A new theme emerged at the Efficient Consumer Response Management cosmetics conference this summer sure to please the cost-conscious — a renewed emphasis on value-priced cosmetics.
Budget brands seem to be sprouting just as the myriad of niche teen brands that once dominated the show are drying up. While the new lower-priced lines are primarily coming from smaller cosmetics firms, market-leading brands are not ignoring the trend. Maybelline is said to be bringing to the U.S. a value nail polish line from Brazil called Colorama.
Behind the push is the rampant growth of the dollar store format. Currently, there are some 20,000 dollar store doors representing dominant chains like Dollar General, with 6,379 stores in 27 states and Family Dollar, with 4,800 units in 23 states. Then there is Dollar Tree with 2,468 stores in 47 states, along with a host of mom-and-pop shops.
Wal-Mart is also getting into the dollar act with test sections in 17 stores.
According to ACNielsen, 60 million U.S. households are expected to shop at dollar stores this year, up from 53 million last year.
Budget, however, wasn’t the only hot topic at the ECRM conference, which drew retailers from more than 50 companies to meet with about 65 supplier firms at the Renaissance World Resort here from Aug. 10-13. There was also an abundance of antiage skin care introductions and an emphasis on multicultural color collections giving retailers something to consider as they hammer out plans to revive the beauty business for the first quarter of 2004. Although a handful of suppliers lamented that the top-level merchants weren’t present from all chains, attendees still call the ECRM sessions the most productive in the business.
Many buyers said they wanted to find ways to drive gross margins back up in a business that has been battered by a tough economy and rampant promotional tactics such as buy-one-get-one-free deals. But several industry executives questioned whether introducing more budget lines was the best solution to boost dollar sales.
Consumers, however, continue to show their passion for saving and apparently aren’t finding the standard bargains at Wal-Mart sufficient as many chase even better deals. Throughout the ECRM show, the buzz being created by dollar stores was evident. Several manufacturers displayed new lines created to exclusively serve budget stores, while others offered value launches to help drugstores and mass merchants compete with their aggressive competitors who sell many beauty items for a buck.In the past, budget merchants have thrived on closeouts as well as brands such as Artmatic and Aziza, but at ECRM new offerings abounded.
Isaac Gindi, designer for Icebox Inc. is typically on top of retail trends and has a value offering called AU79 (the chemical symbol for gold) with items priced at $1.99. Mirage Cosmetics executives noted that many budget brands such as Wet ‘n’ Wild are no longer under a dollar, creating a market hole for its line called Wild & Crazy, which is priced at 99 cents.
Colormates Corp. also showed items it could customize for budget planograms for $1 apiece. Evelyn Champagne, a brand marketer, commented, “Dollar stores are starting to look at cosmetics more because you can really make some margin.”
And Almar Sales’ Dream Cosmetics division, founded earlier this year, was showing Beauty Basic, a brand for dollar stores that offered two items on a card.
Meanwhile, Cosmetic 2000 debuted Hugs & Kisses, another 99 cent line. “We think this works for teens to grannies,” remarked Howard Brauner, president of the marketing department for Cosmetic 2000. The company knows a thing or two about budget brands — its owner is Stanley Acker, the creator of Wet ‘n’ Wild.
Wet ‘n’ Wild’s new parent, Markwins Beauty, showed more reasons why its blockbuster value sets have become among the bestsellers in drug and discount stores. Beyond putting money behind an advertising campaign for Wet ‘n’ Wild, Markwins is now using the logo on cosmetics sets.
The popularity of value-driven gift sets has drawn more players to the category. Intercon is making a big splash with cosmetics and bath sets featuring items such as flip-flops and a cocktail shaker. “They have some of the cutest products I’ve seen at the show,” confirmed Valerie Cheyney, buyer for Happy Harry’s.
“Customers want value,” said Ann Tall, cosmetic category manager, at Intercon. “Everything [in the sets] is reusable.”
The time between a look’s debuting in a class environment and mass is compressing, according to Brad Meyers, executive vice president for RGA. His firm displayed status bags that resemble popular designer logos at a fraction of the cost that are being picked up for mass. Price is a focal point for holiday, noted Meyers. “We are all selling value for Christmas — everybody is doing it.”While cost-consciousness is a mantra in color cosmetics, skin care is where shoppers appear to want to dig a bit deeper into their wallets. However, they are looking for the benefits of Botox and department store skin care at mass doors. American International showed Wrinkle Release, which the firm said offers a Botox-like impact with a safe formula featuring the ingredient Matrixyl. It is priced at $15.
And Neu Technologies displayed its new cosmeceutical skin care line featuring five products in a 12-item display unit.
Beauty Beat displayed Bye Bye Wrinkle, the other extreme from its popular Bye Bye Blemish item. The company has also shifted away from teen color and is focusing on other brands including Savina, a nail and treatment line.
The mass market has been eyeing the ethnic market for more than 10 years, but with inconsistent approaches. Launches have come and gone leaving black, Hispanic and Asian women to turn to beauty supply stores or the MAC counter for appropriate formulas and shades.
Vowing to bring them back, several firms offered launches for a diverse audience. Markwins Beauty Products, which has incorporated AM’s Black Radiance, showed off a new vibrant fixture for the line for black women. Holographic shelf stickers help attract shoppers to the brand. Its Tropez collection, designed for a multicultural audience, is also getting a facelift and will be marketed to speak to Hispanic and Asian populations.
Some international companies are bringing well-known names to America. Puig Personal Care, for example, was getting attention from retailers for its Maja and Heno De Pravia lines, which are already established with Latin shoppers. According to Puig, Walgreens is set to sell the lines.
Black Opal, long one of the more upscale brands sold at mass, is expanding into nail color with a lacquer collection. The company also debuted several promotions planned for Black History month. Its sales grew 35 percent this year, according to the brand’s marketers.
Jordana has been very successful at implementing its Milani line for women of color and Bob Wallner, national sales manager, said two major chains already have impressive sell-through on the line. He said that with its Jordana value line and Milani collection, the brand is well positioned to succeed in the current environment.Cosmetic 2000 also showed its efforts to tap into a multicultural marketplace with 2000 Uptown Visions, which will ship in September. And Diamond Cosmetics is offering Jazz, a line of cosmetics to suit various skin tones.
Private label manufacturers were also on hand to show retailers turnkey methods to enter the exclusive label business. Although success has been mixed with private label brands, retailers do want to look for opportunities to distinguish their stores from the competition.
“Most chains are willing to give private label a try, and they can pick and choose from what we have,” said Johanna DeKama, vice president of domestic and international sales for Lady Burd Exclusive Private Label Cosmetics. Nu-World Corporation, the New Jersey company behind Wal-Mart’s Mary-Kate and Ashley color line, also talked to retailers about easing the risks of entering proprietary brands.
One area where private label has been cleaning up is in makeup brushes. Upstage displayed its array of private label clients, ranging from CVS to Eckerd.
Nail care was also strong at the show as more professional and salon manufacturers seek mass distribution. A case in point is Jessica, a line of products formulated by Jessica Vartoughian, founder of a nail salon to the stars in Beverly Hills. One of her first clients was Lucille Ball. The line consists of problem and solution formulas.
Orly International, another salon staple, displayed new packaging. The company was the originator of the French Manicure and displayed new versions of that as well as salon products including ridge fillers. Pink House Emporium introduced a one-item solution called nailSOS touted as “the only treatment you’ll ever need.”
American International Industries showed its revolutionary Gel Nail Technology, which comes with enough supply for four at-home applications of gel nail. Paris Presents filled its room with its whimsical Ms. Manicure collection, which company executives said is bringing new users to drugstores. Fing’rs showed its delicious side with nail tips kits based on desserts such as Peaches and Cream.
Traci Palermo, vice president of Calico Laboratories showed a revolutionary antibacterial polish remover. “Nails are filled with bacteria and fungus,” she explained. To introduce it, the company has a “Five Grand Giveaway.” The company also revealed a packaging upgrade for its line.Del Laboratories pledged to expand its pedicure business, which offers a new collection of spray-on leg makeup and treatment items such as thigh and leg cream and an anticellulite cream. Under its new Sally Hansen Healing Beauty color line it will add Fast and Flawless Skin Brighteners, capitalizing on its best selling stockkeeping unit — Fast & Flawless spray-on makeup.
Teen products had long been the mainstay of the ECRM meetings and retailers said they were relieved to see fewer youth launches. However, the companies wooing younger girls showed they had grown up. Estée Lauder’s Jane division is getting back to the roots that made the brand one of the first to recognize the power of teens — even some of the original players in advertising are being tapped to restore the luster.
Jane’s image had been based on what was aspirational for young girls. The products were cute, but were considered serious makeup. Executives at the show explained efforts centered on increasing the basic wall business, while still offering a handful of fun prepacks. “We want to have serious products that don’t duplicate or cannibalize from what is out there,” explained Todd First, Jane’s general manager. “We need to expand our consumer base.”
Despite that it has been seeking investors, Caboodles Cosmetics showed it is in the business for the long run with line extensions to popular products such as Frutopia and items such as Hot Tips, a mascara in a range of colors. Speaking for the Caboodles box business, Ernie Lippman, vice president of sales, pointed to a new diamond-finish black box for holiday and a collection of cases with silver highlights for spring. “We have a blend of price points that retailers need,” said Lippman. “We are very price conscious. It is all about value for holiday this year.”
Picking up on the latest movement in youth products — candy and food-based brands — Dream Cosmetics displayed new licensed lip balms based on Kellogg’s cereal such as Fruit Loops and Apple Jacks. Bonne Bell, also an exhibitor, has added a line of soda-based lip items such as Orange Crush and Seven-Up.
Fira Cosmetics, which is sticking to its teen roots, also cooked up excitement with beauty products packaged like mini cupcakes and butterflies. Picking up where cell-phone cosmetics compacts left off, it had PDA kits packed with beauty. “We look for the products that teens think are cool and update our cosmetics,” said Ira Adler, vice president of sales for Fira.Townley, which will produce Stuff by Hilary Duff, also showed licenses aimed at a younger set including Hello Kitty, Strawberry Shortcake and a new inspirational collection called Dear God Kids. Dear God Kids has bilingual packaging to help appeal to a diverse customer base.
Teens still rave over temporary hair colors. Neoteric Cosmetics displayed unique packets called One Night Color. And Jerome Russell attracted attention with its blonding collection called B Blonde, which includes blonding shampoos.
And, as “American Idol” gets ready for a third installment, Beauty Innovations showed a fragrance based on the popular reality show. Will it be a winner? We’ll have to see what Simon says.