Four beauty industry decision-makers pulled back the curtain on what’s driving their business at the recent Efficient Program Planning Session at the Red Rock Resort in Las Vegas.
Among the market drivers: clean beauty, the race to be first, indie brands, multicultural lines and mature shoppers driving bold hair-color sales. The panel included Dawn Norvell, senior buyer, hair color, multicultural hair care and hair accessories at Walmart; Maria Rush, vice president of business development for the Beauty Collection Stores; Quintin Bean, executive director of South-Africa-based distributor Sunpac, and Tracy Abbott, senior director of retail merchandising, Massage Envy.
Developing an exclusive private label or having an item before the competition is on the front-burner today when seemingly every channel has a stake in the $80 billion beauty business. New-to-market brands are producing the lion’s share of beauty sales gains, while Nielsen data shows that retailer store brands have grown nearly three times faster than the entire cosmetics category over the past five years. Demand for products developed by the experts at Massage Envy inspired a private-label collection called CyMe. A cadre of contract manufacturers who are “mighty and scrappy,” help bring new items quickly to Massage Envy, such as new lip collection, Abbott said.
At Walmart, indie brands serve the needs of the 140 million who pass through the chain’s doors, while also pushing megabrands to stay on their toes. “We need the legacy, the midsized and the indie brands,” said Norvell. Also, small and nimble companies allow Walmart to customize assortments. “When you think of Walmart, you think of this huge chain and all stores have to look the same,” Norvell said. However, upstart brands allow Walmart to pinpoint items that might sell better in one market over another, for example, Houston versus Los Angeles.
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The speed that nimbler beauty lines can deliver products retailers is driving growth of upstarts, according to Bean. “Stocking these brands shows retailers are listening to consumers and bringing newness to the market they want.” But being new isn’t enough, Bean said the items have to turn, too.
It is paramount for Beauty Collection to seek out the next big thing, said Rush. “We find it is always important to introduce new concepts and new products. Our shoppers want the latest, the greatest and the new technologies. If we don’t continue to add new products and categories, they are going to go elsewhere.”
Do retailers use a different yardstick for fledgling brands versus heritage logos? The consensus was up-and-comers must also adhere to meeting sales projections. Abbott stressed that suppliers be transparent and not promise what they can’t deliver. “When we are ‘dating,’ be transparent and don’t say you can do something in a time you can’t but say when you can.” Rush said success for the Beauty Collection is about relationships. “In the end we want brands that sell for 20 years, not just two.”
Novell said she likes to incubate new brands in a small swatch of stores. “It isn’t all science, you have to go with your gut, too. Sometimes you get it wrong.” Being intrepid and passionate also works for her. “Rich [founder of Shea Moisture] will tell you how many times he came to Walmart before he even got a bottle on the shelf. He’s been on the grind for a long time,” she said.
The need to offer more “better-for-you” formulas is top-of-mind with consumers today. According to Nielsen data, the natural personal-care market in the U.S. recorded 9 percent growth, hitting $6 billion, according to Kline and Co. The experts agreed there are fuzzy boundaries defining natural and organic. “When brands come to me and say they are organic or natural, I really push on them to define what that means,” said Norvell. “Are you going to have the appropriate labels and substantiation? I think that people are beginning to understand that what they put on their bodies is just as important as what they consume.”
Will shoppers pay more for better-for-you offerings, especially when value is a driving factor at Walmart? When the benefits are communicated properly by brands, shoppers will dig deeper into their pockets, especially across some segments of the chain’s broad scope of consumers. “It is a small price to pay for your health,” she said, noting labels can help shoppers understand what they are getting for their dollars.
Multicultural consumers, she noted, have helped raise awareness of ingredients. “Natural is not new in multicultural. You grow up understanding what coconut does. You grow up understanding those natural ingredients.”
At Beauty Collection, Rush agreed that her shoppers want clean beauty — including everything from vegan to “free of.” Beyond offering products under than banner, Rush said it is critical to train sales associates about benefits of less caustic formulas. “That was one of our goals coming to this event — to look for more clean beauty and how we can build it out across all categories.” She added her consumer base in California is very well-schooled on the natural industry. “The days of greenwashing are over. Our clients are educating us, and we have to provide them what they are looking for. We have signs in our store calling out what products are natural, gluten-free, organic or vegan.”
Bean added, “Natural is becoming the norm, a lifestyle. One of the challenges we have in South Africa is to convince consumers the products work, because they fear that if a product is natural the ingredients that make it work have been removed.”
Serving all shopper needs was a buzzy subject, especially with 40 percent of Americans considering themselves multicultural. “It isn’t as much about filling a white space in the market as having brands that meet a lot of needs,” said Rush at Beauty Collection. “We need to have products for every customer across skin, hair and cosmetics. We also base it on demographics of where stores are located to pinpoint the right products in each store and we rely on our well-trained associates to help with solutions.”
At Walmart, the focus is on products for all different hair types and textures. “We want to have products for each person to find his or her own expression of beauty,” Norvell said. “Today I have my hair curly, tomorrow straight. I need different sets of products. We are having success in being more broad than narrow, even in our general market products.”
Influencers will only become more powerful, according to the panelists. “They are incredibly important,” said Abbott. Massage Envy has a group of lifestyle influencers who help promote the company’s services. Bean added that brands need a firm strategy in what they want to convey to consumers via social content providers and that it varies from product to product. Influencers even impact what retailers purchase for their stores. Norvell, for example, keeps tabs on influencers and brands to use as a “crowd source” to seek out new lines.
So, what’s the next big thing? Rush said keeping the category fun will prevail with trends such as festival beauty. Norvell hopes new bold hair colors will shake up the dormant hair color category. It isn’t just Millennials donning vibrant tresses. “Some mature women are deciding ‘I’m just as cute,’ and playing with color.”