mottusbeauty.com

Federic Fekkai’s hair care and hair coloring products marketed by Procter & Gamble are getting the boot by Sephora in March. The bone of contention appears to center on P&G’s decision to sell its products to Target and other mass outlets.

P&G upscaled the Fekkai line for Saks, Bloomingdale’s and Sephora, and it will sell the “classic” line hair care products to mass retailers, according to an article in WWD. Although industry pundits are quick to point out that prestige is going mass, it is difficult to maintain one line in class and another in mass.

Consumers generally believe that there is little difference between two lines marketed under one name. Napoleon Perdis, whose line was sold at Sephora, also expanded into Target, leaving Sephora to clean out his inventory on line.

At the Sephora on Union Square, Fekkai has about 100 facings, and each facing has four to five products. The wall space is about six feet wide and maybe four to five feet high. At about $30 per unit, we’re talking about $12,000 per store in inventory.

Sephora has more than 200 stores, so maybe it has $2.5 million of Fekkai products at retail in store. WWD reports Sephora does about $20 million at retail annually in Fekkai. Fekkai is also sold in Bloomingdale’s and in other better department stores.

It is unlikely that department stores will continue to provide the imagery for a mass distributed line even if P&G makes it highly profitable to do so. However, P&G has leverage in better stores that sell SK-II and designer fragrances distributed by the company, including Dolce & Gabbana, Burberry and Jean Patou.

According to WWD, P&G spent $400 million for Fekkai, which sounds like a ridiculously high price for a limited distribution line that had been marketed unsuccessfully by Chanel and by a private equity company. If that purchase price is anywhere near the mark, there was no way P&G could have ever justified that money with a limited distribution line.

But can $20 plus price points for hair care work in Target, a highly promotional discounter?

The blurring of price points and distribution is just being explored, particularly by P&G’s Olay whose Pro-X line has a $60 suggested retail price tag. This price point seems high particularly since NPD says the average price of skincare products sold in prestige is $38.