NEW YORK — If early results at Wal-Mart and Rite Aid are any indication, the mass beauty market may end the year with an uptick in sales in the fourth quarter after all.
Remarking on the post-Thanksgiving weekend, Wal-Mart vice chairman Thomas Coughlin told WWD this week that the chain’s fragrance sales “fared better than last year.”
And Rite Aid chief executive Mary Sammons said fragrances have been trending up for the Camp Hill, Pa.-based drugstore chain. “I would expect some good results this season,” commented Sammons, who pointed out that at drugstores, the bulk of fragrance sales come closer to the holiday.
The mass fragrance category has been floundering for several years. Even the widespread introduction of open-sell designer-fragrance programs hasn’t been able to stem the losses. Rather, some claim, the designer items have eroded price points in the segment. So far, the launch of Celine Dion has been the highlight in 2003 and has elevated the price of a traditional mass fragrance. The scent lifted fragrance sales in September, the first growth in the women’s market in 18 months.
Last year sales of women’s scents dropped 11.2 percent and men’s fragrance toiletries dipped 4.6 percent, excluding Wal-Mart, according to ACNielsen.
However, making the mass beauty market even more challenging this year is that sales of cosmetics have been flat to down so far, reversing a several-year growth trend.
To try to remedy that this holiday season, price has been placed at the heart of the matter. Even Wal-Mart, already noted as the industry’s low-price leader, came out with gift sets at lower prices. A visit to a Pennsylvania store found numerous beauty gift sets at an unbelievable $2.88.
A Wal-Mart spokeswoman, noted the chain is offering an “increased number of fragrances, bath and color cosmetics sets in the under $5 retail range, responding to a trend we saw last year in our customer looking for great values.” She added: “Again this year, the customer is responding, as some of our best-selling items are in the lower retails.”
When asked about the lower pricing this week, Wal-Mart’s Coughlin noted, “We are going for value, we always have to.”Along with the Celine scent, bestsellers at Wal-Mart so far include Elizabeth Arden and Liz Claiborne brands, said the spokeswoman. “In fragrance, the traditional mass brands continue to do well, but are outpaced slightly in sell-through by the designer brands,” she added.
Several buyers at different trade classes noted a return to interest in fragrances. That should help spark about a 3 to 4 percent increase in designer scents sold at mass and mass brands, buyers estimated. Once again, retailers think the action will be in prestige scents sold at mass, often in clamshells.
In other ways, too, the blurring between the retail trade classes is extremely evident this year. Drug chains staged early morning sales the day after Thanksgiving and even Santa has become a cross shopper — stepping from the mall to posts at both Wal-Mart and Kmart this year. In the past, consumers had to make a special trip to a mall to pose with Santa. Wal-Mart is even giving the picture away for free.
Shopping malls and discounters have traditionally held early-bird sales on Black Friday. For the first time ever, a drugstore chain, Walgreens, decided to have its own sale for those itching to get shopping. The Friday sale ran 7 a.m. through noon and gave Walgreens a “good start” on the holiday, according to the chain’s spokesman. “Shoppers are getting used to early sales the day after Thanksgiving and we thought we had a chance to capitalize on it.”
Walgreens’ November sales rose 15.1 percent over last year to $2.9 million. Front-end merchandise, including beauty, helped with the gains. Feedback on Walgreens’ new signature scent, C’est Moi, has been very positive. “Our beauty advisers are telling us that the packaging is getting attention and that consumers really like the scent,” said the spokesman.
Ulta, perhaps the example of mixing mass and class, is off to a tremendous start, according to the company’s chief executive, Lyn Kirby. “We did significantly better than we budgeted. Our comp numbers are way ahead of last year and it is a stronger opening to the holiday,” she said. “We came out of the gate strong.” Ulta used the week leading up to the holiday to promote its items in a customer club booklet. Ulta’s Jeff Askenas, vice president, prestige merchandising, noted that many scents are exhibiting double-digit growth. Ralph Lauren’s Romance rose 47 percent, while Chanel’s Chance business doubled thanks, he said, to fresh packaging. Jennifer Lopez’s Glow is up 10 percent, which he said is notable since it is against a “huge launch” last year. “It is still in the top 10,” he said. Other standouts at Ulta include Sensi, Donna Karan’s Cashmere Mist, Tommy Girl, Calvin Klein coffrets, Polo Blue, Cool Water and Calvin Klein’s Truth. “Shoppers are looking for newness, but there are older scents doing well.” He added that Celine is still performing well, even after it rolled out to mass merchants.Makeup artist Sonia Kashuk, creator of the Sonia Kashuk Professional Makeup and fragrance line at Target, said sales of her signature scents have been strong. For holiday, a fourth — Bergamot — was added this year, along with a $19.99 gift set featuring samples of all four scents and a fragrance pen for $9.99. She expects sales of her line to “far exceed” last year’s volume. Kashuk is featured, along with other designers such as Isaac Mizrahi, in Target’s holiday “Favorite Things” ad, a theme that is carried into the store with signage. However, Target also is speaking to value shoppers with endcaps offering beauty sets that are line priced at $4.99 and $5.99, respectively.
Like Target, Kmart is emphasizing its exclusives this year —namely, Joe Boxer and Thalia fragrances and gift sets.
May’s Drug Store is expecting a hot beauty season, but not because the economy in Tulsa is booming. On the contrary, Gregg Heller, HBA buyer, said the region’s recent 17,000 job losses — mainly in the communications industry — has left the area a bit depressed. “[Our] numbers have been a little disappointing prior to Thanksgiving. Personally, I think everyone slacked off, but shoppers will hit stores hard for Christmas and in December in general.”
May’s seasonal aisle blossoms during the month, Heller added, with bath gift sets and other nonfragrance beauty items. Hair color, he pointed out, usually posts a boom during the holidays.
With the focus on value, cosmetics kits are getting a big focus again this year. Gary Savage, president of Beauty Innovations, said retailers have placed reorders on some kits as recently as last week. Savage, whose kits are priced $4.99 to $24.99, expects to see sales climb 20 percent this year. Wet ‘n’ Wild introduced gift sets for the first time in 2003 and, coupled with the launch of its first advertising campaign, expects sales to grow 10 to 20 percent this year.
And clearly there are some who like to stay home. Early sales of TV beauty products appear to be healthier than ever, and could have contributed to lackluster retail sales. Most recently, Bare Escentuals, an all-natural minerals skin care and color cosmetics line, broke records on QVC by recording $12 million, or 357,438 units, in product sales over a 24-hour period. On Nov. 23, the brand appeared in three two-hour segments and five 10-minute “special value” segments, which featured a promotional kit. Leslie Blodgett, ceo of Bare Escentuals, helped sell the 10-piece color collection kit, which included makeup brushes and lipstick, mascara and eye-cheek color cosmetics. According to Allen Burke, QVC’s beauty director, QVC “has never hit that big a number with a brand” before. Burke realizes he has “only scratched the surface” in regard to the brand’s potential, but showing restraint and not being so promotional in the immediate future will help drive Bare Escentuals sales in the long run.Jason Milch of ShopperTrak, a consumer marketing research firm, said the first weekend of the holiday shopping season opened “significantly stronger” than last year. Although many retailers had said they’d offer fewer bargains, Milch said there were plenty of sales to be had. Visits to mass doors proved that point with Wegmans offering fragrances under $4 in the seasonal aisle. Rite Aid also had signs promoting sharp prices on fragrances. The big question will be how much people splurge. “People are feeling better, but it will be interesting to see what they spend on non-necessities,” he said. ShopperTrak said weekend sales totaled $12.4 billion, up 5.4 percent over last year (figures are derived form the U.S. Commerce Department’s general merchandise, apparel, furniture, sporting goods, electronics, hobby, books and other related store sales, as well as proprietary information).
Candace Corlett, a principal in WSL Strategic Retail, concurred. “What will make the year flat, versus 4 to 7 percent gains, hinges on getting enough people to forget the budget and buy an extra three or four gifts,” she said. Unfortunately, on her retail visits, she hasn’t seen enough items to generate incremental purchases. “We don’t see that fun. It also needs to be about the merchandising. Fragrances in particular are just piled high like Cheerios. Fragrance isn’t a commodity,” she said, adding, “it is about romance.”
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