PALM BEACH, Fla. — The sun peeked through the clouds off and on as retailers and manufacturers met here April 30 through May 4 in private ocean-side meetings at the National Association of Chain Drug Stores’ Annual Meeting. The fickle weather was the perfect metaphor for the beauty industry. But in the end, rays of hope for a sales turnaround finally broke through.
In cabanas made hot and sticky by Florida’s notorious humidity, more than 2,500 top executives hammered out marketing plans to revive the mass market beauty category. For manufacturers, there was a big push on innovative products and enhanced in-store support. Retailers unleashed plans for new store prototypes and increased service — more than just lip service — to enhance beauty.
Just about every beauty company had its own version of a sales uptick. Revlon was flush with news about its first profitable quarter in six years. L’Oréal Paris’ president and general manager Carol Hamilton said that one-third of its sales contributed to beauty’s overall new business. Maybelline New York, Kao, Neutrogena, Alberto-Culver, Soft Sheen/Carson, Physicians Formula, White Rain and Del Laboratories’ beauty brands all showed impressive sales increases. Manufacturers’ strides — across all categories — bolstered total beauty sales 3 percent in the mass channel, one manufacturer said, quoting ACNielsen figures.
As is customary, Revlon got the annual meeting started on Friday night with a bash at Mar-A-Lago, in the ballroom where Donald Trump recently wed Melania Knauss. Revlon chief executive Jack Stahl saluted NACDS’ new chairman and Kerr Drug president and ceo, Anthony Civello, who validated Revlon’s chest thumping over its claims of progress. “The company has done so much to bring Revlon to a new level,” Civello said. In a speech to attendees, spokesmodel Halle Berry teased that her 10-year association with Revlon gave her more tenure than top management, including her time there when things at the company “weren’t so good.” “But if you haven’t noticed, things are on the upswing,” she said, and added, “There are great new products we have in store.”
The quest to uncover those new items became a priority for many merchants over the next few days. Although Revlon won’t confirm plans, attendees at the meeting said the company is proposing a major new launch called Vital Radiance (not to be confused with CoverGirl’s upcoming Advanced Radiance Compact Foundation introduction, slated to bow in August). According to reports that were circulating through the cabanas, the launch could be targeted at women with mature skin. Some retailers had the impression that at least six to eight feet of shelf space will be sought. A Revlon spokeswoman said, “We can’t comment on marketplace speculation.”
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Although Revlon wasn’t talking, retailers were quick to see the need for a product targeting older women. “We definitely have a 50-plus customer that this would work for,” said Kathy Gersh, vice president and chief marketing officer and retail general manager for Drugstore.com. With its retail operation in cyberspace, Drugstore.com doesn’t need to worry about finding space. Others, however, will have to determine where they can glean more footage for Revlon — a brand some say is already overspaced.
Also according to reports, Revlon plans to update Almay, positioning it as an easy-to-use brand for busy women in their 30s.
Fellow beauty behemoth L’Oréal is putting a sharp focus on improving the in-store environment to build sales. Armed with success and knowledge from its company-owned Living Lab stores, the firm has created a prototype for a store-within-a-store department targeting drugstores’ top-tier stores. The L’Oréal Paris Boutique, approximately 300 square feet in size, is a full L’Oréal beauty concept with signage and service. “L’Oréal is looking for a way to capture the specialty store environment,” said Joe Campinell, president, L’Oréal Consumer Products Division of L’Oréal USA.
Company executives added that one-third of all new business in beauty was generated by L’Oréal Paris, while the company claims a 15.5 dollar market share of overall beauty.
L’Oréal has also reinstated its “Because I’m Worth It” tag line. “We think its time to reemphasize beauty and its role in women’s lives,” commented Hamilton. She noted how the company’s marketing efforts ramped up during the recent awards season, reaching nearly 100 million women, and how those efforts will continue next year. On the new products front, the company promised an accelerated launch schedule for 2005 and 2006, with bigger introductions backed by extended ad support. “We know ‘new’ drives the business,” said Hamilton.
Maybelline New York is also posting big increases from innovations while also working to enhance the store environment with retail-specific initiatives said to “animate products in the store,” according to Karen Fondu, president of Maybelline New York, Garnier U.S. She spoke of the tremendous impact Fructis has made in hair care, achieving the position of the third best-selling brand in the sleepy category in just two years with $300 million in sales. Garnier, overall, boasts $420 million in sales. While she did not name any specific plans, Fondu did say the company will expand Garnier beyond hair care into more beauty categories.
L’Oréal was one of several companies urging retailers to abandon the practice of importing European brands as a method to differentiate themselves in the market. “Retailers are trying to differentiate themselves, but we feel they are missing the boat on supporting brands with national advertising and support,” explained Campinell. He added that the plethora of unknown brands can be distracting to consumers and that many of these brands won’t be around after more than a year anyway.
L’Oréal certainly has the power of its message on its side. Many of its recent and well-supported launches have helped bring about the revitalization of the mass beauty business, like the dermatologist-inspired skin care kits, such as ReNoviste and ReFinish. With the onslaught of new items flooding the skin care category, Hamilton noted, skin care needs the same sort of organization found on the cosmetics wall.
While well-known beauty brands will always dominate mass retailing, Tom Ryan, chairman, president and ceo of CVS, praised the success of CVS’ exclusive Lumene line. “The skin care [items] in particular have done well,” said Ryan. He’s also pleased with CVS’ foray into Boots brands from the U.K. — especially No. 7 — although he said the economics of the concept continues to need tinkering.
Physicians Formula executives echoed the cry to support national brands. Again, Physicians has the numbers to back up its success claims. The company’s beauty sales are up 24 percent so far this year and dynamic new items are planned to follow on the success of new launches such as Plump Palettes and Mineral Wear Magic Mosaics. Ingrid Jackel-Marken, senior vice president of marketing for Physicians Formula, presented several fashion trends she thinks will translate into strong beauty sales well into 2006.
At Coty, executives hope the European cachet behind Rimmel will propel its expansion in 2006. The edgy cosmetics brand, trumpeted by spokesmodel Kate Moss, has already found a home in Walgreens, Longs Drug and Ulta — to name a few. Rimmel suits the “cosmetics junkie,” said John Galantic, president of Coty U.S., who commonly refers to Rimmel as the “MAC of mass.” The company’s goal for the London-born brand is to break into the top-five cosmetics rankings — a feat that has not been accomplished in 20 years, noted Galantic. Rimmel plans to shatter that barrier with technology-driven products. For instance, this fall Rimmel will introduce a lip plumper called Volume Boost. Volume Flash Mascara will follow in January. As usual, Coty’s fragrance pipeline is teeming with celebrities. This fall, Celine Dion Belong and Shania by Stetson will bow in the mass market. Stetson Black is rolling out this month. Coty’s game plan for fragrance — across both its mass and prestige divisions — is to enter territories that create market growth by pulling in new consumers, explained Galantic, naming the upcoming Baby Phat scent, which seeks to tap into the hip-hop market, as an illustration of that strategy.
Coty was also reminding retailers that the firm can help stores extend wellness, a concept underpinning Coty’s The Healing Garden bath and body brand, from specialty bath to the personal care aisle, with the Adidas Active deodorants with sweat-absorbing Smart Technology.
The question of space was on many retailers’ minds. Some are pruning inches out of color cosmetics and cosmetics accessories to clear room for more skin care offerings. But most are trying to boost the productivity of beauty in a more dramatic method — with new store styles.
As reported, Rite Aid has a new prototype in the Akron, Ohio, market that puts beauty front and center in the store versus off to a wall. Larry Zigerelli, president of Meijer Inc., said his chain has also moved beauty to a more prominent spot in three new stores. “We’ve moved it out of jewelry and gave more endcaps to it,” said Zigerelli, who added he wants to position premier skin care in the departments, too.
Last year, the Edmonton, Alberta-based Katz Group Inc. injected excitement to the cosmetics department in a downtown Toronto store by installing a “L’Oréal playground.” The display allows shoppers to test a smattering of L’Oréal Paris products, said Jerry Kuske, executive vice president of merchandising for Katz Group. He added that the test has proved successful and the retailer plans to roll out the L’Oréal playground to all new stores. Katz is also looking into dermatological skin care centers.
Other chains opening new looks include Kroger, Lewis Drugs, Shoppers Drug Mart and Brooks Eckerd Pharmacy. “We are opening an entirely new look in a few months with even more upscale beauty,” said Michel Coutu, president and ceo of Brooks Eckerd Pharmacy. Brooks was the first American chain to add upscale skin care centers in stores.
While retailers look for better environments, manufacturers are trolling for the next big thing.
With spring planogram resets, retailers have trimmed space from cosmetics and cosmetics accessories to make room for hot categories such as skin care. While large beauty brands, such as L’Oréal Paris and Maybelline New York have not felt the ramifications from such actions, niche players are digging their heels into the space by cranking out innovations. For instance, this fall Del Laboratories’ Sally Hansen brand will add lip plumpers to its assortment. The brand is known for fresh concepts such as Fast & Flawless Airbrush foundation and Airbrush Legs. Harvey Alstodt, president of global business for Del Labs, noted that consumers have embraced the Sally Hansen name for categories outside of nail care, such as cosmetics. For instance, Sally Hansen has had great success with Air Brush Sun, despite being a bit late to the self-tanning segment. Looking to create space and promote brand identity, several retailers have begun to fold Sally Hansen’s spin-off makeup brand Healing Beauty into their main Sally Hansen assortment of nail, lip and hand and foot care items. Over time, Sally Hansen will likely phase out the Healing Beauty name, said Del Labs president and ceo Bill McMenemy. Standout launches in the nail segment include Star Opal, a $5.95 nail polish said to contain crushed opal. The company is also expanding its presence in salons, which will be kicked off by the Elizabeth Arden nail products. McMenemy said the company is close to an acquisition that will propel growth in salons, too.
Del’s budget-priced N.Y.C. (New York Color) continues to go head-to-head with Markwins’ Wet ‘n’ Wild brand. This spring, N.Y.C. added a five-item skin care line called Nourish Your Complexion, which is merchandised alongside the brand’s color cosmetics. Since its launch in March, the line’s Eye New under-eye gel has emerged as one of N.Y.C.’s top 20 items. N.Y.C. also grabbed an extra foot of space in 6,000 doors for a pencil bar display, an assortment of cosmetics, such as concealers and lipsticks, in pencil form. McMenemy said he expects the pencil bar will roll out to 6,000 more stores next year. The N.Y.C. brand is also bound for Europe, and is currently setting up three-foot displays in 150 Superdrug stores in the U.K. McMenemy’s ambitions for N.Y.C. are big: He expects to grow N.Y.C. into a $100 million brand by 2007.
For its part, Markwins is continuing to revamp the Wet ‘n’ Wild brand. Earlier this year, Wet ‘n’ Wild updated its compacts from white to a brushed silver look. Beginning mid-June, lipsticks and nail polish bottles will soon retire their blue and white packaging for silver. As part of the effort, Markwins has simplified the brand’s logo, ditching apostrophes and swapping a script font for a san serif. Like its staunch competitor N.Y.C., Wet ‘n’ Wild will introduce a skin care line. The 11-item skin care assortment called Fresh Face, which includes five products targeting acne-prone skin, will bow in the skin care aisle early next year.
This fall, Wet ‘n’ Wild will kick off a $3 million ad campaign featuring the new packaging for the remainder of 2005. Each of the ads includes a woman’s answer to the question, “What are you wild about?” Tropez, the last of the former AM Cosmetics brands to get a makeover, has been updated with bronze packaging and tag line, “Your Color. You Style.” Tropez, a multicultural line that targets Latinas, is a solid fit for stores in ethnic markets, said Tina Perez, vice president marketing for Markwins International. She added, many products contain shimmer or glitter — an aesthetic that appeals to Latina women, according to Markwins’ consumer research.
With gas prices guzzling funds from consumers’ bank accounts, beauty companies such as N.Y.C. and Wet ‘n’ Wild that play in the budget or value-price tier had a more compelling proposition for retailers this year.
For instance, in the hair care aisle, chain drugstores have emphasized premium salon-inspired brands of late, such as Marc Anthony True Professional. Despite the trend, budget-priced manufacturers such as The White Rain Co. have remained committed to the $0.99 price point. The hair care company upped its value quotient by repacking its shampoos, conditioners and body washes in sleeker, more attractive bottles. The update, as well as more promotional support and increased distribution, contributed to year-to-date sales growth of 28 percent, said Pete Columbia, senior vice president, sales and marketing for White Rain. White Rain’s dollar price point also allows the company to have a significant presence in the dollar store channel, which accounts for 20 percent of brand sales.
Alberto-Culver’s Howard Bernick said that business for his company is performing well, with special note of Tresemmé, which sources estimate could generate $50 million in the U.K. alone this year. He would not comment on rumors circulating at Annual that Alberto-Culver is looking to add a small toiletries company to its umbrella in the next several months, with an announcement possibly coming this month.
Neutrogena Corp.’s strategy of marketing more advanced skin care products at better price points has apparently paid off handsomely with the launch of Neutrogena Advanced Solutions At Home Micro Dermabrasion System, which hit full distribution in April. Industry sources estimate that sales of the $39.99 kit could ultimately exceed $35 million at retail. While not commenting on that estimate, Neutrogena global president Michael McNamara said that he sensed a common feeling among manufacturers at the meeting. “I feel there’s a real interest in bringing sufficient innovation to grow the category,” he said.
Jane Cosmetics, meanwhile, is bent on trading budget shoppers up to its “value” price points of between $4 to $6. “We are not interested in trading down the L’Oréal lipstick buyer,” declared Jane’s president and ceo, Lisa Yarnell, who purchased the brand from The Estée Lauder Cos. 14 months ago. Yarnell, who had to fight to reverse Jane’s eroding display space, said brand sales for the latest 52-week period were up more than 50 percent, thanks to a better product assortment and new advertising campaign. She added that roughly 60 percent of Jane’s assortment will be new by August. A new ad campaign — one that touts product benefits more loudly — will break in September and October beauty books. Jane Cosmetics is now found in some 10,000 stores, including in Canada, and is gearing up to launch on Drugstore.com. McMenemy of Del/N.Y.C. isn’t the only one eyeing the $100 million mark. Yarnell expects to grow Jane to a $100 million brand over the next two years.
Yarnell is also a proponent of a wide array of brands in the cosmetics aisle. “It is key to successful retailing.” Those who merchandise smaller assortments are killing the category because “it’s not interesting to shop.”
Beiersdorf continues to shake up the skin care category, specifically with innovative treatment products that aim not to overpromise results. Its current launch of Reshaping Treatment, for example, which launched in March, is “taking off at stores,” according to Susan Savoie. While the cellulite segment is not shrinking, despite the proliferation of me-too products, keeping retailers focused on the players that actually contribute and grow the category remains a priority.
Soft Sheen/Carson president Candace Matthews attended this year’s Annual complete with a beefed up staff. The largest ethnic beauty company in the world recently added six category managers to help express to retailers the importance of a diverse ethnic beauty mix in their stores. However, the new staff will not only be teaching retailers about ethnic beauty trends, they will also be armed with ethnic buying data regarding an array of categories, from general merchandise to snacks, to help retailers stock all parts of their stores. Also, Soft Sheen/Carson will help retailers pinpoint which stores in their chain are best to receive ethnic products.
In addition to ethnic planogramming, the company is set to relaunch Reviving Colors, a five-item line of semipermanent hair colors. And, in an aim to target ethnic consumers with products by Soft Sheen’s sister company Maybelline New York, boxes of Dark & Lovely relaxer systems include a free Maybelline New York lipstick. Also new at the company is a line of heat styling products, Let’s Jam, which is shipping to stores, in packaging that’s bright yellow with heat implement icons on facings so consumers know which product to use.
At Kao, company executives were quiet on its “very big John Frieda news” for 2006, but they did discuss continued efforts in polishing off Kao’s all-American image and replacing it with one that’s a bit more fashion-forward. “More L’Oréal looking,” said one executive, while retaining a successful middle-America franchise. The plan seems to be working so far. Jergens Natural Glow, a best-selling body moisturizer designed to deliver a darker skin tone over time, is on back order in many accounts.
Annual attracted a larger than expected crowd this year, so much so that show organizers closed registration a month prior to its start and added a 10th hotel to its participation list. Annual’s popularity, some said, is being caused by increased consolidation in the marketplace, which is driving more people to attend the high-level executive show to make sure the industry knows who is doing what.
“We thought that with the acquisition of Eckerd it was important for us to be here face-to-face,” to meet with Brooks and CVS, said Dunnan Edell, president and chief operating officer of CCA Industries.
With that sentiment, next year’s Annual, scheduled to be held in Palm Beach yet again, should attract record numbers.
— by Faye Brookman, Andrea Nagel and Molly Prior