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NACDS: Retailers Seek Exclusivity

Retailers at the NACDS Annual Meeting want to be the have's not the have nots

PALM BEACH — The traditional mass market beauty department is history.

In the scramble to be first to market or offer something no one else has, retailers are augmenting rows of nationally supported pegged beauty brands with exclusive lines, limited-time offers or one-of-a-kind stockkeeping units. The quest for unique comes just as mass-market beauty is starting to cool off. Nielsen data for the 12 weeks ended April 9 show a 4 percent increase in cosmetics sales, but the most recent four-week period revealed only a 1 percent rise in beauty volume.

In a sea of sameness and countless beauty choices, chains find survival is tied to exclusivity. There were many examples at the recent National Association of Chain Drug Store’s Annual Meeting here at The Breakers, where 30 beauty and personal-care suppliers met with the top brass from 60 attending retail companies.

An illustration of the first-to-market movement occurred just as the meeting kicked off: Cover Girl announced Katy Perry was collaborating on a collection called Katy Kat consisting of 13 matte lipsticks and four mascaras. Here’s the catch — 11 of the shades of lipstick were only available exclusively through pre-order online at Wal-Mart. Others get the line in May. Perry was the third celebrity in one week to announce their own brands along with Victoria Beckham and Rihanna.

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Launching rights also fueled demand for Sinful Colors collections with social media magnet Kylie Jenner. Wal-Mart was out of the gates first with the collection King Kylie, while both Target and Walgreens Boots Alliance also had first crack at other collections. “It is about creating different stories and tailoring to specific customers,” explained Sinful Colors’ Blake Decker, head of marketing. The relationship with the very influential Jenner is boosting overall nail-color sales, the company said.

Wendy Liebmann, chief executive officer of WSL Strategic Retail, noted customized beauty choices require more efforts for brands, but yield a payoff in building partnerships. “Retailers are asking brands to know their shoppers and tell their story through the lens of that shopper instead of having a national, generic approach,” she explained. Using loyalty programs and social networks, she noted, brands have more opportunities to customize the approach.

Giving customers something special makes sense instead of just competing on price with an array of same merchandise, explained Ingrid Jackel, the chief executive officer of Yes To Inc. “Retailers are hungry for something to make them stand out and differentiate themselves,” said Jackel. She said Yes To is “nimble,” and can go beyond a one-size-fits-all strategy. “We also have more tools now such as social media to talk to specific consumers.”

Social media, in fact, has helped put fledgling brands on par with the behemoth beauty powers. “It think it is a tough time to be a big company,” added one manufacturer.

Compounding issues for some of the giants were questions, especially swirling around how Coty Inc. will digest the Procter & Gamble & Co. brands. Also retailers await Revlon’s future path. Those attending said they wouldn’t be surprised to see Revlon taken private rather than sell. Several commented that Revlon’s sales are gaining traction; a fact Revlon’s senior vice president John Collier alluded to during the opening Revlon party attended by global brand Alejandra Espinoza. “It is a very exciting time at Revlon,” he said adding Revlon is a “driver” to the category.

Natural brands, who are often small companies, were among the most sought-out poolside at The Breakers as witnessed by the buzz at Sundial, EOS, Burt’s Bees, Markwins (which previewed a bath and body line with a natural positioning as well as its vegan makeup brushes) and Yes To.

“The natural phenomenon is exploding,” confirmed Jackel. She’s just completed a total refreshing of the Yes To line and earmarked the largest ever promotional budget to give some needed attention to the brand, one of the first in mass to fuse natural and fun. “Natural has been coming for the last 10 years, but the target Millennial consumer is now the one in the stores. Also, the performance of natural has evolved and there is less skepticism.” Yes To will unveil a bevy of new items in the next few months.

There was also much discussion of the retail movement to enlarge space for private brands. The chatter reached a fever pitch especially around Walgreens Boots Alliance as it adds more of its own portfolio of beauty lines. National brands expressed challenges in keeping space against the swelling tide of retailer created beauty.

Liebmann suggested manufacturers can secure their shelf space with innovation.“Retailers are asking for something different, something that isn’t just a bigger size or better fragrance,” she explained.

If chains can’t find that, they create their own. For many the journey takes them to Maesa, which has worked with Wal-Mart, Walgreens, Ulta and CVS in the past few years. “We fill the white space,” explained Shawn Haynes, senior vice president of sales, mass and drug retail. He said the quest for proprietary brands spans all channels — even food, which as a format is turning up interest in beauty.

But one representative from a leading brand manufacturer, who admitted he’s concerned with the booming demand for exclusives, noted it can be challenging for retailers to become manufacturers. “Retailers are good at retailing but not always a marketing — success of private label beauty has been mixed,” he asserted.

One area where brands can help chains boost beauty, Liebmann added, is the presentation in physical stores. “Shoppers have so many places to go from Instagram to click and collect. There is a need for the experience in the store to improve — be it less clutter and curated or more dazzling,” she explained. Purse strings are tugged in many directions from paying bills to reducing consumption in favor of life experiences. “You have to make it so they want to buy your ‘stuff,’” she added.

Elevating the store experience was something all could agree on. Beauty, it is clear from NACDS members, is as important as health in the contemporary mass market store. Both Walgreens and CVS detailed major programs putting the department at the forefront. Walgreens is opening up its beauty counters and adding more makeup chairs along with proprietary lines especially Boots No7. Its program Beauty 2000 will roll out this summer to 2,000 more stores. CVS continues to burnish its beauty profile with a program Elevate Beauty.  For its part, Wal-Mart is scoring many exclusive launches, too.

Other developments during NACDS included:

* Physicians Formula is at the forefront of bringing Korean-inspired beauty to mass such as its Mineral Wear Cushion Foundation.

* Feminine hygiene is the new beauty frontier. Skinfix, which gained attention for its natural skin care, is bringing natural and hip washes and wipes that are safe and glycerin-free to the feminine cleansing category with a collection called SweetSpot. Fleet is also credited with reviving feminine hygiene by introducing a new generation to the category with updated products in its summer’s Eve portfolio.

* Markwins will help women be “selfie-ready” with a foundation in its Wet n Wild collection that eliminates photo flashback. “The biggest cause of foundation sales going bad is if the foundation fails on your selfie,” said Evelyn Wang, vice president of marketing.

* Market reports are that despite a cooling in celebrity fragrances, a new Britney Spears fragrance will launch later this year.