Appeared In
Special Issue
WWDStyle issue 01/28/2011

NEW YORK — Buoyed by the success of premium skin care, mass merchants plan to further increase upscale assortments while adding enhanced services. That’s not to say, however, there won’t still be a focus on value pricing with more space allocated to inexpensive brands, too.

This story first appeared in the January 28, 2011 issue of WWD. Subscribe Today.

According to data presented during The NPD Group’s Hot Off the Press conference, beauty in the food, drug and mass arenas experienced 3 percent sales growth in 2010, versus a flat 2009. Makeup sales posted the biggest increase, followed by skin care, while fragrance sales declined slightly. Skin care has, indeed, been a growth engine for the mass market for the past three years as women felt more confident buying the brands, especially the Olay franchise, in a self-service setting.

If many of the top visionaries in the field have their way, however, shoppers are going to find more assistance at the local drug or discount stores. Duane Reade president Joe Magnacca predicts that providing advice is one of the top three trends for the remainder of 2011. “Beauty adviser knowledge remains the key to success. With information overload for today’s consumer, the beauty adviser must be able to help her understand what products will work for her,” he said.

He also believes that not only can in-store experts help edit the shopper’s decisions, but retailers owe it to consumers to do their homework and offer the best of breed in assortments. “Today’s shopper wants the best of everything. She doesn’t want to have to stay within one brand to get all her products if she feels she is ‘settling’ on any particular product in the range,” he explained.

To give shoppers what they want, Duane Reade just added two lines to its successful Look Boutique — H2O and Gosh, a trendy line from Denmark. Parent company Walgreens also just borrowed a page from Duane Reade and stocked Borba, a line made popular at mass in Duane Reade’s Look Boutiques at select Walgreens. In particular, Borba plays off another big trend at drugstores: combining beauty and wellness.

“Our customers see us as a valued destination for health and wellness needs, from the trusted standby beauty staples to the latest innovations,” said Shannon Petree, Walgreens’ divisional vice president and general merchandise manager for beauty. “Borba has created a buzz in the beauty world and among celebrities. Now, we’re excited to bring these items to the masses so everyday women can achieve total beauty in a healthy, unique and affordable way.”

For Magnacca, it isn’t only about the products, but presentation, too. He thinks more retailers will install product fixtures that help elevate a brand or a category to “new heights.”

That is certainly a goal of Lewis Drug’s president and chief executive Mark Griffin who recently oversaw the launch of a new prototype for the regional chain. The store sports a beauty boutique with wood flooring and upscale displays. The beauty department further burnishes the image of the store which also has a four-seasons room with a retractable roof to merchandise items such as Christmas trees or garden items. There is also a walk-in cooler with minikegs and chilled wine. The kitchen department has granite-like counters and brands like Cuisinart.

Griffin said the store got off to a strong start over the holidays and the momentum built in December with a promotion called a Sunday block party. Invitations with one-day gift certificates were mailed to consumers near the store and the event featured activities, samples and goody bags. Griffin said his 32-store chain aimed to do something special with the store and break out of the “cookie-cutter chain drugstore mold.” Overall, Lewis operates 32 drug stores in South Dakota, Iowa and Minnesota.

Already many efforts in beauty are paying off with front-end sales on the rise. Rite Aid, in fact, just reported a 2.2 percent increase in comp-store, front-end sales.

As the ambiance of the local drugstore improves, buyers hope to see even more lines arrive. There’s optimism lines will extend distribution to mass — sometimes even via acquisitions such as Coty’s purchase of OPI.

To get fragrance sales pumping again, some buyers suggested less push on celebrity and more on building true brands with big marketing support and the chance of longevity such as Stetson.

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