The numbers might forecast dismal sales, but mass merchants are clinging to the premise that, in this economy, people might drive less, trade down and, therefore, shop more mass retail doors.
“This type of economy does favor the local drugstores, and we are trying to offer more merchandise to take advantage of that,” said Lewis Drug’s chairman, Mark Griffin. He hopes to lure shoppers with beauty items including blockbuster kits and new fragrances.
Research from Deloitte LLP, TNS Retail Forward and The National Retail Federation all point to difficulties, such as the latest economic turmoil, as factors that could hinder sales. Even the buzz created by the election could keep people out of stores, retailers said. Deloitte is estimating sales gains of less than 3 percent, TNS Retail Forward is at 1.5 percent and the NRF expects sales to grow by 2.2 percent to about $470.4 billion. That figure marks the lowest rate of growth since 2002 when sales expanded only 1.3 percent.
According to data from Information Resources Inc., a Chicago-based market research firm, sales performance of cosmetics items will depend on the category. Cosmetics for the face, such as bronzer, blush, foundation and concealer, are up 3.4 percent to $708.5 million for the year-to-date period ended Sept. 9 in food, drug and mass stores (excluding Wal-Mart), while nail care sales are nearly flat with a dip of 0.4 percent to $413.9 million. Sales gained in eye makeup segments such as mascara, shadow and liner, with a 5.7 percent rise to $706.7 million. Sales of lip items, despite the legend that predicts lipstick sales rise in tougher times, have dipped 4.3 percent.
And, based on first-half performance, the second half needs to provide a big push in order to make up for sales losses. According to a recent NPD/IRI Cross Channel Monitor report, makeup sales declined 1 percent in the first half, while skin care sales fell 3 percent. Fragrance faced challenges, as well, with sales of women’s scents dropping 9 percent for the half. Men’s scents fared a little better in the mass market, with only a 4 percent decline. Sales of hair care were down by 5 percent for the first half.
Value is one mantra being chanted by a number of manufacturers.
“Value brands that provide not only good prices, but great quality are doing very well in this economic downturn as people look to buy one or two quality items at a good price,” said Lisa Yarnell, chief executive officer of Jane. “Mass cosmetics is an affordable luxury, one that will fare better in an economic downturn than others. Masstige brands view today’s tougher economy as an opportunity.”
Procter & Gamble’s Gina Drosos, president of Global Personal Beauty, said, “Our top-performing mass products offer great value versus prestige alternatives — often superior performance at a much lower price.” She added that P&G Beauty, in tough economic times, actually shifts “even more focus to driving out costs the consumer doesn’t see or care about — costs of manufacturing or distribution — so that we can keep prices reasonable and our quality high.”
Mass merchants are quick to point out that they are repeating an already weak holiday from last year. That means most bought less merchandise or the same amount as last year for the coming holiday — a fact that could help mass merchants have a better sell-through than expected. NRF research confirms that inventories are down since retail container traffic at major ports is expected to drop 6 percent this year. There are murmurs that staffing will be lighter at chains to save budgets, especially in the beginning as retailers see how things stack up.
“I can’t tell you for sure that it’s going to be the worst season in the last decade and a half, but we expect this season to be as challenging as any in recent memory,” said Scott Krugman, an NRF vice president.
Retailers offering a mix of mass, masstige and prestige items acknowledge the tough time ahead, too.
Lyn Kirby, Ulta’s ceo, is preparing for a fourth quarter that will be “as tough as the last three,” but noted that this year’s holiday period will be “jumping over a lower base” from the prior year. Mainly, she is keeping her eye on the election, knowing it is serving as a distraction to shoppers.
By Thanksgiving, she said, she will know which direction holiday is going to take and whether Ulta will “need to be more aggressive” with promotions in December.
“We always have contingency plans for the fourth quarter, and Thanksgiving serves as a good benchmark for us,” she said.
Despite the tough economy, she said Ulta has a “price point for everyone” and that, even though shoppers are watching their purse strings, she is not seeing a trade down from higher priced goods to lower-priced items. She noted that gas prices are figuring into the shopping trip and that Ulta could serve as a one-stop shop with its range of categories. Wal-Mart has found itself in the enviable position of providing what consumers consider value, and sources said Elizabeth Arden had created several door-busting programs for the megaretailer for Christmas. Target, on the other hand, is stressing fashion with its new color lines that have been set up in stores. Target’s prices are higher than Wal-Mart, especially for its new upscale skin care. Walgreens, always known for healthy fragrance sales, has enacted a few programs to drive more shoppers. Recently, the chain held Saturday events with beauty advisers who provided consultations and samples.
One problem facing mass merchants for the holiday could be a lack of must-have items. Indeed, the mass market fragrance business has been bereft of launches outside of the activities of Coty Inc., which primarily focuses on celebrities.
For Christmas, a number of buyers said they want to get off the promotional treadmill and deemphasize buy-one-get-one-free in favor of other traffic-building ideas, such as glossy gift guides. One ray of hope comes from research from Fitch Ratings, which suggests shoppers are willing to still buy certain items — even the more costly options. For example, Alberto-Culver’s Nexxus hair care brand sold briskly in the latest quarter with sales up 13.6 percent, but V05, which is aimed at the lower end of the market, was down 5.7 percent, according to IRI data provided by Fitch. Personal care has not been hit as hard as some other industries, but commodity prices have risen so sharply over the past year that manufacturers have been forced into action. P&G and Colgate have issued price hikes, followed by Johnson & Johnson, banking on the idea that consumers will still buy items they really want.
My character, Dinah Madani, is just the coolest, [most] badass woman imaginable," says @amberroserevah. The actress stars in @marvel's newest series on @netflix, @thepunisher. To prepare for her role, Revah sat down with Homeland agents to get a real sense of with Dinah's day-to-day life is really like. Read our full interview on WWD.com. #wwdeye (📷: @jilliansollazzo)
A scene from the 91st annual @macys Thanksgiving Day Parade. The parade, which boasts 50 million TV viewers and 3.5 million on-site spectators, is considered one of the largest and most watched parades in the world. (📷: Jason Szenes/EPA-REX)
The circus came to @bloomingdales 59th Street on Tuesday night and lit up Lexington Avenue with acrobatic dancers, death-defying knife throwing, sword swallowing and aerial acts with no net. The 45 minutes of theatrics built up to unveiling the holiday windows depicting @swarovski crystal-encrusted circus pieces and scenes from “The Greatest Showman” – songs from the soundtrack included. See the rest of the photos on WWD.com #wwdfashion (📷: Joshua Scott)
The psychedelic fashion that pervaded the ’60s is back with an exhibit at the @museumofcityny. “Mode New York: Fashion Takes a Trip” chronicles the changing styles from 1960 through 1973 and features designers such as @ysl, @oscardelarenta and more. The exhibition, which is on display through April 1, is organized into four periods: First Lady Fasion, Youthquake, New Bohemia and New Nonchalance. Pictured here is model Pat Bardonella during the Garvey Day Parade in 1968. (📷: @kwamebphoto) #wwdeye #wwdfashion
“People should be a lot more honest in expressing both the dark and light of themselves. We need to give each other the space to do that because it’s the only way we can grow and evolve,” says @noelwells of her new film “Mr. Roosevelt,” which is largely based on her own struggles. Unexpectedly leaving @nbcsnl in 2014 after just one season, Wells felt set back in her self-esteem and career trajectory. She quickly refocused her energy to more personal projects, which led to the completion of “Mr. Roosevelt.” Read the rest of WWD’s interview with the “Master of None” actress on WWD.com #wwdeye (📷: @jilliansollazzo)
@barbrastreisand is giving fans a chance to see her perform up close in a new concert series, which makes its debut on @Netflix today. From behind-the-scenes takes to her concert performance in Miami last December, the two-hour streaming special captures Streisand in her element. Pictured here is the singer/actress photographed for WWD in 1963. (📷: Palmieri Tony) #wwdeye #wwdarchive
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)