Melissa Parsons picks her beauty products wisely-and carefully. The 27-year-old accountant from Melrose, Massachusetts, usually frequents cosmetic counters at major department stores like Filene's so she can smell a product, touch it, and test it on her skin. She spends about $100 a month on everything from lotions to lip liners. While shopping at the nearby North Shore Mall in Peabody recently, Parsons discovered a new-but well-known-beauty source: Avon. A glitzy Avon kiosk had set up in the mall's center aisle, smack in front of Bath & Body Works. No Avon Lady had ever knocked on Parsons' door, so out of curiosity, she stopped at the kiosk to dab a lotion or two. She left with three oils and a bath gel, her first Avon purchase ever. "I was very surprised to see Avon here," she says. "I wouldn't take the time to order out of an Avon brochure, but I'll buy it if it's here."
After 113 years of direct selling, Avon Products is entering the mall. It was the logical next step for the New York City-based cosmetic and beauty product company. After all, what good is a makeover if you can't show it off? All dressed up, with new and improved products and a cleaner, more modern look, Avon has found it has plenty of places to go, including its new web site and mall beauty centers. Perhaps its most obvious move to strut its stuff in front of a new crowd was the opening last November of a spa and retail showcase in Manhattan's Trump Tower. Its ad budget has swelled too, from $14.3 million in 1995 to nearly $23 million last year. These efforts all underscore Avon's strategy to shed its grandmotherly image and become more relevant to younger consumers. In return, the company hopes to boost profits in the United States-currently stuck at about 3 percent-and put the market on par with its rapidly growing overseas divisions.
Avon debuted on the retail scene last May with the opening of its first kiosk, or "beauty center," in atlanta's North Point Mall. Thirty-eight others have opened since, and several dozen will open by mid-1999. A thousand more may be down the road, if the cash registers keep ringing. Avon expects the beauty centers to take at least a year to turn a profit and two years to reach their full potential, estimated by retail experts to be about $150,000 to $450,000 in sales per kiosk. In 1997, roughly 33 million customers were served by Avon's 450,000 direct sales reps in the United States, generating more than $1.7 billion in sales for Avon.
So why hit the mall? Avon has a simple answer: to target the 20 million to 30 million women not buying the brand today. "It isn't about a different customer," says Brian Connolly, Avon's group vice president of sales and customer service. "It's about more customers."
More customers with deeper pocketbooks, perhaps. Avon seems to be positioning kiosks in pricier neighborhoods that may be beyond the reach of its middle-America reps. The typical Avon Lady is in her early 40s, a high school graduate with a household income of about $35,000-and so is her average customer. Compare that to the demographics of Atlanta's North Point Mall: its shoppers have an average household income of $85,000 and a median age of 35. Avon's first wave of kiosks were placed in malls where the average household income within a 10-mile radius was about $58,000, according to data from the Directory of Major Malls. And teenagers, who average 27 percent more mall visits than other shoppers, according to the International Council of Shopping Centers, have already noticed Avon's allowance-friendly $6 lipsticks, Connolly says.
Catching customers while they're young has a value beyond just adding more names to the database. "Once you get into the Avon family, then as you get older, theoretically, you have more disposable income," says Buckingham Research Group analyst William Steele.
Avon turned to mapping software from Tactician Corp., based in Andover, Massachusetts, to figure out where the kiosks should go. The software, which Avon has used to develop U.S. strategies since 1997, allows the company to manipulate more than 1.5 gigabytes of data. Analysts can overlay representative territories and sales information with population data from the U.S. Census bureau to find where Avon is and isn't selling. The mapping program with its Selling Machine add-on can also help identify population shifts and determine which strategy works best among a given demographic. For example, the software helped Avon pinpoint a growing Asian-American population in the Southeast. To boost sales in this market, the company is showing local reps which products Asian-American women might prefer, such as lighter cremes and foundations. Selling Machine is Tactician's most popular specialty product, used by companies such as Hallmark, Ralston Purina, and Staples.
Avon has taken profiling a step further to place its mall beauty centers. The company says it's still testing different models and won't discuss specifics, but the formula includes data on sales per square footage of the top 1,000 U.S. malls with the highest revenues, as well as stats on mall neighborhoods, like the size of the female population, average household income, the number of local representatives and the level of Avon's door-to-door sales. "The kiosks are really an opportunity to support our representatives out in the field with a stronger image," says Tom Kelly, Avon's vice president of sales development and strategy.
Still, treading on an Avon Lady's turf isn't easy. The company has addressed several issues to ensure that the kiosks do not infringe on its reps' sales. The beauty centers don't offer sales or discounts featured in brochures, and only 400 of Avon's 5,000 products are available. Shoppers who request other products are referred to Avon representatives. Women interested in selling Avon can also sign up at the kiosk. Barbara Daly, counter manager at the North Shore Mall beauty center, says some Avon Ladies were upset about the kiosk until the company held a meeting to explain how it would operate. Most of the reps, she says, were then happy to see the beauty center open.
Nancy Preman, who lives just a "football field away" from the North Shore Mall, wasn't one of them. Preman, a representative for 19 years, relies on Avon to support herself and her husband, who is retired and has cancer. In the last fiscal year, she sold more than $300,000 worth of Avon products. "Going into the mall is contradictory to what Avon was set up originally to be," she says. "I think the kiosk is going to take away business. In fact, I know it already has."
Buckingham Research Group analyst Steele disagrees. "Let's face it: if you are already an Avon customer, you're not going to [the mall]," he says. He believes the kiosks may help narrow the perception gap between the consumer's view of the Avon brand and the actual quality and breadth of the company's products. According to Avon's Connolly, preliminary market research indicates that the beauty centers have increased brand awareness and improved the company's image. "Women who view Avon as their mother's brand are seeing Avon's new look," Steele says.
In fact, it's pretty hard to miss Avon's silver and pale blue kiosks. Products are displayed on simple shelves of glass and blonde wood. Each 10-by-14-foot store cost Avon about $50,000 to $70,000 to construct, plus costs for rental space in each mall.
Counter manager Daly at the North Shore Mall still remembers the reaction of employees from the mall's other retail stores on the day the kiosk opened. "They walked by and said, 'Ha! Avon in the mall,'" she says. Now, she adds, those naysayers are repeat customers. Perhaps Avon will have the last laugh.