WWD.com/beauty-industry-news/hair/economic-woes-crimp-b-t-s-1722571/
government-trade
government-trade

Economic Woes Crimp B-t-s

Nine-year-old Lauren Manko of Montgomery Township, N.J., is a serious back-to-school shopper.

The hair color aisle inside a Target store.

NEW YORK — Nine-year-old Lauren Manko of Montgomery Township, N.J., is a serious back-to-school shopper. She has a huge wish list from her favorite stores, such as Limited Too and Bath & Body Works.

But her mom, who will lose her job in September, put restrictions on her habits this year. A few clothing items from Limited Too, but the rest from Wal-Mart. Bath and body potions from discount retailer Five Below and a couple of makeup products from Rite Aid. Her mom even hopes to ravage Lauren’s older brother or sister’s stash of notebooks to use for supplies.

The Mankos are not alone in their quest to slice b-t-s shopping this year. The economy has many consumers looking in their closets for outfits, trading down to budget shopping channels and basically looking to save. A national survey from Deloitte found that 71 percent of families plan to spend less this year. And 90 percent said they’d change the way they shop, opting for more dollar stores.

Worse, is that b-t-s is often a barometer for the holiday selling season. Mark Griffin, the chief executive officer of Lewis Drug, said the b-t-s season “launches the rest of the year and the holidays.” Indications are that this season won’t make the grade.

The National Retail Federation predicts spending for b-t-s and back-to-college will rise a modest 2.5 percent this year to $51 billion. According to research firm WSL Strategic Retail, people are altering habits. In its Pulse study, 73 percent of those surveyed said they are more careful about shopping than a year ago and 56 percent even said they are proud of ways they’ve found to save money. What’s more, 63 percent said they avoid some stores so they won’t spend more money. The big question is, now that shoppers have traded down, will they stay there even as the economy brightens?

That scenario actually has a silver lining for mass merchants which — if they can impress when shoppers have to be in their stores — will win consumers over even when they can opt for more upscale venues.

Wal-Mart appears to be benefitting the most from the shopper shuffle. “Wal-Mart is exceptionally well positioned for growth,” said Thom Blischok, president of IRI Innovation and Consulting. According to Information Resources Inc.’s MarketInsight, Wal-Mart is posting share gains in 84 percent of the top 100 consumer product goods categories. It has gained more than two percentage points of the hair color category as an example of its growth in beauty.

While Wal-Mart had watched some of its shoppers migrate to the “cooler” Target over the past few years, Wal-Mart is getting them back with its price positioning, causing Target to try to tout its prices, too. Drugstores also hope to find some shoppers putting some of their b-t-s dollars in their coffers.

Rite Aid published a list of items it is offering as a lure to customers, who could also buy beauty while picking up notebooks. Ulta is promoting a buy one, get one free deal on select items. Lewis Drug has more promotional tables available for merchandising impulse items. Walgreens is staging Saturdays with beauty advisers, who provide consultations and samples.

The migration to more mass stores might prove to be a boost to cosmetics departments, experts said. “The economy is driving new rituals,” said Blischok. “From dining at home with friends to in-home beauty treatments, consumers are finding a more economical way to continue their routines.”

Retailers cited examples, such as the success of Clairol’s Perfect 10 hair color, artificial nails and mass market mineral cosmetics formulas. “Consumers are switching to less expensive brands,” confirmed Blischok.

WSL also sees opportunities in the current climate. According to the company, retailers need to stress service, while offering surprises such as manicure or eyebrow shaping, and products that are typically unexpected in mass stores.