I'm in the cosmetics business and I'm opening a new luxury line, so I can give my input here...Just to recap, I'm talking about the thread where people noticed Target selling Origins, Kiehls, Clarins, Kerastase, Paul Mitchell, etc. and there was a question as to whether or not the products were authentic or if Target was (il)legally selling them.
I'm sure it's 150% real and I'm SURE that Origins, Kiehl's etc is thrilled about the Target distribution contract. Target is making huge efforts to expand their customer base (successfully) and these brands (which aren't high-end luxury, by the way, they're more masstige (medium-end) - great quality, I use them myself, but high end would be a serum that costs $300, etc just a different price point, that's all) potentially make a huge amount of profit from Target's enormous orders.
It's not that big of a risk because Target has many brands now that are selling $23 scrubs, so Origins actually "fits in" there now. But Guerlain wouldn't put their $390 Orchidee serum in Target because that would dilute their luxury feel and exclusivity. Maintaining "luxury" is a very difficult process. A lot of work is put into updating formulations, marketing strategies, and keeping an elusive air of exclusivity - while also being somewhat convenient to purchase - but not TOO convenient for the masses.
But since Origins, Kiehl's, Clarins, Paul Mitchell, etc. are trying to appeal to the masses - hence they are "Masstige" product lines (a combo of mass and prestige), it's perfectly in keeping to seek a Target distribution contract, as Target has made these huge strides to distinguish themselves from Walmart, Sam's, Costco by seeking out Masstige lines (beauty, fashion), creating designer clothing lines, etc.
As the prices for Mass lines have increased (Olay, Loreal) it makes sense that the Masstige lines would either hike their prices or try to compete for that huge, lucrative Mass customer base. Origins is owned by Estee Lauder. Estee Lauder is probably trying to expand as far as possible. They also own Mac and Creme de la Mer. So they truly are covering all customer bases.
There is always a risk with these huge distribution contracts. I know someone who's product was picked up by Walmart. He had a small, single product company, but it had a lot of mass appeal. Walmart gave him a $10 million contract, which is fairly huge. Unfortunately, his factory was destroyed by Katrina and he couldn't fulfill his contract. Walmart took him to court and took his company for the price of .15 cents to the dollar. However, he was a very small company and the cost of defending the lawsuit literally broke him. Kerastase is owned by Loreal, the world's largest cosmetic empire. Origins is owned by Estee Lauder, Clarins is huge in it's own right. They are all successful companies that have been running for a long time, and if one of their factories were destroyed, etc. another factory could pick up the work. They can afford litigation costs without breaking the bank, and they can pull out of the contract fairly easily. So there is little risk for them if the venture doesn't work out.
Coach's huge dispute was that they felt Target selling their products diluted their feeling of exclusivity, potentially harming their brand long term. Though Target did nothing illegal (as far as I know), it was a loophole as to how they procured the Coach bags and Coach was pissed.
I hope this makes sense. I'm in the middle of reviewing a fairly heavy contract and I thought I'd take a break. But it's still morning and I don't explain myself terribly well until that second cup of coffee.
And no, it's not *that* early, it's just me. lol
All in all, everyone's observations are so spot on with the various issues going on in the cosmetics world right now.
There are two huge international conferences this month discussing luxury or mass, etc. and how to continue to appeal to customers in harder economic times.
I'm sure it's 150% real and I'm SURE that Origins, Kiehl's etc is thrilled about the Target distribution contract. Target is making huge efforts to expand their customer base (successfully) and these brands (which aren't high-end luxury, by the way, they're more masstige (medium-end) - great quality, I use them myself, but high end would be a serum that costs $300, etc just a different price point, that's all) potentially make a huge amount of profit from Target's enormous orders.
It's not that big of a risk because Target has many brands now that are selling $23 scrubs, so Origins actually "fits in" there now. But Guerlain wouldn't put their $390 Orchidee serum in Target because that would dilute their luxury feel and exclusivity. Maintaining "luxury" is a very difficult process. A lot of work is put into updating formulations, marketing strategies, and keeping an elusive air of exclusivity - while also being somewhat convenient to purchase - but not TOO convenient for the masses.
But since Origins, Kiehl's, Clarins, Paul Mitchell, etc. are trying to appeal to the masses - hence they are "Masstige" product lines (a combo of mass and prestige), it's perfectly in keeping to seek a Target distribution contract, as Target has made these huge strides to distinguish themselves from Walmart, Sam's, Costco by seeking out Masstige lines (beauty, fashion), creating designer clothing lines, etc.
As the prices for Mass lines have increased (Olay, Loreal) it makes sense that the Masstige lines would either hike their prices or try to compete for that huge, lucrative Mass customer base. Origins is owned by Estee Lauder. Estee Lauder is probably trying to expand as far as possible. They also own Mac and Creme de la Mer. So they truly are covering all customer bases.
There is always a risk with these huge distribution contracts. I know someone who's product was picked up by Walmart. He had a small, single product company, but it had a lot of mass appeal. Walmart gave him a $10 million contract, which is fairly huge. Unfortunately, his factory was destroyed by Katrina and he couldn't fulfill his contract. Walmart took him to court and took his company for the price of .15 cents to the dollar. However, he was a very small company and the cost of defending the lawsuit literally broke him. Kerastase is owned by Loreal, the world's largest cosmetic empire. Origins is owned by Estee Lauder, Clarins is huge in it's own right. They are all successful companies that have been running for a long time, and if one of their factories were destroyed, etc. another factory could pick up the work. They can afford litigation costs without breaking the bank, and they can pull out of the contract fairly easily. So there is little risk for them if the venture doesn't work out.
Coach's huge dispute was that they felt Target selling their products diluted their feeling of exclusivity, potentially harming their brand long term. Though Target did nothing illegal (as far as I know), it was a loophole as to how they procured the Coach bags and Coach was pissed.
I hope this makes sense. I'm in the middle of reviewing a fairly heavy contract and I thought I'd take a break. But it's still morning and I don't explain myself terribly well until that second cup of coffee.
And no, it's not *that* early, it's just me. lolAll in all, everyone's observations are so spot on with the various issues going on in the cosmetics world right now.
There are two huge international conferences this month discussing luxury or mass, etc. and how to continue to appeal to customers in harder economic times.
