By and  on July 10, 2009

BOSTON — A shift in the balance of power between buyer and seller set a desperate tone for many manufacturers at the National Association of Chain Drug Stores’ Marketplace meeting, held here June 28 to July 1. But, in the face of difficult economic times, many beauty makers were armed with solid business plans — such as focusing on their most profitable brands rather than creating new ones — to get through the last half of the year and into 2010.

With fewer, yet more powerful drugstore chains calling the shots, manufacturers are now forced to shell out big bucks to get products onto retail shelves. Many manufacturers said it is a far cry from the more equitable days of when buyers and sellers worked together to build item success stories.

One beauty executive at a multinational firm said, “There is big pressure on retailers on cutting operating costs and the way they operate the inventory. Cash is not easy to get, like it used to be. They now think about how quickly will the inventory move and how will they finance it. Smaller players can’t help them do this anymore and retailers themselves can’t do it anymore. Consumption has changed. Impulse purchases are rare. People make shopping lists now.”

The shrinking industry and the economy sapped some of the traffic at Marketplace. Numbers provided by NACDS showed that this year’s meeting attracted 780 buyers, down from 900 last year, a drop of 13 percent. This year the conference attracted 3,300 attendees. Last year attendance was at 4,100, a difference of 19 percent. This year 251 retail companies attended. Last year that number was 266.

Despite fewer attendees, Jack McAuliffe, president of Beauty Handbook, characterized Marketplace as “still very important to the industry,” a venue where “manufacturers can efficiently accomplish more in three days than if they had to fly around the country to meet with all the retailers and deplete their valuable marketing and promotion dollars.” He said it also allows small manufacturers to be noticed and meet with decision-makers. “And, very importantly, it provides an opportunity to reconnect with industry friends like a reunion.”

Representatives from both sides of the buying desk lamented the New World order results in fewer “gut-instinct” buys and less scintillating shelves. In fact, a group of buyers and manufacturers, many of whom are considered mass beauty industry mainstays, spent one evening during the show not making deals but reminiscing about the old days and the retail legends of earlier times.

But today’s reality is that there aren’t as many chains, and, the number of small to midsized beauty firms are dwindling. For example, Jane Cosmetics recently declared Chapter 11. There also were notable absences of key beauty firms such as Revlon, the beauty division of Neutrogena and Bonne Bell. A former beauty executive described Revlon’s absence as “outrageous” and speculated that the company is either about to go private under Ron Perelman, its chief stock holder, or be sold. In a statement, Revlon said it does not comment on trade activities and it supports NACDS and did participate in the NACDS Annual April event in Palm Beach, Florida.

Reflecting the retailer crunch, several former retail executives attended Marketplace as consultants this year, including Rod Kautz, former Rite Aid vice president of category management for beauty and personal care, and Jeff Rubin, Drug Fair’s former health and beauty care manager. Kautz, now head of Retailer Insight, said it is harder than ever to crack the mass market these days. He said too many manufacturers don’t take the time to really understand the channel and target products properly. “There’s sku optimization going on so you have to have a reason for ‘being’ in the market. You have to know how to sustain the business. [Buyers] do want to buy new, but some new products are not market ready,” said Kautz, who looked for companies in need of his services.

While finding exciting new products was scant, there were a few promising items found on the show floor. One was RapidLash, which Duane Reade executives confirmed has been catching shoppers’ eyes in the store, especially thanks to plugs from Kathie Lee Gifford on the “Today” show. RapidLash, an over-the-counter lash grower, is riding on the promotion ofAllergan’s Latisse, as well as premium lash growers from department store brands. RapidLash has a suggested retail of $49.95 and is said to thicken and improve the appearance of lashes and brows in four to six weeks.

All eyes are on the mascara market, with Catherine Bokar, senior buyer for Ulta, adding, “We are selling all and any mascaras,” most notably L’Oréal’s Extreme Volume Collagen Mascara.

Once again, the Yes To Inc. booth was one of the most vibrant and heavily trafficked. “People want quality and value and will buy when they are offered that,” said Ido Leffler, chief executive officer of the firm, which gets feedback on what to launch from a its social network called the Carrot Club. Retailers said the company would shortly be adding a clever baby offering called Baby Carrots.

While the prestige market might have seen some cooling to celebrity items, the mass market can’t get enough. Pamela Anderson patiently posed for photo opportunities to launch her new lifestyle brand, Malibu, which will make its debut as a fragrance this fall, by Perfume Center of America/International Beauty Brands. The scent is available in two versions, one for day and one for night, and will retail for $49 for a 3.4 ounce size. Personal care, sun care and bronzer items are planned for the Malibu brand, too, said Anthony Eluck, president of IBB. Hairstylist-to-the stars David Babaii also attended Marketplace, talking to retailers about his eco-friendly hair care line, Wild Aid, which is made in partnership with actress Kate Hudson. Sally Hershberger met with retailers as she looks to grow her brand. Recently, her line of hair care items entered Shoppers Drug Mart, Ulta and Target, supported by a national print ad campaign in June beauty magazines. “As bad as everything is, this is a great time to spend,” said Hershberger, who charges $800 for a haircut. “It’s an incredible time to build business.”

Paris Hilton hair care and nail products were being shown at the HairTech booth, following up on the celebrity’s hair extension line that debuted several years ago. The lead hair item there was the Ultimate Brush, which has a ball-shaped head to add volume and lift to hair. Hair care items have been infused with pomegranate, coffeeberry and soy bean, while a Paris Polish nail color has a unique bottle that allows for one-handed nail color application. Also, Kathy Ireland is a backer for an eponymous skin care range targeted at families, especially busy moms who don’t always take time for proper skin care.

News within color cosmetics focused on two subjects: who will be filling up the wall space once occupied by Max Factor, and “less is more,” the current retailer mantra.

“Because of Factor being [discontinued] there is an immediate opportunity to grow presence,” said one cosmetics maker. Reports heard on the show floor singled out a well-known prestige brand making the leap to mass to fill Factor’s shelves in Wal-Mart. As for sku rationalization, one manufacturer said the strategy, while crippling to smaller brands, “makes point of purchase easier.”

Makeup trends spoke volumes: Neon, glitter and Eighties-type color combinations took center stage, as seen at Mirage Cosmetics and Milani. Mirage touted its Sinful nail polish line and cited numbers that proved not all manufacturers are suffering: For the most recent four weeks, sales of Sinful, which is priced at $1.99, grew 36 percent at Walgreens. Summer promotions for Sinful include Neon Nites. At Milani, the focus was on eye and nail. Within eye there’s Eye Am Perfect featuring two new liquid liners: Infinite Up to 24 Hour Wear and Eye Tech with Felt Tip Nib applicator; Easyliner Glitter in a retractable pencil; Crystal Eyez Sparkling Eye Shadow; Liquif’Eye Metallic Eye Liner; and several new baked eye shadows from Runway Eyes Fashion Shadows featuring glitter over-sprayed shades. Prices are sensitive to “the change of the nation” and average $4.49.

At Markwins, the major message was the refreshing of its Wet ‘n Wild franchise as well as its Black Radiance collection. Wet ‘n Wild has been upgraded with new packaging and fixturing without a price hike. The full planogram will be in place early in 2010. Black Radiance also has several new sku’s and an enhanced design for in-store. The brand is one of few choices for women of color available on the market, Markwins’ executives noted.

For Christmas, Markwins promises to bring back pizzazz. “We have great innovation that stresses value for Christmas,” stated Bill George, the firm’s chief operating officer. Last year many retailers held back in gift kits causing a lack of excitement at the point of sale that some hope to correct his year.

Between breaks, show attendees chatted about several rumored industry developments, including Physicians Formula’s launch of a major color story, and Procter & Gable’s men’s business launching Gillette Skin Care in Europe.

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