At Estee Lauder, The Sweet Smell Of SurvivalLaura Zinn
The cosmetics industry is a glamorous place of product-launch parties, gorgeous models, and impeccably attired executives. But for every air-blown kiss, there's a rumor that some executive's career is imploding. For months, the choicest gossip has been that Robin Burns, the 39-year-old president and CEO of Estee Lauder USA, would be out by Christmas. Her supposed sin: failing to revive the "blue line" of cosmetics--so named for its distinctive packaging--at Estee Lauder Inc.'s $650 million flagship division.
To the dismay of the gossip mongers, though, Leonard Lauder, chief executive of the $2 billion privately held parent, dismisses the rumors: "Robin Burns has three years left to run on her contract, and she has done extremely well." Anyone looking for a portent of Burns's fall has been grieved of late to see her not only dancing with the boss at a sales meeting but also toasting his semiretired mother, 84-year-old industry legend Estee Lauder, at a swank lunch. In August, Burns threw a party to celebrate a 10% sales gain at Estee Lauder USA for the fiscal year ended June 30. That bettered the 5% increase industry watchers had figured for 1991 (table).
Burns, in short, is looking like a survivor. "I've learned that if you're a woman my age running a company this size and this visible, in an industry that's small and incestuous, there are people wanting to stir up trouble," she says. What the whispers reflect is how tough the past two years have been for Burns, one of the hottest talents in cosmetics and retailing. She landed at Lauder in February, 1990, after a seven-year stint as president of Unilever's Calvin Klein Cosmetics Corp., where she introduced the best-selling fragrances Obsession and Eternity. Upon her move to Lauder's biggest division, Burns was hailed by many as the new queen of cosmetics and fragrances.
There was trouble in her realm, though. While the blue line still dominated the $3.7 billion prestige cosmetics business, its customers were generally viewed as aging women still fond of Youth-Dew, the fragrance Estee introduced in 1953. Although Lauder's prices had gone up steadily through the 1980s, Burns at first raised prices even more, so that makeup that was never a bargain now seemed outrageous.
Adding to Burns's challenge, two ex-Lauder executives, Pierre Rogers and Joseph X. Spellman, had become powerful players at rivals Lancome and Elizabeth Arden Co. "Rogers and Spellman knew Lauder's strengths and weaknesses and attacked with an arsenal," says cosmetics consultant Allan Mottus. They knew that Burns had scaled back on promotional giveaways, so they stepped up their own promotions and boosted market share. The weakened state of department stores, Estee Lauder's main outlet, also put pressure on Burns.
BACKFIRE. Some early missteps by Burns made matters worse. Last fall, she launched Spellbound, a perfume designed to attract younger women with its untraditional fragrance and marketing. Black-and-white ads featured a very un-Estee couple with decadent, androgynous good looks, staring intently at each other. To cosmetics marketing consultant Wendy Liebmann, it looked like something Burns would have done for Calvin Klein, and Liebmann thinks the approach may have turned off Lauder loyalists accustomed to older ads with a more aristocratic vision of glamour. Also, a newsstand distribution of 250,000 videotapes touting Spellbound seemed to achieve little. Burns says she won't play the video gambit again.
It didn't help that Unilever's Elizabeth Arden division introduced Elizabeth Taylor's White Diamonds around the same time, and Calvin Klein's Escape also debuted that fall. Spellbound sold roughly $20 million its first year, while Escape and White Diamonds sold about $30 million each, industry consultants estimate. Burns acknowledges Spellbound didn't score a big hit, but she insists that the scent has long-term strength and has been the best launch in Estee Lauder's history. "Lauder's fragrances always start small and grow over a period of time," she says.
Leonard Lauder is backing Burns's handling of Spellbound and giving her room to form a team with no ties to the ancien regime. "They have a lot of sacred cows," says one consultant. "Robin is getting rid of them." Some of Estee's old friends, such as ad guru June Leaman, have been moved to other positions within the parent. Burns has brought in outsiders to head marketing, product development, and creative design. A new ad director will soon be named.
Burns has also introduced several promising marketing strategies. Spellbound's smallest bottle of cologne--the most popular item in a fragrance line--was a lofty $50, and Burns has since introduced a scaled-down $35 bottle. She is training her salespeople to push Small Wonders, a $25 box of five tiny bottles of different Lauder fragrances. For Christmas, she's selling empty baskets that customers can fill up with Lauder products of their own choosing. Bilingual salespeople are working at Lauder counters in California and Florida to help customers lured by Spanish-language advertising and mailings.
KNICKKNACKS. And for the first time in Lauder's history, Burns has conducted focus groups to find out who wasn't using Lauder's skin-care products and why. "We found we were missing the 30-to-35-year-olds," says Burns. Since those women weren't yet worried about wrinkles--and therefore weren't willing to pay through the nose for hope in a bottle--they bought whatever moisturizer they needed at the local drugstore. To lure these women, Burns developed a best-selling item, Skin Perfecting Lotion, a lightweight, fragrance-free moisturizer, for $27.50. Another first: Burns discreetly listed the lotion's price in ads.
With autumn coming, Burns has introduced new Spellbound ads and is girding herself for Christmas with knickknacks such as $15 pomanders and $25 candles scented with Beautiful, an older, best-selling fragrance. Such prices are bargains by Lauder standards, and some consultants wonder if too many lower-priced items will pose a danger to the brand's image in the future.
Still, Burns-watchers are starting to disregard rumors of her demise and focus mn her long-term chances against the competition. "You have a family-run company up against $40 billion Unilever and Nestle's Lancome," says Mottus. "Robin is a good executive, but she's also going up against some other very good ones." At least she has had some tough on-the-job lessons in survival.