Cosmetics: Kiss and Sell

(10 of 10)
the low-priced Natural Wonder line.

Successful as the company has been, the market is so mercurial that no cosmetics firm can ever really be safe; a bad mistake can be ruinous. A classic example is Max Factor's "Just Call Me Maxi" fragrance, introduced last year to compete with Charlie. It came about four years too late, as taste was at the point of switching back to romance and mystery, and bombed so badly that Factor plunged deep into the red; the debacle is widely believed to have cost President Sam Kalish, a Revlon alumnus, his job.

If Revlon does stumble, plenty of competitors are waiting to snatch away its customers. Estée Lauder, a family-owned company that stresses a theme of understated elegance in its promotions, concentrates entirely on prestige stores and outsells Revlon in them 3 to 1. In the popular-priced field, Avon still holds a lead, though Revlon has been catching up. In the rush to sign up big-name clothes designers to put their names on perfumes, other firms have been quite as aggressive as Revlon. Revlon bagged Bill Blass, but Norton Simon Inc., parent company of Max Factor, got Halston, and Helena Rubinstein took Anne Klein. Calvin Klein has built up a big business operating on his own.

In general the large companies probably will take an ever increasing share of the market, because they have the money for the extensive research, intensive promotion and building up of widespread distribution networks. The growth of cosmetics sales is expected to slow a bit, to perhaps 8% or 8.5% annually over the next few years, from 9% to 12.5% during 1976-77-78. One reason is that cosmetics companies are suffering from their own promotional success; many women now regard cosmetics as necessities to be bought all the time, rather than as luxury items to splurge on when incomes rise. That attitude helps to keep cosmetics sales from falling during a recession, but prevents them from rising as fast as sales of some other goods during a boom.

Still, the industry's hold on its customers is secure, and one has only to prowl the stores to find out why. At Bloomingdale's in Manhattan last week, a blue-jeaned young woman sat at the counter being made up by a saleswoman while her husband watched eagerly. She hesitated at first when the bill for her face makeup—eye shadow, foundation, mascara, liners, lip pencils—came to $42. But she gave in and paid when her husband murmured, "You really look great, honey." Then he turned to the salesgirl and asked, "Isn't she pretty?" No one who saw the light in his eyes would have to ask what the woman got for her $42.