NEW YORK -- Beauty is becoming more of a private matter.
As retailers scramble to differentiate their stores from the competition, exclusive brands are taking on greater prominence. "Private label is a profitable way to differentiate your stores," said Vicki Williams, president of Signature Sales, a company that works with retailers on exclusive brands.
Examples of efforts to establish mass proprietary brands include Drug Trading Co. Ltd. of Markham, Ontario, Canada, which installed a new bath and body line late last year called Fix Therapy available to the company's 700-plus doors, and Shoppers Drug Mart, another Canadian powerhouse, which plans to roll out its Quo color line into 600 doors. Quo was originally tested in 250 stores. Specialty items such as Bags Away -- a concealer -- and makeup brushes have become the best-selling items. Shoppers Drug Mart is considering expanding into skin care under the Quo umbrella. And mass giant Wal-Mart has added private labels targeted at specific age groups. For the young set, there's No Boundaries, and for fashion-conscious women, there's CQ2 lip and nail.
As private label beauty becomes mainstream, mass merchants are learning valuable lessons, namely, that you can't just slap a retail name on a beauty product. Effort rivaling that of a national launch must be applied to the exclusive brand.
"I think if you look historically at the role of drug chains and mass merchants in beauty, they shied away from private label because it was the purview of department or specialty stores and because of the way in which beauty was merchandised with suppliers paying for space," explains Brian Sharoff, president of the Private Label Manufacturers Association. "Now the retailers can command enough of a following to offer a private brand that is seen as being high quality."
Sharoff predicted more retailers would join the exclusive beauty club in 2002. "There is a clear indication that players such as Wal-Mart, Target and CVS are doing well, and there's no reason to change formulas -- and there's no reason others can't follow."
Sales of all categories of store brand products grew by more than $1.2 billion last year across drug, food and mass doors, up 2.6 percent. According to PLMA's 2001 report, store brands produced sales of $47.3 billion. And, store brand beauty items were among the fastest-growing categories in drug and mass doors. For example, facial cosmetics were the fifth-fastest-growing category by dollar volume in drugstores in the 2001 report.Retailers said proprietary brands deliver attractive gross margins coupled with shopper loyalty.
Although retailers such as Target, Eckerd, CVS, Shoppers Drug Mart and Wal-Mart have proprietary color lines, most retailers entered the business via bath and body. According to a source at Drug Trading, bath and body is easier because it is less item intensive than color cosmetics. "And, customers are less fickle," she added.
Drug Trading's Fix Therapy, she said, is a simple and well-edited assortment of the most frequently purchased bath and body items such as body lotion, massage bath oils and bath crystals. The entire line is priced under $10.
"Fix Therapy is also unique because the products are all-natural and packaged in componentry that is unusual for the category," the source said. "So far, the response has been great, and we did very well at Christmas with gift sets," she said.
Bath and body has also been a home run for Rite Aid. Speaking at a PLMA meeting last year, Mary Sammons, president and operating chief of Rite Aid, pointed out that private brands at the front end of the store are helping offset lower margins at the pharmacy. She said private label is currently 10.7 percent of front-end volume, which include beauty. She hopes it will expand to 11.5 percent. Rite Aid unveiled three new proprietary bath and body brands last year.
According to Todd Andrews, spokesman for CVS, the chain's own Essence of Beauty bath, body and hair care offerings are doing well. "We continue to be very pleased with our Essence of Beauty bath and body and hair care offerings. Consumers have responded very favorably to both lines," he said.
Color can sometimes be a slower build, said those familiar with building private brands. CVS, in fact, continues to test market Essence of Beauty cosmetics with "no plans at the present time to introduce into our regular offerings," said Andrews. At a store near Philadelphia, CVS moved the line from the front of the department to an endcap toward the back. The store manager said sales picked up substantially after the move.
And although Duane Reade has been working on a proprietary beauty line, Bruce Schwallie, senior vice president of merchandising, said the company's own brand is "still in the development stages."Retailers tinkering with going private said they are concerned about keeping the line fresh and managing the stockkeeping units in a slow-turning category. Williams at Signature Sales added that retailers often don't have brand development people to sustain the color brands. Some executives point to the problems Sears had with nurturing Circle of Beauty. Further exacerbating the challenges of homegrown beauty is the lack of statistics to qualify how the existing labels are doing. To date, they have not shown up on the radar screen for Information Resources Inc. or ACNielsen.
However, many think a private label brand could help fill the hole left in planograms as Oil of Olay exits the color business.
Some industry experts even think exclusive fragrance brands could be the remedy for ailing mass market fragrance sales. "My personal belief is that private label [fragrance] will be on the increase and that retailers who aren't looking into it are missing an opportunity," said Mary Manning, partner with Manning Abelow, a marketing consultancy in Manhattan.
Despite the challenges of breaking the exclusive color code, there are examples of successful programs. According to Eckerd's vice president of beauty Kathy Steirly, the chain's Mira has won fast acceptance. "We are pleased with 2001 results and expecting great growth for 2002. As we continue to remodel our stores to the new prototype, we will be relocating Mira to our universal wall fixtures. There will be some minor assortment changes for spring as we do our regular resets of the department."
Other examples of exclusives getting the nod from consumers are Quo, Target's Sonia Kashuk and Boots' No. 7.
Michael Lovsin, vice president of beauty merchandising at Shoppers Drug Mart, said Quo has become a brand sought out by the chain's shoppers looking for a quality premium line. "We continue to experience double-digit -- 20 percent -- gains in the line, plus fantastic growth from our brushes. He added that Shoppers Drug Mart is also gaining the rights to Rimmel from Coty and will be only the second retailer in Canada to market the brand (Wal-Mart is the first).
In specialty stores, sources point to the private label success stories at The Skin Market, Bath and Body Works and Sephora. "I'm very impressed with Skin Market," said Williams. "They have a true internal development team."One specialty retailer known for private labels, however, is experimenting with brands. MishMash, the newest format from Too Ltd., sells Tony & Tina, Dirty Girl and Demeter. Cristina Bornstein, co-founder of Tony & Tiny, said that although MishMash has its own brand, the emphasis is on Tony & Tina. "We're the name brand that brings trend to their stores," she said. A MishMash spokesman confirmed that it was easier to establish what the store is about with a known brand than to build from square one with a store brand.
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