NEW YORK — Santa went bargain hunting for beauty this year.
The jolly old fellow skipped the shopping malls and instead landed right in front of Wal-Mart and Walgreens. With price being the watchword of the season, mass market fragrance and beauty manufacturers and retailers say they were able to maintain, and in some cases even increase, their sales, while their department store counterparts struggled to make plan.
Executives estimate that when final tallies are made, mass merchants will pull out of what has been one of the most dismal seasons for most retailers with overall storewide sales up 6 percent over last year.
Tony Wesley, chief operating officer of New Dana Perfumes Co., which markets a host of mainstay brands like Canoe, Heaven Sent and Chantilly, said: “Our sales are at least as good as last Christmas. We were above pace through mid-December and we are gathering last week’s data now.”
Sales at Wal-Mart and Kmart were solid, he said. “But Eckerd really surprised us. Eckerd just blew it out.” While Eckerd has not been one of New Dana’s biggest customers, on a percentage basis, its sales grew the most. Wesley attributed part of Eckerd’s success to an early season coupon offer. On another upbeat note, he said, “Kmart ordered more from us this year.”
Others observed that Kmart had been much more aggressive in its presentation of fragrance and bath-and-body gift sets than in the recent past. In one New Jersey Kmart flagship, there were no fewer than 10 four-sided displays devoted to beauty sets. “They were far better organized this year,” said Wesley. There was also a selection of floor displays with holiday cosmetics collections like one from Bonne Bell, which was picked over. Kmart’s beauty executives were not available for comment this week.
What really pleased executives at New Dana was that Wal-Mart’s sales of its basic stock items — which bring higher margins — were up along with the value-priced gift sets. “I was so excited about the trend in the basic business,” said Wesley. He said being in stock had helped. “Last year, we were only 84 percent in stock at Wal-Mart. We sent out a very large order at the end of November and were in stock this year.”
New Dana offered gift sets in four price options beginning at $8.95, going only as high as $14.95. “We were consistently lower than Coty by two to three dollars,” noted Wesley. The $8.95 box set, offering a juice and a lotion, did the best.
Wal-Mart fragrance merchandisers were not available for comment, but the company did say that sales of cosmetics sets “exceeded last year.” Overall, said a Wal-Mart spokeswoman, “our stores had a very good holiday season.” In cosmetics, “we had several great sellers. Our opening price points of $2.97 and $4.94 had the best sales.” But the higher-price-points kits, at $8.94 and $12.87, also “had a great sell-through.”
Parfums de Coeur president Mark Laracy said because of his firm’s collection of value-priced fragrances and bath-and-body items, “we were well positioned” for this season. “I think, all things considered, we did pretty well.”
Parfums de Couer unleashed a TV advertising blitz two weeks before Christmas that helped. “The lower the price of the item, the better it sold,” said Laracy. “Items under $5 did exceptionally well.” The company’s Bod Man collection of light scents for young men were some of the best movers.
This year, observed Laracy, “Wal-Mart is winning the traffic war.”
One beauty retailer said that while all the numbers had not been tallied: “We are pleased with the season. It was pretty much the same as last year.”
Holding steady is good news for the traditional mass fragrance brands, where sales have been in a downward spiral. According to Information Resources Inc., sales of both men’s and women’s fragrances were off about 5 percent at mid-year.
In beauty, shoppers snapped up bath and aromatherapy collections, inexpensive fragrance gifts sets and value cosmetics kits. A spot check of stores on Dec. 26 revealed shelves picked clean of items for teens.
Mass merchants, with value priced items, fared better than department stores. But not all mass marketers will share equally in the gains. Discounters like Wal-Mart fared better than most drugstores overall. Wal-Mart, in fact, reported its sales for December would exceed initial estimates and be in the upper end of a range from 4 to 6 percent ahead, versus initial projections at the low end of that range.
Drugstore chains, which don’t typically sell some of the hot items such as DVD players or apparel, were more creative in merchandising and promotions to get shoppers in this year. Many offered gift-with-purchase giveaways and discounts. Walgreens, for example, knocked down prices in its beauty department, with some items priced under $10.
Those efforts appeared to work. While drugstore chains are usually a last-minute stop for people who have forgotten someone on their lists, retail executives said sales were strong since Thanksgiving.
“Holiday sales were good. We sold a lot of ‘nesting’ merchandise and anything that was high value, but low priced,” said Mark Griffin, president and chief executive officer of Lewis Drugs Inc. in Sioux Falls, S.D. Griffin is also the newly installed chairman of the National Association of Chain Drug Stores. “And, you can’t overlook the fact people need to come to drugstores for prescriptions and if they see other items they like, they’ll pick them up.”
Lewis has some large concept drugstores spanning 50,000 square feet, allowing the chain the opportunity to sell CD players, $100 DVD players and home entertainment centers, said Griffin. “People aren’t traveling as much and want more things for their homes,” he said.
The chain didn’t overlook beauty. Right after Thanksgiving, Lewis set up what it calls speed tables with value-priced beauty assortments from Maybelline and Revlon. The tables were near the entrance of the store. “They didn’t even last 24 hours,” said Griffin. “People were grabbing them for stocking stuffers.”
At one of the major drug chains, beauty sales beat the plan by 13 percent. The best items, according to a company source, were the Markwins cosmetics gift sets. Fragrance sales at the chain were slow, however.
A visit to a New Jersey Eckerd found many items had clean sell-throughs. Any item priced less than $10 had sold out of the store. Mira cosmetics, Eckerd’s own label, sold well, as did funky nail colors such as Del Laboratories Chrome. Holiday color promotions from L’Oreal were also almost sold out. Eckerd helped push the holiday along with promotions such as $1 off all Cover Girl and Maybelline lipsticks priced at two for $10. There was also an extensive couponing effort touting all L’Oreal mascara at $4.99 and all Olay cosmetics (which needs to be moved out of the stores as Olay exits the business) at 30 percent off. Target Stores was also sold out of youth-oriented products such as Hello Kitty. The chain did well with prestige fragrances packaged in clamshells. At one New Jersey Target, hot brands such as CK One, Eternity and Cool Water sold out even before Christmas.
Two distributors of designer scents did not return phone calls this week, but one source said designer scents in mass stores are believed to have sold “extremely well” this season.
Still, fragrance remains a hit-or-miss category. At May’s Drug in Tulsa, Okla., chairman Gerald Heller said fragrances remained a slow category for his stores. “We did great with trim-a-tree and wrap, but we don’t even consider fragrances a major holiday item anymore,” he lamented. However, there were some retailers seeing a flicker of hope in scents. A chain that is a member of the Chain Drug Marketing Association reported fragrance sales that were up 32 percent over last year. Some drugstore traditional items such as Stetson, Chantilly and Old Spice showed new life, buyers said. “We also do well with very good value fragrance sets that appeal to that shopper that forgot Aunt Mary,” said one top-five drugstore chain source.
Anastasia Ayala, senior vice president, global fragrance at Coty Beauty, said sales came later in the season. At first, shoppers turned to discounters offering hard goods like low-priced DVDs and $89 TV sets before turning their sights on soft goods like beauty.
Leading up to Christmas, Coty’s new The Healing Garden Waters fragrances were “doing extremely well,” said Ayala. “They were exceeding our expectations.” Surprisingly, she noted, the two scents — Pure Calm and Pure Joy — were selling in equal measure.
It is unclear how Coty brands did overall. She said she won’t see full reports until everyone is back in the office on Jan. 7.
“People waited a little longer to shop for fragrances and personal products and we did see retailers discount very key items to attract shoppers,” she observed. “Retailers worked harder to get shoppers into stores this year. Some retailers drove with price and some used price and atmosphere.”
Kmart was hoping to appeal to those procrastinators this year with its stores open 24 hours from Dec. 20-23 and up to 8:00 p.m. on Christmas Eve. Beauty deals included designer fragrances for men and women priced at $19.99, including Nina Ricci’s L’air du Temps and Elizabeth Taylor’s White Diamonds 1-oz. sprays. There were also color blockbusters from Markwins priced at $9.99.
The full extent of the extended hours wasn’t known at press time, but a taped message from Kmart said the fourth week of December, including Christmas, exceeded plans. The rest of the month had generally been somewhat softer than anticipated. The best items at Kmart included TVs, DVD players, the George Foreman grill, pre-lit trees and Dr. Seuss’s “The Grinch” movie. As far as categories, what Kmart considers “drugstore” was within the top-three best-selling departments.
At May’s Drug, an adjunct to the beauty department emerged as a winner. According to Heller, personal pampering items such as hot lather lotion machine, massagers and water rock gardens sold out.
Heavy discounting wasn’t unusual this holiday season, with shoppers coming out as the big winners. That leaves the question of whether profits will be eaten away when the numbers are crunched. “It has been the most promotional holiday season in history,” said Scott Krugman, a spokesman for the National Retail Federation in Washington.
Post-Christmas sales got off to a slow start — a fact blamed on sharp price-cutting prior to Christmas. “With prices so good, people didn’t have to wait,” concluded Heller at May’s. Although many malls were not as busy as anticipated, some specialty operators said customers were coming to the centers just for their stores. “We are busy from the moment we open,” said Tom Souza, president of My Emotions, a teen specialty store. “I actually open at 9 a.m., before the mall, because there are people who walk the mall and come in and love our merchandise.”