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Beauty Roundup:September 3, 2010

As Americans send their kids off the college and shop for back-to-school needs, retailers are already fretting over the Christmas selling season.

Will Santa Show Up This Year

As Americans send their kids off the college, shop for back-to-school needs and put away summer clothes, retailers are already fretting over the Christmas selling season. There are clearly two schools of thought with one predicting a breakout year with shoppers returning with zeal; or another year of penny-pinching and value purchases. The last two holiday periods were lackluster at best. Consumers bypassed beauty for other needs or purchased extreme value gifts. Instead of fragrance gift sets, many opted for single items. The usual beauty blockbusters were often left untouched.

 

Beauty is on a slight comeback path at mass doors. According to Nielsen, sales for the 52 weeks ended Aug. 7, for food, drug and mass including Wal-Mart jumped 2.9 percent to $4.35 billion. The standouts were nail, which was up 11.5 percent, and facial, which rose 2.2 percent. Lip is down about 5.6 percent.

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August monthly numbers also give some hope. Many chains reported modest gains. However, the sales bump was driven by price slashing. Beauty did register on the plus side for many merchants such as Target, which called health care and beauty items “strong sellers,” and Walgreens, which said front-end sales jumped 8.3 percent in August.

 

Another positive sign for mass operators, especially drugstores, is the early arrival of flu vaccines. Chains such as CVS and Walgreens are promoting flu shots early, driving shoppers into stores so they can be exposed to seasonal merchandise.

 

Still, suppliers aren’t counting on a flood of free spending shoppers. Many are offering lower-priced choices, such as under $5 stocking stuffers. Several chains also said they will offer deals where consumers can earn store reward gift certificates as a method to lure customers back for more purchases. The best crystal ball gazing suggests mass holiday beauty sales will be up about 5 percent — the best in the last four years. Plans call for stores to be set up earlier than in the past and with more attention paid to displays created specifically for chains. For example, Wal-Mart or Target might have larger prepacks; drugstore chains smaller endcaps.

 

The final positive for mass merchants is that as consumers have shifted shopping patterns to include more inexpensive venues, drug, food and discount stores will have an opportunity to entice and try to extract more holiday gift purchases from customers. It will be a key time to make sure stores are ready.

People, Places and Things

A few words with Lyn Kirby on Ulta’s latest results. Ulta is bucking the overall slow economic sales environment, thanks to store expansion and new brands. Kirby discusses why.

 

Kirby: We are pleased to report an excellent second quarter 2010 performance. The momentum in our business is very strong as we reap the benefits of our market share strategies implemented in 2009 and continue to execute against these strategies in 2010. Growth was balanced across all major product categories. Our performance reflects the continued strength of our business model with dynamic marketing, compelling merchandising, new brand introductions and the continued leverage of our powerful loyalty program. The third quarter will include the continued brand introduction of Philosophy and the launch of Tarte in cosmetics. We will deliver 28 new stores in third quarter.

What’s In Store

Liquid Keratin Bold Debuts: An at-home keratin hair straighten line called Liquid Keratin Bold will hit Ulta and Beauty.com in September. Retail locations will follow in October. The treatment is designed to provide results lasting as long as 30 days.