It’s not beginning to look a lot like Christmas in the nation’s mass market stores. Store checks throughout areas in New York and New Jersey found that many retailers gave up on decking the aisles in the beauty department.
This story first appeared in the December 19, 2008 issue of WWD. Subscribe Today.
Manufacturers and retailers said privately that some of the lack of sizzle is by design since chains bought less expecting a gloomy Yule. The goal, several said off the record, was to eliminate inventories in hopes of starting 2009 clean. Reduced holiday sell-in was not unusual this year. The downside to the downscaling, however, is a lack of a holiday feel in many stores, shoppers told WWD.
In fact, a survey from BDO Seidman found that one-third of chief marketing officers at large U.S. retail companies said they were hoping to bring costs in line with lowered sales expectations and that they were working with smaller budgets. A Target in Piscataway, N.J., for example, had very little as far as holiday blockbuster color and fragrance offerings. The only end cap of color kits was Markwins’ Glam Girl, aimed at tweens and priced from $4.99 to $14.99. Very little emphasis was placed on promoting holiday in the beauty department.
The same appeared true at a Rite Aid near Princeton, N.J., where gift sets are currently on display, but the offerings are pared down versus walls and walls of goods seen in past years. A Whole Body store in the Chelsea neighborhood of Manhattan was light on Christmas decor, but endcaps in the bath, body and hair section of the store presented customers with discounted gift sets options. Items by Burt’s Bees, Pangea, Avalon, Alba, Kiss My Face and even Dr. Haushka were on display, packaged in gift sets alongside a sign revealing the sale price and the savings customers would realize with purchase.
A Walgreens in Somerville, N.J., was one of the only doors visited that did have a massive display of fragrances ranging from Fantasy to L’air du Temps.
Walgreens also offered its own brand of bath products priced at two for $20. Going after the male market, the chain also featured Axe gift sets. One end cap was stocked with Color Workshop color kits, but another offered many of the hot “As Seen on TV” items such as the Telebrands PedEgg. Walgreens’ Catherine Lindner, divisional vice president of marketing development, said during a tour of a new Manhattan store that the chain has many interesting exclusives she thinks will help shoppers seek its stores for the holidays. Among those are a private label bath and body line called Details, products in The Face Shop as well as the line extensions from Yes to Carrots.
Bob Wallner, vice president of sales for Milani, said what’s selling in the beauty aisle in the past month is in line with sales trends for the year. “Eye continues to be stellar, and lip is the softest. Nail is taking some lumps…due to formula changes,” he said, adding consumers are trading down to midlevel and budget brands. “I suspect that with the current economy, people have been conditioned to buy on sale. Every weekend there is a circular promoting sales, and they shop the sales.”
Since the mass market buys so far in advance, with plans nailed down as early as last February, manufacturers could not enact quick markdown strategies to attract more shoppers. However, a great deal of buy-one-get-one-free offers and discounts were built into most plans. And mass marketers can follow the upscale formula by marketing well-priced blockbusters of their own. CVS, for example, offers a beauty tote bag filled with products from its Essence of Beauty range, priced at $14.99, but valued at $80.
Even massive discounting has failed to bring out stingy shoppers. The number of consumers heading to U.S. stores dropped sharply the second week in December despite steep price cuts and limited time-only deals for the holidays, according to data released by ShopperTrak on Wednesday. ShopperTrak, which measures customer traffic, said total U.S. foot traffic fell almost 18 percent for the week ended Dec. 13 compared with a year earlier, while its estimate for retail sales declined 0.3 percent in the same period.
The good news, however, is that many shoppers didn’t even start yet. Mass-market doors and fragrance sets are traditionally last-minute purchases, so decorations or not, there could be much more business to come. The National Retail Federation said Tuesday the average consumer has completed much less holiday shopping by this point in the season than in previous years. ShopperTrak said the final weekend before Christmas typically accounts for approximately 11.5 percent of holiday sales. And that is what companies such as Markwins bank on. “While it is well-documented that the holiday season is off to a slower start, surveys suggesting 8 to 10 percent of shoppers are behind shopping schedule due to the few shopping days between Thanksgiving and Christmas. Additionally, this has been compounded by procrastinated shopping as consumers are waiting for the best deals to be published at retail. While slower sales are concerning to retail, this does play favorably into Markwins’ value-oriented gift sets,” said Matt Allen, senior vice president of sales. “Markwins has very strong gift presentations in all retail, and consumers are responding particularly well to the $10 and under price points.”
Lyn Kirby, president and chief executive officer of Ulta Inc., the Romeoville, Ill.-based chain of 300-plus beauty stores, said that for the holiday season the company has continued promotional initiatives that began in the third quarter.
“We have invested modestly more margin in advertising,” said Kirby. In particular, the chain has expanded distribution of its promotional brochure, which contains cost-saving coupons. A typical offer is $3.50 off the purchase of $10 or more. Additionally, Ulta is working more closely with vendor partners to provide incentive promotions such as buy-one-get-one-free offers. Customers can also find better deals on Ulta’s private-label brands.
While the stores are featuring numerous gift-with-purchase offers in its fragrance department, such as free pajamas with a $30 purchase, those promotions are similar to last year, said Kirby.
Wallner added that a sea change has occurred in consumers’ buying patterns — one that benefits the likes of Wal-Mart, which offers daily deep discounts, versus retailers that don’t, the likes of which may impact the future.
“The concern over fourth-quarter sales are somewhat unique and will impact decisions for 2009 and possibly longer. Now, every retailer just wants to get through the quarter and the next six months. Everybody just wants to reduce inventory levels,” he said.