town Center in the North Fort Worth area, is the first of five Penney's stores set to contain Sephora boutiques, averaging 1,500 to 1,800 square feet each.
The Fort Worth Sephora is slightly larger, partially because it is the only one of the five to be built in a new store. The other four Sephora boutiques, which will open Thursday, have been installed in existing Penney's units. The Fort Worth location and 19 other new Penney's stores around the country will be unveiled officially on Friday.
Myron E. Ullman 3rd, chairman and chief executive officer of the $18.7 billion chain, pointed out that this is the heftiest round of new store openings that Penney's has mounted since the Seventies. During an interview last week about the joint venture with Sephora, Ullman stated, "The transformation of J.C. Penney into the preferred shopping destination of Middle America is taking a big step forward." Ullman has been a believer in Sephora since the late Nineties when he oversaw the French beauty perfumery as president of the selective retailing division of its parent, LVMH Mot Hennessy Louis Vuitton. And ever since taking the top spot at Penney's in late 2004, he has been determined to light a fire under the venerable chain and generate buzz. In his mind, one of the striking points was beauty.
The lack of a fully articulated cosmetics and fragrance department was a "big void" in the chain's merchandising map, he said. With Sephora in the store, customers will visit more often, stay longer and spend more, he predicted.
Ullman enlarged upon that idea in a later statement: "Our initiative with Sephora is a clear reflection of the transformation under way at J.C. Penney as we seek to build an emotional connection with our current customers and bring new customers into our stores and onto [our Web site]. Our customer has been telling us that she wants a beauty and cosmetics selection that is new and exciting and within her reach." He then said Sephora was chosen because it is "the most revolutionary, innovatory retailer in the beauty industry." While industry observers have pointed out that Penney's and Sephora's core customers differ starkly in their demographics, they match up perfectly in spending patterns. According to Penney's research, its customer spends $650 a year on beauty, generally in competing stores. Sephora found its customer spends exactly the same amount, Ullman added.
David Suliteanu, president and ceo of Sephora in the U.S., views the marriage with Penney's as "a brand-enhancement opportunity." Eyeing the midtier department store chain's tally of 50 million customers, Suliteanu said the main payoff will come in being able to attract "many of those women who for one reason or another haven't been able to visit Sephora. Millions of women do not have a beauty option." Suliteanu clearly was drawn to the prospect of pairing Sephora, which has succeeded in freestanding stores with its beauty-expert persona, with one of the largest and most successful midtier department stores in the country. That opens up a vast audience for Sephora. "It's a big idea," he said. "It's not about opening a number of stores." Suliteanu noted that another important dimension is the Internet. Sephora's Web site, which some industry observers view as the biggest prestige portal in beauty, already is linked to the Penney's site, which does more than $1 billion a year in sales.
Many of the vendors also see the merits of the coupling. Shashi Batra, a former Sephora executive who helped found the chain in the U.S. and currently is the new president of Perricone, said Sephora now will be able to attract those shoppers who before tended to visit only those retailers that offered a multitude of merchandise categories, not just one. As for Penney's, the retailer will inherit "a whole new customer from a discretionary income-level standpoint." He also praised the department store's slick new ad campaign.
"Penney's is making Middle America cool," he said.
Jean Ford, co-founder and co-creator of BeneFit, noted, "I think that Middle America defines for a lot of women how the rest of the world shops. The coasts are beginning to catch up." Ford pointed to the variety of merchandise and mix of price points at Penney's. "A woman who buys an inexpensive bath towel will buy a $15 lipstick," she noted. "But a woman buying a $30 bath towel won't buy the $15 lipstick, she'll go for the $25 brand." She added, "It's good for our brand. Anytime we have the opportunity to cross-pollinate with other labels and other economic strata, it is wonderful." Terry Darland, senior vice president of sales and education for Dior, another LVMH subsidiary, noted that Penney's 48-year-old-plus customer makes a stark comparison with the Sephora clientele, 55 percent of whom she said are ages 25 or younger. "It will be interesting to see if they can get their young customer to walk into the door," Darland said. "It also will be interesting to see how the older moms and the grannies react." Suliteanu conceded Sephora previously had a youthful image. "But it's no longer a playground for the young. It's now a playground for all women," he asserted, stressing that Sephora's fastest-growing customer group has been women over 40 and 50 years old. Likewise, skin care, a hit category with Baby Boomers, has been one of the store's largest and fastest-growing classifications. see here sephora coupon code
The other four Penney's stores offering a Sephora store-within-a-store opening this week are in the Queens Center Mall in Elmhurst, Queens, N.Y.; the Glendale Mall in Glendale, Calif.; the Aventura Mall, north of Miami, and the Arden Fair mall in Sacramento, Calif. Fort Worth is one of Penney's new prototypes that is not built in a mall, and the Queens Center does not contain an existing freestanding Sephora store. The Sephora inside the Penney's store there will measure 3,000 square feet. Ullman noted that the absence of a competing Sephora unit in the Queens mall will give the Penney's-Sephora combo a good test. The other three malls all have freestanding Sephoras. this web site sephora coupon code
On average, the Sephora boutiques will be roughly one-third the size of an average 4,500-square-foot freestanding Sephora store. At 2,000 square feet, the Fort Worth prototype is a little bigger than average.
Suliteanu said the assortment has been edited into "the all-star team, category by category," but the merchandising approach has not been altered from the chain's freestanding stores.
In Fort Worth, Sephora managed to present the essence of one of its freestanding stores with sharp editing. According to executives, the store-within-a-store contains 3,000 stockkeeping units, compared with 8,000 sku's for an average Sephora. There are more than 50 brands merchandised in a pattern reminiscent of other stores, although the black signature is not evident.
The Sephora October theme, "Royal Flush," is emblazoned across the gondolas and the corporate Sephora mood music plays inside the shop. BeneFit and Stila are in front, followed by other hip and trendy makeup brands including Bare Escentuals, Too Faced, Hard Candy, Lorac, Cargo, Urban Decay, Smashbox and Philosophy, as well as the Sephora house brand.
Women's and men's fragrance include fashion brands such as Calvin Klein, Hugo Boss and Donna Karan, as well as the inevitable celebrities such as Britney Spears and Hilary Duff. There's a men's section with brands such as Anthony and a women's skin care wall. All the major beauty product categories are represented.
Talking about the Penney's layout, Suliteanu observed that the boutique offers advantages over regular Sephora stores in that there are entrances in four directions at Penney's, rather than just the usual front entrance in a freestanding store.
Ullman noted, "We hope the customers won't know the difference between a Sephora in Penney's and Sephora in a freestanding store." Penney's expectations for the new initiative are reflected by the fact that the Sephora boutique is located in the merchandising core surrounded by career and contemporary apparel, fine jewelry and handbags.
As part of Ullman's master plan for Penney's, seven merchandising categories have been targeted as focus businesses that would yield above-average productivity: Women's sportswear, men's sportswear, bedding, women's footwear, children's footwear, children's apparel and intimate apparel. After the Sephora deal was announced, beauty became the eighth focus. Neither Ullman nor Suliteanu would give a sales projection for the Sephora stores-within-stores.
"We believe in productivity," Ullman joked. "We tried it both ways, and we prefer this way." He did concede that Penney's management would be "thrilled" to match the Sephora sales-per-square-foot average in its own freestanding stores. Penney's average was $221 per net selling square foot last year. Industry sources estimate Sephora generates $1,000 to $1,500 a square foot.
The Penney's chairman said the second round will roll out in the spring with Sephoras in 19 stores, nine of which will be new, and the remainders renovations. In 2008, the expansion will "ramp up," Ullman said. He envisions installing Sephoras in Penney's new stores, as well as in renovations of its major existing stores. The 1,020-door chain plans to open 50 units a year for the next three to five years.
Ullman clearly is a believer in the concept. When asked how much time he would allow the experiment to work before rendering a verdict, Ullman replied he doesn't see it as an experiment. His final answer: "Till death do us part." Suliteanu was more cautious. "We've got to be careful not to get ahead of ourselves," he said. Beyond the second rollout next spring, the two partners are still hammering out plans for the second half of next year. But he stated that "2006 and 2007 will be the learning years. We then have to take what we learned and step up the pace in 2008," which he agreed would be "definitely a ramp up." Suliteanu maintained, "We've got to make sure that we have the operational model where we want it." Meanwhile, Sephora will continue with its own independent expansion program. The chain now has 131 freestanding stores in the U.S., with plans to open at least 24 new units each year for the next several years, Suliteanu said.
Perhaps he seemed a bit cautious about the Penney's venture because the relationship between the two retail organizations is highly complex, consisting of working hand-in-hand. Sephora provides the vendors, concepts and merchandising, but Penney's runs the stores. So Penney's is in charge of buying and replenishing stock, but its personnel work out of Sephora's San Francisco headquarters, Suliteanu said.
"We own the product, and they assort it," a Penney's spokeswoman said. Similarly, Penney's hires the staff, but Sephora does the training, although Ullman talks proudly of the department store's customer-satisfaction ratings for its service.
"Mike and his team are superb to work with," Suliteanu said, noting that, "in the beginning, when you don't have results, you have to trust a strategy. I can't say enough about Mike. It really now is at the point of a love affair between the two organizations." Suliteanu declined to discuss the financial details of what observers regard as a partnership, not a lease arrangement or licensing deal.
Ullman made sure to allay any possible skepticism among vendors concerning any impact on their images. He admitted he met with Sephora's decidedly more upscale vendors to assure them that Sephora in Penney's would have just as high of a quality presentation as in freestanding Sephora stores. Although he came out of the process feeling optimistic, not every vendor signed onto the program.
During a conference with Wall Street investors in early September, Dan Brestle, chief operating officer of the Este Lauder Cos., said the Aramis Designer Fragrance Division agreed to participate in the Penney's venture, but Clinique, which is distributed in freestanding Sephora stores, has decided to sit it out. Brestle questioned whether the mix of brands would mesh with the clientele, which could be an unknown combination of young and old.
But Darland of Dior thinks that, if the Sephora units could double the average Penney's productivity without cutting into the business of the freestanding Sephora stores in the mall, it would be "a home run." Dior is distributing its fragrances, not its beauty lines, in the Sephora units, partly because Penney's already had been stocking Dior fragrances.
The Sephora venture will be Penney's sole beauty vehicle. Fragrances and bath and body products are still sold within the chain, but Ullman said those businesses will be absorbed by Sephora as the concept spreads. Penney's also operates hair salons in nearly 900 of its stores.
"This is a major event for J.C. Penney that will enhance its image greatly, particularly with younger consumers," said Bernard Sosnick of Oppenheimer & Co., referring to the rollout of the five Sephora boutiques this season. "Penney's has always been handicapped by the absence of branded cosmetics. Until now, department stores have had a lock on branded cosmetics in the mall." He added that Penney's will give cosmetics brands a foothold outside the mall, as well.
He said Penney's already attracts younger consumers with brands such as Arizona denim and a popular juniors department.
Another analyst, Michelle Clark from Morgan Stanley, said, "This is a big positive for J.C. Penney." She added that, based on the retailer's research, 50 percent of Americans have an outdated image of what Penney's is. "Having a brand like Sephora with great brand equity will help awaken the consumer," said Clark.
Perhaps that is why Ullman likes to say, "Retailing is a contact sport. It's a team sport." Caption(s): The new J.C. Penney's. / Sephora's October theme is Royal Flush. / Myron E. Ullman 3rd. / David Suliteanu / A BeneFit display. / Skin care lines the walls. / Lashes take an end cap. / Urban Decay brightens things up.