NEW YORK — It might be time to think out of the cosmetics bag.
Mass market retailers, in search of ways to offset marginal cosmetics losses, are eyeing categories to merchandise in the beauty department that lure new customers while boosting gross margins.
Among the products popping up in cosmetics are implements, teeth whiteners, deodorants, magazines and even vitamins.
According to ACNielsen, cosmetics sales at mass, drug and food stores, excluding Wal-Mart, fell 3.8 percent to $2.8 billion for the 52-week period ended May 31. Conversely, tooth whitener category sales are soaring. Crest Whitestrips alone produced sales of $200 million last year, according to Procter & Gamble.
There are several reasons why nonbeauty items are vying for space in cosmetics. For one thing, most chains have placed cosmetics inhigh visibility locations near the entrance of the store. Also, as category-management principles have been applied to mass retailers, it is easier for buyers from one category to import merchandise from another. In the past, buyers didn’t share products because they didn’t want to lose the revenues from their departments. Furthermore, as firms are getting bigger via acquisition, there are opportunities to cross-merchandise nonbeauty items with cosmetics. A case in point is a promotion at Target combining cosmetics and Crest Whitestrips.
Dental care is a prime example of a category now being viewed as a beauty tool rather than a sundry. Whitening toothpastes such as those from Rembrandt started the trend more than five years ago. The momentum built with the launch of Crest Whitestrips, Colgate Simply White and now the night versions such as Crest Night Effects. Through its efforts in the oral care category, P&G has pumped $1 billion of new sales into retail doors, according to the company.
Several chains are clip-stripping oral care products in cosmetics as women realize that a great lipstick looks best on white teeth.
While nail files and clips have always been popular in beauty departments, many retailers are adding more upscale tools and accessories such as mirrors. Companies such as Swissco and WE Bassett are responding with more elegant offerings. Ely Tawil, vice president of sales for Swissco, said more drugstore retailers are buying gold and silver trays, mirrors and upscale brushes. “They can put these out at a good value and it can be an alternative gift purchase to a fragrance,” he said. Consumers aren’t shy about shelling out upwards of $20 for quality accessories, he added.Even deodorants are masquerading as beauty items. Several products such as Dove’s new deodorant promise beauty benefits such as skin softeners or even protection from staining clothing.Excessive wetness affects about 2 percent of the population and Numark Laboratories offers a special product — Certain Dri — for people with this problem. According to Numark’s vice president of marketing, M.F. Daya, the product is bringing shoppers into departments looking to solve the problem. The item has become the number-one antiperspirant in units, according to Information Resources Inc.
Magazines are a perfect link with cosmetics since magazines promote beauty products. A handful of chains are taking that to the next step. Rite Aid, for example, has its own beauty magazine called Be Healthy, Be Beautiful promoting its cosmetics items. Eckerd and other chains have put racks of beauty magazines in the cosmetics aisles. Magazine sales are expanding at a rate of 4.5 percent, according to IRI, in mass doors.
Vitamins are now nudging into cosmetics, thanks to the launch of vitamins designed to make women beautiful from the inside out. The new Olay vitamins should hit shelves in the next few months and L’Oréal offers similar items abroad. Although the primary merchandising spot is vitamins, some chains hope to clip-strip the vitamins in beauty. Eckerd already has a vitamins line housed in its skin care department. According to P&G, the beauty of the line is that it brings vitamin users who may not shop mass cosmetics into the department.
Diet aids and direct-market gadgets have also become popular cosmetics items. When The Hollywood Diet was hot, Walgreen’s merchandised the diet drink on end caps in cosmetics. Other direct-marketed items such as Hairagami have also become major revenue builders in beauty departments. Space once allocated to fragrance gift sets are often stocked with merchandisepromoted on TV.
While the nonbeauty items deliver much needed sales and margins, retailers can run the risk of cutting beauty selections too deep and losing customers. If top management sees bigger returns from noncosmetics, the space allocated to the category could be at risk. However, as retailers look to bolster sales in a tough beauty market, toothpastes and other noncosmetics products are looking downright beautiful.If it wasn’t enough that drugstores face competition from supermarkets and discount stores that have added pharmacy counters, another competitor is entering the fray. ShopKo Stores Inc., a discount chain, has announced plans to open a freestanding drugstore. The design will feature a pharmacy and an optical center as well as an assortment of health and beauty aids, cosmetics, skin care, wellness products, photo processing and convenience foods. Earlier this year, Sears announced plans to open Sears Grand, a format that will sell some groceries and beauty aids.
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