Estee Lauder Expands Distribution To Drug Stores

Estee Lauder is going mass by expanding distribution for its prestige Clinique cosmetics brand to include Shoppers Drug Mart, the largest drug store chain in Canada.

At first glance the move seems a departure for the brand, which in North America has been sold only in department stores and the cosmetics emporium Sephora.

The plan is for Clinique to be in Shoppers Drug Marts by next fall, merchandised in Beauty Boutiques that also carry prestige brands such as Christian Dior and Lancome.

Industry analysts did not seem particularly concerned that distribution in an "assisted self service" channel would harm Clinique's image.

It's good to test different channels, said Suzanne Grayson, industry expert and president of the consultancy Grayson Associates. "If it's executed well -- and I'm sure it will be -- with the mix of other high end brands already [in the shopping venue], it won't affect the brand image."

Clinique is Estee Lauder's top seller and is considered its entry-level prestige brand. Its other lines include Aveda, Bobbi Brown, and MAC.



"It is a positive signal that EL appears to be getting more open minded about new ways to boost the visibility of its brands with consumers," Citigroup equity analyst Wendy Nicholson wrote in a research report. She estimated an additional $20 million in incremental revenue would come from Shoppers Drug Mart sales, which is a fraction of Estee Lauder's fiscal 2006 revenue of $6.5 billion.

Industry consultant Allan Mottus said the move makes sense because it puts Clinique in new regions. He speculated that if the relationship is successful, Estee Lauder might try other brands there as well.

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