August 26, 2008
CVS Creates Luxury Beauty Concept
CVS is following the lead of Canada’s Shoppers Drug Mart with a new luxury beauty concept store that will feature brands normally found only in department stores.
The new store dubbed Beauty 360, which makes no mention of a connection with CVS, will have a footprint of between 2,500 and 4,000 square feet, according to a report on the Women’s Wear Daily website. The locations will either be established as a store-within-a-CVS or at an adjacent building to a CVS Pharmacy.
CVS plans to open the first pilot store somewhere on the East Coast by the end of the year with another location opening a few weeks later on the West Coast.
Unnamed sources told WWD that the first two locations would be in the nation’s capital and in Sacramento, Calif. The drugstore chain is said to be looking to open 100 Beauty 360 stores in the next year, eventually growing the concept to between 500 and 1,000 locations.
CVS is not the first North American drugstore chain to follow the beauty store strategy. Shoppers Drug Mart, the largest pharmacy operator in Canada, announced in March that it was also opening an upscale beauty products format. It has operated its Beauty Boutique store-within-a-store format for eight years.
Cheryl Mahoney, vice president of merchandising for beauty for CVS, told WWD, “Initially, we will overstaff [the concept] to make sure we get the service level right.”
CVS is also considering adding “express services” such as manicures and hand massages to make Beauty 360 a destination stop, said Mary Lou Gardner, the senior category manager for beauty at CVS, who is heading up the Beauty 360 concept.
Ms. Mahoney is looking for big things from Beauty 360. “Sixty percent of the female population lives within 5 miles of a CVS store,” she said. “One of the things that has made CVS a success is listening to our customers. She wants to shop where she wants to shop. She’s buying mass cosmetics and she’s also buying prestige.”
Discussion Questions: Will Beauty 360 be a winning concept for CVS? Do you have any concern that CVS is launching the concept at a time when the economy faces serious challenges?
BrainTrust
Recent Discussions
Discussion Questions
Poll
CVS is THE right US drug store chain for this strategy. Their more upscale, professional female shopper base is seeking simpler ways to get the cosmetics she wants from stores that fit with today’s value orientation. With department stores struggling due to economic pressures, CVS might actually be doing this at the right time to make shoppers feel better about spending on small pleasures at their favorite drugstore.
With my recent relocation to Hong Kong, I’ve spending a lot of time walking stores, particularly high end, prestige shopping. In the cosmetics and HBA areas, you get a tremendous level of service, something the customer who spends the kind of money they do, expect.
CVS or, for that matter, any retailer who intends to include high end beauty into their store needs to consider the personal service factor of the department. Location and store design are important, for sure, but making the customer feel important, and insuring that this purchase is more important than a generic purchase or choosing from the national brand selection has got to be key.
Bravo CVS! They know their shoppers and the zip codes, where beauty stores will pop.
These stores will be alternatives to mall stores. Why drive to the mall and fight the traffic when you can get high-end beauty products in your backyard? Further, the shopping experience can be more leisurely and indulgent. Women don’t want to spend a lot of time browsing lipstick shades while other shoppers are jostling them to get to the hemorrhoid creme.
Here in Sacramento, where one of the initial Beauty 360 stores is scheduled to open, they’re going to have a difficult time. You see, the women here are already naturally beautiful and require little or no makeup. Must be something in the water. Also, I was puzzled by the juxtaposition of two statements in the topic: “no mention of a connection with CVS” and “locations will either be established as a store-within-a-CVS or at an adjacent building to a CVS Pharmacy.” Boy, that certainly separates Beauty 360 from CVS. No one will ever make the connection.
I really applaud the concept of initially over-staffing the pilot stores (or stores-within-stores) and then drawing back on employee numbers as warranted. Overstaffed stores are also great training grounds to infuse the Beauty 360 culture into staffers who can then go on to open new stores and pass the culture along.
This could be a winner, for several reasons: First, give CVS credit for an aggressive real estate strategy that might allow a much faster rollout than Sephora has been able to manage, in more cost-efficient locations. Second, the market for prestige cosmetics (especially age-fighting treatment) is likely to continue growing even as traditional department stores’ market share is shrinking. There is no doubt that a time-starved customer would welcome an alternative place to shop for beauty outside the mall.
It looks like CVS has already made some smart strategic choices (regarding staffing, store ambiance, etc.) as it develops the Beauty 360 concept. One of the keys to success will be convincing the prestige brands like Lancome and Clinique to get on board, in order to provide the kind of brand leadership sometimes missing at Sephora.
This is a double edged sword for CVS. Beauty Boutique at Shoppers is very successful and really separates itself from the competition. This could be a good margin maker for CVS. Is this the right time? Probably not but we always want to think 2 steps ahead in retail and the economy will not be bad forever.
Luxury items tend to see huge rebounds after an economic downturn so CVS should be able to capitalize on that. My only suggestion is to make sure that strict loss prevention techniques are in place. Beauty Boutique stores do not lock up items and as we know, theft always increases in amount and aggressiveness during bad economic times.
Depending on price point, this will be a success because of convenience. Women will try it out at department stores and get replenishments through CVS; easy in/easy out.
Offering a wider variety of beauty supplies and services is an idea that certainly could work since so many women purchase cosmetics at what used to be pharmacies. However, going upscale and bringing in expensive brands from department stores is not likely to work any better at CVS than it did at Walmart. People purchase cosmetics at drug stores rather than department stores because of a lower price point. Creating higher price points won’t increase sales. Offering a wider variety of beauty products and services at a reasonable price point could be effective.
Retailers have to plan for future success and can’t afford to bury their heads in the sand. Personal care and cosmetics happens to be an area where consumers will spend a bit more, even during a downturn. That’s why Target, Walmart and Walgreens haven’t backed off of their higher-end and more expensive organic lines and in fact are plumping up their better offerings.
Target is in the process of launching a revolving makeup artist-driven line that follows the premise of their high-end Go International program in apparel.
It was smart of CVS to create a dedicated concept since higher end lines are increasingly present in the competition. For CVS to just sprinkle in a few in their existing stores would not make much of a statement. A surprising number of upscale launches are in the works in other categories right now including J. Crew’s new men’s concept, the Liquor Store which will feature bespoke fabrics and details at a relatively affordable (though certainly not cheap) price point, and the long-awaited Norma Kamali collection at Walmart should be hitting stores any day.
This is another indication as to why CVS is the retail chain that everyone should be watching. They are willing to take risks, try new things, and push the envelope a bit beyond traditional drug retailing. I’m sure that CVS has watched with envy the success and proliferation of stores opened by Sephora, Ulta, and Beauty Brands, and they want a piece of this upscale pie.
It is hard to convince women to pick up their beauty products at the same place where you can buy a Snickers bar, so creating a separate upscale store makes a whole lot of sense. This move seems to have success potential written all over it.
Shoppers Drug Mart has done well with their Luxury Beauty concept–knowledgeable beauty consultants providing a high level of service. The location of these stores has proven to be an important part of the mix, making the products more accessible rather than fighting crowds at the mall. The Luxury Beauty section would fit in any higher end department store. Busy women have been stopping in at Shopper’s to pick up pantry staples and dairy products as well as the expected HBA, pharmacy, books, organic products and more. Positioning Shoppers as a “Woman’s Convenience Store” seems to fit with an easier way to buy preferred products. The interesting observation was the number of men making holiday purchases.
I believe CVS could enjoy similar success if the concept is well executed, service levels maintained and location is carefully chosen for the core consumer.
This appears to be a very smart move to grow CVS’ business without adding more CVS stores (we know how that retail expansion story ended!).
Departments stores operating in these areas will face a significant threat from this concept, as main floor cosmetics is a key draw of new and existing customers.
CVS should be commended for getting this started in spite of the environment. It provides customers with a good option to a “more expensive” department store or mall visit and allows for some “everyday affordable luxury” indulgence. When the economy improves, and it will, they will be positioned right where Jim Valvano always espoused…”in a position to win.”
Economies peak and trough periodically and the companies that push marketing and customer awareness in the downturn will reap the benefits in the upturn. As long as it is done right of course. I am sure they have done the numbers and market research and the roll out can be adjusted depending on the prevailing market conditions. A lot can happen in a year.
Shoppers Drug Mart successfully sells upscale cosmetics and fragrances because many top brands willingly sell to Shoppers Drug Mart. But not all brands. Shoppers Drug Mart didn’t have an agreement to sell Estee Lauder until 2007.
In the USA, the top brands aren’t always anxious to expand their distribution outside traditional upscale channels, especially department stores. Beauty 360 (at CVS or not) might not be able to get all brands needed to be optimally profitable. And how will they generate traffic? By copying Sephora?
More Discussions
As Boomers ‘Age Out of Peak Purchasing,’ How Can National Brands Retain Interest With Gen Z?
According to a recent First Insight study titled “Is Gen Z Still Choosing Your Brand,” while…Is Supply Chain Volatility Here To Stay?
Can we expect an ongoing volatility to remain in terms of retail supply chain?Has Same-Day Delivery Become an Expectation Across Retail?
Are expectations around retail delivery speed in flux?
CVS is THE right US drug store chain for this strategy. Their more upscale, professional female shopper base is seeking simpler ways to get the cosmetics she wants from stores that fit with today’s value orientation. With department stores struggling due to economic pressures, CVS might actually be doing this at the right time to make shoppers feel better about spending on small pleasures at their favorite drugstore.
With my recent relocation to Hong Kong, I’ve spending a lot of time walking stores, particularly high end, prestige shopping. In the cosmetics and HBA areas, you get a tremendous level of service, something the customer who spends the kind of money they do, expect.
CVS or, for that matter, any retailer who intends to include high end beauty into their store needs to consider the personal service factor of the department. Location and store design are important, for sure, but making the customer feel important, and insuring that this purchase is more important than a generic purchase or choosing from the national brand selection has got to be key.
Bravo CVS! They know their shoppers and the zip codes, where beauty stores will pop.
These stores will be alternatives to mall stores. Why drive to the mall and fight the traffic when you can get high-end beauty products in your backyard? Further, the shopping experience can be more leisurely and indulgent. Women don’t want to spend a lot of time browsing lipstick shades while other shoppers are jostling them to get to the hemorrhoid creme.
Here in Sacramento, where one of the initial Beauty 360 stores is scheduled to open, they’re going to have a difficult time. You see, the women here are already naturally beautiful and require little or no makeup. Must be something in the water. Also, I was puzzled by the juxtaposition of two statements in the topic: “no mention of a connection with CVS” and “locations will either be established as a store-within-a-CVS or at an adjacent building to a CVS Pharmacy.” Boy, that certainly separates Beauty 360 from CVS. No one will ever make the connection.
I really applaud the concept of initially over-staffing the pilot stores (or stores-within-stores) and then drawing back on employee numbers as warranted. Overstaffed stores are also great training grounds to infuse the Beauty 360 culture into staffers who can then go on to open new stores and pass the culture along.
This could be a winner, for several reasons: First, give CVS credit for an aggressive real estate strategy that might allow a much faster rollout than Sephora has been able to manage, in more cost-efficient locations. Second, the market for prestige cosmetics (especially age-fighting treatment) is likely to continue growing even as traditional department stores’ market share is shrinking. There is no doubt that a time-starved customer would welcome an alternative place to shop for beauty outside the mall.
It looks like CVS has already made some smart strategic choices (regarding staffing, store ambiance, etc.) as it develops the Beauty 360 concept. One of the keys to success will be convincing the prestige brands like Lancome and Clinique to get on board, in order to provide the kind of brand leadership sometimes missing at Sephora.
This is a double edged sword for CVS. Beauty Boutique at Shoppers is very successful and really separates itself from the competition. This could be a good margin maker for CVS. Is this the right time? Probably not but we always want to think 2 steps ahead in retail and the economy will not be bad forever.
Luxury items tend to see huge rebounds after an economic downturn so CVS should be able to capitalize on that. My only suggestion is to make sure that strict loss prevention techniques are in place. Beauty Boutique stores do not lock up items and as we know, theft always increases in amount and aggressiveness during bad economic times.
Depending on price point, this will be a success because of convenience. Women will try it out at department stores and get replenishments through CVS; easy in/easy out.
Offering a wider variety of beauty supplies and services is an idea that certainly could work since so many women purchase cosmetics at what used to be pharmacies. However, going upscale and bringing in expensive brands from department stores is not likely to work any better at CVS than it did at Walmart. People purchase cosmetics at drug stores rather than department stores because of a lower price point. Creating higher price points won’t increase sales. Offering a wider variety of beauty products and services at a reasonable price point could be effective.
Retailers have to plan for future success and can’t afford to bury their heads in the sand. Personal care and cosmetics happens to be an area where consumers will spend a bit more, even during a downturn. That’s why Target, Walmart and Walgreens haven’t backed off of their higher-end and more expensive organic lines and in fact are plumping up their better offerings.
Target is in the process of launching a revolving makeup artist-driven line that follows the premise of their high-end Go International program in apparel.
It was smart of CVS to create a dedicated concept since higher end lines are increasingly present in the competition. For CVS to just sprinkle in a few in their existing stores would not make much of a statement. A surprising number of upscale launches are in the works in other categories right now including J. Crew’s new men’s concept, the Liquor Store which will feature bespoke fabrics and details at a relatively affordable (though certainly not cheap) price point, and the long-awaited Norma Kamali collection at Walmart should be hitting stores any day.
This is another indication as to why CVS is the retail chain that everyone should be watching. They are willing to take risks, try new things, and push the envelope a bit beyond traditional drug retailing. I’m sure that CVS has watched with envy the success and proliferation of stores opened by Sephora, Ulta, and Beauty Brands, and they want a piece of this upscale pie.
It is hard to convince women to pick up their beauty products at the same place where you can buy a Snickers bar, so creating a separate upscale store makes a whole lot of sense. This move seems to have success potential written all over it.
Shoppers Drug Mart has done well with their Luxury Beauty concept–knowledgeable beauty consultants providing a high level of service. The location of these stores has proven to be an important part of the mix, making the products more accessible rather than fighting crowds at the mall. The Luxury Beauty section would fit in any higher end department store. Busy women have been stopping in at Shopper’s to pick up pantry staples and dairy products as well as the expected HBA, pharmacy, books, organic products and more. Positioning Shoppers as a “Woman’s Convenience Store” seems to fit with an easier way to buy preferred products. The interesting observation was the number of men making holiday purchases.
I believe CVS could enjoy similar success if the concept is well executed, service levels maintained and location is carefully chosen for the core consumer.
This appears to be a very smart move to grow CVS’ business without adding more CVS stores (we know how that retail expansion story ended!).
Departments stores operating in these areas will face a significant threat from this concept, as main floor cosmetics is a key draw of new and existing customers.
CVS should be commended for getting this started in spite of the environment. It provides customers with a good option to a “more expensive” department store or mall visit and allows for some “everyday affordable luxury” indulgence. When the economy improves, and it will, they will be positioned right where Jim Valvano always espoused…”in a position to win.”
Economies peak and trough periodically and the companies that push marketing and customer awareness in the downturn will reap the benefits in the upturn. As long as it is done right of course. I am sure they have done the numbers and market research and the roll out can be adjusted depending on the prevailing market conditions. A lot can happen in a year.
Shoppers Drug Mart successfully sells upscale cosmetics and fragrances because many top brands willingly sell to Shoppers Drug Mart. But not all brands. Shoppers Drug Mart didn’t have an agreement to sell Estee Lauder until 2007.
In the USA, the top brands aren’t always anxious to expand their distribution outside traditional upscale channels, especially department stores. Beauty 360 (at CVS or not) might not be able to get all brands needed to be optimally profitable. And how will they generate traffic? By copying Sephora?