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NACDS: Natural Is the New Normal

Top mass-market executives headed to the desert to plan growth strategies for the future built around healthier beauty options.

A dose of healthy ingredients is the prescription for boosting beauty sales in the nation’s drugstores.

That was the prevalent message at this year’s National Association of Chain Drug Stores Annual Meeting held April 22 to 25 in Scottsdale, Ariz. Retailers called upon brands to remove chemicals consumers don’t want in their beauty and personal care.

The need to respond to these healthier consumer demands was among the clarion calls from the newly minted chairman of the NACDS board, Walgreens Boots Alliance cochief operating officer, Alex Gourley. “The theme for today and moving forward is the customer — understanding the customer’s needs and meeting them,” Gourlay said.

What consumers now covet, as discussed in top-to-top meetings held on the sprawling grounds at the Phoenician Hotel, are products that are better for them. What started as a movement in food where consumers looked for natural, organic and or non-GMO has migrated to the beauty realm.

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“Natural is evolving. People are conscious of what they put in and on their bodies,” explained Lyle Tick, managing director for Walgreens Boots Alliance-Boots Retail USA. “It doesn’t always have to be 100 percent natural. What they want is total transparency and knowing their products are sourced properly with good ingredients that work.”

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Better-for-You Beauty Expected To Be Better
Lyle Tick, Walgreens Boots Alliance-Boots Retail

A few days before the yearly gathering, CVS announced it would remove chemicals such as parabens and phthalates from its private label beauty and personal-care products by 2019. The move impacts more than 600 items and is one of several health-oriented moves the chain is making.

Earlier this year as Target broadened its “better for you” beauty assortment, the retailer promised that by 2020 it will ban phthalates, propylparaben, butylparaben, formaldehyde, formaldehyde donors and nonylphenol ethoxylates from beauty, personal-care, baby-care and household-product formulations. Target is riding a wave of sales in naturally positioned products, according to John Butcher, Target’s senior vice president of Beauty and Derm Store, with double-digit sales lifts.

The rush to formulas with fewer harsh ingredients puts further pressure on big brands already struggling against consumer demand for nimble niche brands. Compounding that is the cost of reformulating that could raise prices if companies decide to pass on the charges. Perhaps the most daunting issue, mentioned by brands and retailers alike, is whether consumers will see big brands’ efforts as credible.

Smaller brands can react faster, acknowledged Wendy Liebmann, chief executive officer of WSL Strategic Retail, but she credited beauty’s power players with stepping up to the plate. “We are seeing most of the major companies try to do more around at least using healthier ingredients,” she said.

Still, niche players created with natural foundations such as Yes To, Skinfix, Burt’s Bees and Sundial have a running start, as do brands with roots in Europe where stringent regulations have long been in place.

Better-for-You Beauty Expected To Be Better
Ed Vlacich, Henkel

“We’re already there. The consumer is there. Now we have to continue to elevate,” said Richelieu Dennis, chief executive officer and founder of Sundial Brands. He welcomes the all-out efforts to offer “better-for-you formulas,” which he added will drive more innovation in the market.

There’s big potential, explained Ingrid Jackel, chief executive officer of Yes To Inc. noting there are more than 50 million consumers in the market interested in “crossing over” to more natural choices. In just 18 months, she’s rejuvenated the 10-year-old Yes To brand to the point where it is producing point of sale data increases exceeding 200 percent. “It was tired and we needed to jazz it up and bring back the fun and brightness of the brand,” said Jackel. With an arsenal of new products and imagery, Yes To is bringing incremental business to mass chains, delivering 60 percent of customers who were new to natural to the brand.

One of the most buzzed-about trends during the meeting was fusing natural beauty into the mainline merchandising set. In the past, natural personal care was often housed with natural foods or other items.

“That’s where we’ve been all along,” said Amy Ries, chief marketing and sales officer for Skinfix Inc. “When we launched we were the only dermatologist-recommended, clinically proven brand that just happened to be natural, too.” Ries said part of getting derms on board has been proving first that the products are effective since the profession previously wasn’t convinced of natural’s potency. “We worked hard to show efficacy first because down the road this [efficacy and natural] will become one,” said Ries.

Better-for-You Beauty Expected To Be Better
Coty’s Shannon Curtin

The importance of getting the assortment right is mission critical as mass merchants ride a wave of notable growth in several beauty categories. The most eye-opening: lip combo where sales for the 52-week period ended March 19, 2107, soared 73 percent, lip treatment escalated 104 percent and eye/brow makeup 30 percent in mass outlets. There are skin-care growth stories, too, with cleansers and moisturizers rising 14 percent and 11 percent, respectively.

Discovery of new brands sets the pace in mass, even if that means compressing space to mass market standbys. A glance at IRI data shows double and even triple-digit sales gains for brands such as those owned by Markwins, E.l.f. and NYX.

Still, the venerable brands did their part at NACDS to show they can accelerate trends. “We have very productive meetings,” said Shannon Curtin, senior vice president of consumer beauty for Coty Consumer Beauty. With almost a year under her belt at Coty, the former Walgreen executive got the chance to update retailers on the assimilation of the former Procter & Gamble brands.

Better-for-You Beauty Expected To Be Better
Walgreens’ Lauren Brindley

Other news from NACDS includes:

Walgreens Co. Efforts in Beauty Pay Off: The chain is adding its elevated beauty concept to 1,000 more doors (for a total of 3,000 by the end of the summer). Next up will be effort put into the skin-care area, according Walgreens’ group vice president/general merchandise manager Lauren Brindley.

Influencers Really Are the New Celebrities: Social media star Kandee Johnson held retailers’ attention at Revlon’s (she created Sinful Colors’ nail collections) unofficial opening cocktail party discussing how she came to fame and how she selects what to broadcast. “It can be a trend like a bright lip or sometimes I just like to try new things. I like to do the opposite of what others are doing,” she chuckled.

Doing It With Style: Henkel Consumer Goods Inc.’s Gliss hair care is off to a brisk start since hitting shelves in January. The best news? Turns on treatment are on par with shampoo and conditioner, according to Ed Vlacich, general manager, beauty care for Henkel. That’s welcome news to retailers looking to rev up that segment of hair care.

Beauty Blur: Consumers have spoken and they want to see products where they want where they want them. Following MAC’s migration to Ulta Beauty, NYX confirmed the highly coveted brand is now at select Macy’s doors.

OGX Eyes New Territory: The number-one selling shampoo, OGX, will look to entice consumers to new launches in mousse, hairspray, glues, pomades and dry shampoos.

Differentiating With Owned Brands: Maesa is expanding its presence in Wal-Mart beyond Drew Barrymore’s Flower with P2 nail color available in 22 colors priced at $2.97. Greg Mager, Maesa’s ceo and founder also said the recently launched Kristin Ess hair collection is selling out at Target.

Recruiting Men: Bulldog’s founder Simon Duffy, a first-time attendee at NACDS, found a receptive audience for his line of men’s items, which are free of parabens, SLS, artificial colors, synthetic fragrances or microbeads. “Bulldog is suitable for vegetarians and vegans and the products never contain any ingredients from animal sources,” added Duffy. “The interesting thing about the U.S. men’s skin-care market is that it is so far behind other countries like the U.K. or Sweden. The average British man currently spends about three times as much on skin care as his American peers.”

Giving a Lift: With Boots Retail’s Lift and Luminate Triple Action Serum putting a rise in sales, the company’s next serum focuses on the face and neck. “You don’t see a lot of the mass serums doing neck, you see that much more in prestige,” said Boots Retail’s Tick of the Restore and Renew launch.