By and and  on September 3, 2010

Mass merchants have a message for beauty shoppers: Step right up, the price is right.

Retail chains and beauty brands are entering the fall season armed with a new generation of analytical marketing strategies — such as gift cards, consumer events and gift-with-purchases — designed to supplant commonly used, margin-pinching tactics, including the notorious buy-one, get-one free, or BOGOs. The about-face in their promotional strategies comes as retailers seek more effective ways to bolster foot traffic in their stores and boost beauty sales.

During the last two years, BOGOs were rampant, and often brand-driven as companies looked for ways to grab sales in a dismal economy. “The manufacturers with deep pockets used and abused the BOGO as a way to buy market share,” said Ingrid Jackel, chairman and chief executive officer of Physicians Formula. “It’s counter-productive, especially at a time when [store] traffic is not high. It doesn’t enhance a brand’s premium image.”

This recession-era Hail Mary promotional tactic seems to have forced the industry to find more viable, brand-building alternatives. “It’s easy to slap a sticker on a product, but now retailers are asking how do we engage the consumer,” said Jackel.

The shift away from BOGOs began at the start of the year with a declaration from L’Oréal that the beauty firm was removing the practice from its “arsenal of tactics,” as the promotion, in the eyes of the company, failed to grow the category. Since then, several of its peers have made similar decrees.

Following Revlon’s most recent earnings call on July 29th, president and ceo Alan Ennis told WWD, “You build equity more effectively through advertising than promotional activity.” He added Revlon is shifting away from retail promotions, which over time can erode a brand’s value in consumers’ eyes.

The view has gained traction with retailers, including the leading drugstore chains Walgreens and CVS Pharmacy, which have both said they are experimenting with new ways to court the value-obsessed shopper. So far, both retailers and beauty brands are reaping the reward from retooled promotions: U.S. beauty sales in the mass market tallied $1.87 billion for the year-to-date period ended Aug. 8, up 6 percent, according to SymphonyIRI Group.

“BOGOs did bring in a lot of top-line sales, but the margins were always a battle,” said Kathy Steirly, a former beauty merchant and founder and ceo of the consultancy Kathy Steirly Associates. “Consumers stock up when an item is half price or better. They have been trained to wait for the sales,” she said, adding that hoarding mentality can take shoppers out of the store for long periods.

Candace Corlett, president of WSL Strategic Retail, said, “Shoppers have developed an immunity to the traditional sale messages. Shoppers are trying to keep their heads down and stick to their shopping lists. They are just not going to buy to stock up on inventory.”

Retailers are pulling back from certain marketing levers, but they are hardly abandoning promotions. Industry observers expect mass merchants to pull out all the stops to court shoppers this fall, the lead-up to the pivotal holiday season.

“This is not the time to be bold and try to arm wrestle shoppers into buying,” said Corlett.

Store visits in central New Jersey revealed that eye-catching promotions and BOGOs across many chains are still prevalent. But, in a new twist, many of the BOGOs were tied to retailers’ loyalty programs. For instance, a Rite Aid store offered a three-for-$15 deal on Maybelline lip color and lip liner with the use of its Wellness+ Rewards Card, as part of its Glam Camp promotion. In the same store, shoppers could pick up a Physicians Formula item, and get another 50 percent off by using the card.

Price discounts alone might not break shoppers’ willpower to refrain from spending, but several retailers are becoming more creative in their approach. For example, Target has partnered with Procter & Gamble Co. to offer a $5 gift card to shoppers who buy a certain number of select P&G brands. “Women then spend that $5 on themselves. It’s like found money to them,” said Corlett.

Target is working to draw consumers’ attention to its redesigned beauty department, called Destination Beauty, which began rolling out to select stores in February. The revamped area includes interactive kiosks, softer lighting and product testers, said a Target spokeswoman. In addition to touting beauty in direct-mail pieces and newspaper inserts, the discounter is outfitting stores with eye-catching end-of-aisle displays. This week, all Target stores feature end-cap displays of award-winning beauty products. The products received their various awards from a host of magazines, including Allure, Glamour and People en Español. is featuring these award winners, coupled with a free shipping offer.

Walgreens also is experimenting with several marketing initiatives to calibrate the customers’ current definition of value.

“We’ve scaled back on BOGOs [in color cosmetics],” said Shannon Petree, divisional vice president and general merchandise manager for beauty and personal care, Walgreens. “We took a stand that we are going to sell our merchandise in a different way.”

Walgreens — together with Neutrogena, RoC, Revlon and Nexxus — ran a four-page insert in the September issues of Vogue, Glamour, Allure and Self magazines that includes a month’s worth of tips on skin care, hair care and cosmetics. Readers are directed to to redeem a $10 rebate on a purchase of select products from the four featured brands.The promotion also was prominently displayed on the beauty page at

In an additional partnership with Glamour, features mass-market beauty recipients of a Glammy, the magazine’s readers choice award. The site offered a range of promotional prices on a number of Glammy winners, ranging from 20 percent off of Aveeno Active Naturals Positively Radiant Daily Moisturizer to a Buy-One, Get-One-50 Percent Off deal for John Frieda Frizz-Ease Hair Serum.

Walgreens’ aim, said Petree, is to prompt shoppers to think of the store first for beauty, particularly when it comes to new items, which she said drive 80 percent of the category’s growth.

“Our stores catch about 95 percent of the population in the course of the year,” said Petree. With all mass market retailers rolling out aggressive promotions, Petree said Walgreens is asking, “How do we make the experience in the store more inviting?”

CVS Pharmacy is courting recession-battled consumers, both inside the store and outside, with a spate of new initiatives.

“Generally, we are seeing a pullback on BOGOs, but not necessarily on promotions,” said Cheryl Mahoney, vice president of beauty for CVS. “When we meet with our vendors we talk about creating a surround-sound event for the customer.”

In the store, CVS launched its Semi-Annual Beauty Sale on Sunday. “We spent a lot of time thinking about the fall event, and did some consumer research to tell us what customers wanted. We found that she would respond to a gift-with-purchase,” said Mahoney.

As a result, throughout September CVS is offering shoppers who spend $15 or more on beauty a free charm. To receive the charm — the assortment of charms includes a star, sunglasses, miniature lipstick and a high-heel shoe — shoppers can redeem the coupon at the end of their purchase receipt or, at the ExtraCare Coupon Center, an in-store kiosk.

Being aggressive with price cuts and advertising spending might seem to be a quick fix to lure customers to shop, but even the world’s largest retailer recently learned that these tactics aren’t necessarily a solution to driving shoppers — or sales — to stores. During Wal-Mart’s most recent quarterly earnings call, the retailer said it was “executing changes in strategy,” such as cutting deep price rollbacks that were featured in May and June, since while they “did improve price impression, they did not generate the level of top-line sales we’d hoped for.”

In July, the retailer put emphasis back on its core everyday low price model. In the coming weeks and months, Wal-Mart added that its assortment will be more relevant to customers, with “the right mix of new and innovative products…restoring thousands of products to our assortment and adding new items.” Wal-Mart also has brought media expenditure “back in line” as ad expenses were up “significantly” last quarter versus the previous periods.

Wal-Mart is collaborating with beauty brands to help drive this growth. In the second quarter, the retailer partnered with Physicians Formula and P&G’s Cover Girl, for a print and digital advertising campaign, which linked back to the stores with end-cap displays. Wal-Mart selected Physicians Formula for the winter campaign as well, said Jackel, adding the brand’s business at the retailer is growing nicely.

Retailers’ brand partners seem to be following a more realistic paradigm, where they can move the needle in beauty, but also maintain margins and increase sales through unique sponsorships, contests and programs.

To that end, Maybelline New York, the official makeup sponsor of New York Fashion Week, has partnered with CVS to create a visible presence at shows, erecting a tent at 1701 Broadway, about seven blocks south of Lincoln Center, where many shows are being held. The pop-up Beauty & Fashion Retreat, open Sept. 11-16, will offer free makeovers, and the first 50 visitors each day will nab products and coupons for Maybelline items at CVS. Inside the tent, visitors will see a map of nearby CVS locations. The pair have linked the event to stores as well: Maybelline’s displays at 1,000 CVS locations will highlight the look of the season. CVS will drive consumers to the event through social media, including Twitter. The retailer launched @CVS_Extra in February and reached 10,000 followers as of Tuesday.

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