Eye pencils at the ready in cosmetics battle
Professional makeup and cosmetics stores are considered a great success story at malls. It's a winning combination of a small store with high sales per square meter. This competitive market space, occupied by former partners Madina Milano and Il Makiage, was challenged about a year ago by Mac, the growth engine of Estee Lauder cosmetics.
Until recently, Elcalil, which imports Estee Lauder products to Israel, operated only one store here, in the Ramat Aviv Mall, a store that has been so successful that it is ranked among the top 10 Mac stores worldwide.
Elcalil CEO Herbert Granierer and Mac Israel operations manager Orit Malonwanczyk are very pleased with the results.
"The cosmetics department at a good SuperPharm or Hamashbir Lazarchan branch has sales of up to NIS 500,000-600,000 a month, and we surpass that target every month," Granierer says.
Elcalil recently opened two pilot stores inside hairdressing salons belonging to the Shuki Zikri chain. The stores, each about 25 square meters, have separate entrances. Granierer says that Mac world headquarters is currently studying the Israeli idea of combining the chain's stores with hairdressing salons, as the salon's customers are potential cosmetics customers. Granierer forecasts 60 percent growth in Mac sales this year, thanks to the new stores.
Mac's competition does not share Granierer's enthusiasm.
"The combination of hairdressing and make-up doesn't work," says Ofek Kairi, owner of Madina Milano. "A woman who comes to a salon is focused on her hair. The hairdresser tries to bring out the best in her as much as possible, with highlights, styling etc. She spends about NIS 800 there and has no thoughts of buying more products."
Madina Milano currently operates seven outlets, each occupying about 50 square meters. The company has signed an agreement with the prestigious April cosmetics chain to open small stores of about 18 square meters inside April stores. The first branch of this joint venture has been opened in the April outlet in Rishon Letzion. Madina Milano plans to open four more branches in April stores and two new regular stores this year.
Kairi estimates that the Israeli cosmetics market is worth about NIS 60 million a year and says this market is growing by 10-15 percent annually. He says that Madina Milano has a 40 percent share of this market, and that Il Makiage has a similar share.
"Mac is still small, but will put up competition in the future," says Kairi.
As one would expect, Il Makiage executives dispute Kairi's figures. The chain, which operates 16 stores of about 60 square meters each, is owned by Hanoch Rieder and Galit Wertheim. They estimate the size of the Israeli professional makeup market at NIS 90 million annually. Rieder and Wertheim say their stores control 73 percent of the market, while Madina Milano and Mac have 18 percent and 9 percent respectively.
Malonwanczyk is more cautious about giving absolute figures, saying that Mac's competition in Israel is more than just the professional makeup market. She says it also includes both luxury and mass marketed cosmetics. This versatility is thanks to Mac products' price range, whose high end is NIS 65-150.
Mac's sales target is NIS 34 million a year within three years, and although sources at Elcalil would not disclose any figures, they said the company had met its launch target.
Granierer says that the chain will open three more branches in Israel, in the north, in Jerusalem and perhaps another branch in Tel Aviv, in addition to expansion into a total of 14 Shuki Zikri salons.