The Cosmetic Counter LTD set to open doors in March

Drug Store News, Feb 2, 1991

The Cosmetic Counter LTD set to open doors in March

SOUTHFIELD, Mich. -- The Cosmetic Counter LTD, a new chain of franchised cosmetic/fragrance specialty stores based here, will open its first prototype store in March in the Wonderland Shopping Center in metro-Detroit, president Don Fox told Drug Store News.

Cosmetic Counter LTD, which is affiliated with B & E Merchandising Corp., a leading distributor of fragrances, cosmetics and beauty supplies, currently operates three stores.

However, Fox says, the existing stores don't reflect how the company will look in the 1990s and beyond. The three are all small: one is 500 sq. ft., one is simply a four-sided kiosk, and the other is a three-sided kiosk or what Fox calls a wall unit. All are franchised and in malls.

The new prototype of 800 to 900 sq. ft. will stock a broader selection of high-margin merchandise: cosmetic mirrors, cosmetic bags, travel bags, home fragrances, bath and body lotions, fashion scarves, high-end costume jewelry, high-end hair barrettes, wallets, umbrellas and hair brushes.

"If you go into a department store, their cosmetic departments are surrounded by higher margin accessories," says Fox. "We want to stock all the fashion items that have something to do with cosmetics."

The Cosmetic Counter units used to carry diverted department store fragrances, but Fox says they have gotten out of that business because they weren't able to maintain continuity of supply. Fox wanted his customers to feel that if they liked a brand, they could always find it in The Cosmetic Counter.

Fox hopes that his sales of cosmetic accessories will make up for some of the sales lost by the elimination of diverted fragrances. He is also picking up more distribution from some department store vendors who are willing to sell mass. Among them: Anne Klein, Gucci, Julio Iglesias.

By buying direct, Fox will gain continuity and selling aids such as testers. Since some department stores no longer carry these brands, Fox will also be able to sell them at full margin rather than at discount, a move that should enhance the bottom line.

The Cosmetic Counter doesn't carry mass cosmetics. Since these are mall stores that depend on traffic for impulse sales, Fox feels they can offer high quality private label lines that can attract sales through color and value.

Special Features is the store brand name for its price-sensitive line positioned to compete with Cover Girl, Revlon and L'Oreal. Price points range from $3.00 to $5.00.

The high-end line is Sedona, priced $1.00 to $1.50 above the mass line. Fox says Sedona is positioned to compete against department store lines like Estee Lauder and Lancome.

Opening inventory for a Cosmetic Counter store is between $35,000 and $45,000. Fox projects the prototype should generate $150,000 to $200,000 first-year volume. Mature stores can ultimately generate sales of $450,000 to $500,000 a year, he says.

He is projecting that with his mix of high-end merchandise, margins should average about 40 percent.