FINDING THE GREEN IN AMERICA'S GRAY

Byline: Faye Brookman

NEW YORK--The expanding rainbow of new hair color products is keeping mass market retailers in the black.
Thanks to the aging of America and the advent of salon technologies available in home coloring kits, retail hair color sales were up 16.8 percent for the 52 weeks ended May 22 to $872.2 million, according to Information Resources Inc. of Chicago.
Buyers are predicting increases of more than 20 percent for this year. They hope several of the new items will generate new users.
Chain executives said they've seen a shift in consumer patterns in the last few years, as women went from having their hair colored in salons to purchasing kits for use at home.
"People are still going to the salon for perms and cuts, but coming to us for color," said Greg Hunt, merchandising manager for Drug Emporium in Powell, Ohio.
Statistics provided by the L'Oréal hair care division of the New York-based Cosmair Inc. show that of the 36 million people who color their hair in the U.S., 24 million do it at home.
The overall market for hair color is expected to increase dramatically by the year 2000, widening to 55 million consumers.
Among the new items currently available or ready to be shipped to the retail market are:
L'Oreal's Excellence Creme, the first cream hair color designed for use at home. According to L'Oreal, about 80 percent of hair color applications in salons are made with cream formulas rather than liquids. The 26 shades will retail for $6.99 each.
Clairol will launch Natural Instincts in October. It's a semipermanent hair color mostly derived from natural ingredients such as aloe, chamomile, ginseng and plant extracts. Many salons offer natural hair-color treatments, but Clairol said this is the first from a major U.S. company for at-home use.
Industry estimates are than Clairol will pump more than $15 million into the brand during its launch year.
Revlon Shadings, a highlight product that adds shine to the base shade and blends away gray. Many buyers call it Revlon's answer to L'Oréal's Casting. There are 15 shades with a suggested retail of $4.39 each. Shadings will be available in October.
Revlon is also reformulating Colorsilk to have greater conditioning properties. Colorsilk sells for a suggested retail of $3.29.
Despite the potential of new products flowing into the market, some retailers fear that if they stock the full array of new contenders in all their shadings, the proliferation might dilute their business.
Drugstores are especially concerned because they have seen their leading share of the hair-coloring business challenged by the encroachment of discounters and food stores.
According to Information Resources, drugstores now have 54 percent of the market; discounters, 28 percent; supermarkets, 17 percent, and other retail formats, 1 percent.
Drugstores have traditionally been able to offer customers a wider selection of colors because they have larger hair-coloring departments than discount or food stores. But the weight of new offerings puts pressure even on drugstores, buyers said.
Since the category has a low return on investment because of the huge commitment needed to stock every shade and type of product, as well as the pressure of competitive pricing, buyers said they refuse to enlarge the footage.
"Hair color just doesn't have the ROII [return on inventory investment]. We're loath to expand it," said Susan Swartz, senior buyer for I Got It at Gary's in Eagleville, Pa.
That means some heavy editing is required. L'Oréal, buyers said, has made it easy because the new Excellence product can be merely a stockkeeping swap with the existing Excellence merchandise.
More troubling is working Clairol and the new Revlon stockkeeping units into an already bulging-at-the-seams department.
"L'Oreal made it an even swap. But we're still trying to figure out where all the others will go," said Michelle Jones, buyer for Perry Drug Stores in Pontiac, Mich. "I wish manufacturers wouldn't come out with so many colors."
Buyers said they are eliminating color duplications within bands, rather than stealing from one brand to support another's new item. For example, space to house Natural Instincts is coming from existing Clairol footage rather than from L'Oreal's space.
"We're basically looking at facings within brands and cutting there," said Hunt.
Swartz said she is challenging the manufacturer to find the space. She thinks finding room for Clairol's Natural Instincts will be difficult, but worth doing.
"They've made an adroit assessment of the market. There are people who are scared of coloring their hair and it should bring new business," she said, referring to the fact that Natural Instincts is semipermanent. The color gradually washes out.
Steve Mistretta, director of trade marking at Clairol, said the company offers computerized inventory placement schematics to help retailers create new merchandising arrangements.
An even greater challenge, Swartz said, is finding room for Revlon's Shadings.
"But we will do it because we hate to impinge on anything Revlon does for hair color because it is one of the few profit centers in hair color," she said,"although we did manage to make money on Casting, too."
Revlon's pricing provides retailers with more gross margin than competitive brands'.
Hair color has been an especially ripe ground for space wars at retail, with major players introducing new items.
Buyers have trouble keeping up with who is growing the fastest. Although L'Oréal's Preference is Swartz's number-one brand and Clairol's Nice 'n Easy is number two, Clairol is her top overall vendor.
According to market statistics provided by IRI, Clairol sales are $430.5 million in the three types of mass market outlets--drugstores, food stores and discount outlets--up 14.5 percent for the year and representative of a share of 49.4 percent.
Cosmair's L'Oreal sales are pegged at $306 million, up 23.1 percent for a share of 35.1 percent. Revlon's mass market items represent sales of $36.7 million, up 9.6 percent for a 4.2 percent share of overall volume. Smaller brands represent the remainder of the market.
Retailers believe Excellence will boost L'Oreal's share, especially with Hispanic customers who like cream formulas. However, the L'Oreal product has just been launched in stores and has not yet shown up in the rankings, said Hunt, who added, "It has a higher cost than the previous products and I think it will take a while to catch on."
Retailers also applauded Clairol's new, offbeat advertising, showing Julia Louis-Dreyfus coloring a woman's hair on a bus.
The problem of marketing hair color is exacerbated by the fact that the two top players--L'Oreal and Clairol--have diverse approaches to merchandising.
Sensing that many customers are scared away at the point of sale because they are confused, Clairol created a fixture that it feels clarifies matters. It is similar to the modular fixtures made popular in cosmetics departments by Revlon and L'Oréal.
Called the Clairol Color Choice System, it organizes hair colors by commitment--the length of time the color will last--by color and by brand.
Since blonde is the number-one seller, it is positioned first, followed by red, brown and black.
Temporary colors that wash away in six to 12 shampoos are on the top shelf, products that wash out in 12 to 24 shampoos are on the next shelf and permanent colors round out the selection.
All products are assigned a commitment rating of Level I, II or III and each product's level is stated on the packaging.
The fixture includes a computer that will suggest a product after a consumer punches in her hair type and what kind of look she desires.
L'Oreal agreed consumers are confused at the point of sale.
"Through intensive research, we found that the greatest barrier to hair color purchases is that consumers find the category both intimidating and confusing," said Joe Campinell, senior vice president and general manager of the L'Oreal hair care division.
L'Oréal's solution is the Color Intelligence System. Information on the shelf tells customers how to pick the right color category, the appropriate brand and the best shade.
"The decision on how to talk to the consumer comes from what's easiest for the customer, not what's easiest for the manufacturer," said Campinell.
L'Oréal Excellence Creme will also be supported with an "educational boutique."
In addition to products merchandised on a store shelf, Excellence Creme will be displayed on a rotating four-sided unit that contains mirrors, hair swatches and a laminated book covering each shade range and entitled "Selecting Your Best Hair Color."
Several chains, perplexed by diverse vendor strategies, refuse to choose one approach over the other. Duane Reade, for example, uses Clairol's approach for Clairol merchandise and L'Oreal's for its items.
Concluded one buyer, "We're trying both approaches. We don't care what they do, as long the stuff sells."

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