Big Challenges For Small Beauty Companies

A longtime beauty executive posed an interesting question late last week: “Can a new color cosmetics line survive in today’s environment?”

The track record of even megafirms has been cloudy, including launches from Procter & Gamble’s Olay and Revlon with Vital Radiance. Going back even further was the failure of Clarion from Noxell. One source had to go back as far as the U.S. launch of L’Oréal to find a new color line that’s made it.

The question was posed as many small and mid-sized labels are struggling in the current mass beauty universe. It isn’t only the climate, though, but also actions retailers are taking on the beauty wall.

Stockkeeping utilization is the new buzzword in mass retailing. CVS embarked on the process within the last few years, according to suppliers. Walgreens is the latest to take a hard look at each and every item in its beauty department. In fact, when asked if Walgreens was eliminating a few brands, a company spokeswoman didn’t name the brands being considered, but pointed to the “reevaluation as part of the SKU optimization process.” Under the direction of Kim Feil, chief marketing officer, Walgreens is editing some categories to make space for those that bring in the returns. Although the Walgreens spokeswoman wouldn’t comment, market reports indicate that Jane is one of the lines being pruned out by the drugstore chain. Jane executives couldn’t be reached.

Jane, along with some other mid-sized players, are mentioned in the industry as brands that will have a big challenge riding out the recession. At times like these, retailers contract and stick with big firms with big budgets. “Then one day,” joked one supplier, “they wake up and see all the stores look alike and they start looking for niche brands.”

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In the prestige market, there has been room for independent brands to get a following and to grow. This is often because the cost of entry is lower than into a major mass merchant. There are few small mass merchants left — as witnessed by the sale and closure of Drug Fair stores — to help fledgling lines get off the ground. Retailers demand too many things from vendors today ranging from fixtures to co-op dollars.

Have an example of a brand that’s survived and thrived in the brutal mass color world? Let us know in our comment section at the bottom of the page.

NEXT: People, Places and Things >>

People, Place and Things

A few words with Tom Winarick, a former executive vice president at Prestige now out on his own looking for international acceptance.

WWDBeautyNews: What are you up to since leaving Prestige Cosmetics?

Winarick: I’ve always wanted to start something of my own and the opportunity came to start a business helping U.S. companies expand globally. I had experience bringing Prestige to international doors such as Boots, so it made sense.

WWDBeautyNews: What is the reception to U.S. brands abroad?

Winarick: There is demand right now, especially after the election, for anything American. In fact, many companies want the packing or displays to say ‘Made in America.’ I’ll be going to Cosmoprof exploring more opportunities. The timing is good, especially now, for firms to look to international markets. Among the best are Europe and Latin America right now.

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