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SAN DIEGO — The migration of consumers from mass stores to specialty stores, as well as an overall softening of cosmetics sales across all channels, remained a theme at this year’s National Association of Chain Drug Stores Marketplace. Facing the challenge retailers are setting for them — driving consumers back into drugstores — many of this year’s Marketplace exhibitors revealed well-thought-out merchandising plans, innovative new products and, in some cases, brand-new management during the four-day show here.

This story first appeared in the July 2, 2004 issue of WWD. Subscribe Today.

As in past shows, Revlon remained a company on the lips of most show attendees. Fueling the gossip on the state of the company was its recent revised sales forecast. Originally, Revlon had predicted company sales would expand 7 to 8 percent for the quarter. That was downgraded to 3 percent.

According to Paul Murphy, executive vice president of North American sales, who attended Marketplace, “What we are facing in an AC Nielsen universe is that the color category is down 1.5 percent. The industry forecast said it would be up 4 percent. But it isn’t going to be that way. So that has led us to reevaluate.”

Subsequently, Revlon officials at Marketplace tried to stimulate retailers with plans to reintroduce Super Lustrous lipstick and Age Defying foundation. There also will be packaging changes emphasizing Revlon’s trademark red packaging, as well as a new carded program for eye shadows. To cut down on damages to lipsticks, Revlon has a new peek top to view the color. Added Murphy, “We are making great changes to our packaging on some of our core products and have been working closely with our retail partners to insure a smooth transition.”

Retailers give Revlon an A for effort, but some think the company is still making painful mistakes. For example, buyers said there is not a solid program to clean out old merchandise while new items ship in, especially since universal product codes are staying the same for old versus new items. And there is the ongoing situation of Revlon still not showing any breakthrough new items. “We are all behind Revlon, but they are at a point where they can’t afford to make mistakes,” said one seasoned buyer.

On the positive side, several buyers noted an uptick in Revlon sales. “Our sales are up,” said Eckerd’s Kathy Steirly, vice president of beauty care merchandising for the chain. “I don’t see problems in the rollout.”

Revlon isn’t the only brand hoping for revitalization. Jane Cosmetics, under the new leadership of Lisa Yarnell, showed new items such as a cream-to-powder foundation and a high-fiber water mascara.

“We are introducing nine new categories,” said Yarnell, who, along with investors, bought the company from the Estée Lauder Cos. Yarnell said the entries are a mix of products developed by Estée Lauder, as well as some she felt were needed to bring Jane up to market standards. “We added a foundation with SPF 15, and we took out all of the items that smelled like fruit. Lauder had taken the brand very young,” she added. To get Jane revved up, Yarnell introduced new advertising, couponing programs, secondary display fixtures, trial sizes and sampling efforts.

At Caboodles, a new management team looks to restore the luster to what was once the brand to watch for innovation.

The new management group, interestingly, consists mostly of former Maybelline executives. In fact, the company has been moved to Memphis, the former home of Maybelline. “We are bringing back the innovation,” said Caboodles’ Gail Harrell, vice president of marketing, who showed some new tattoo stencils and metallic looks for fall. “We need to add back a point of difference,” she said.

Seeking a slightly older audience was SmartBrands’ Tru. “Tru looks very good,” said a buyer for an upscale supermarket chain. Tru is positioned for the post-teen market. SmartBrands also debuted its dollar brand, called Ten. Dollar-priced merchandise remains a big quest for retailers, including Target, which recently reported it would add extreme-value departments to all of its stores.

More sophisticated mass market consumers are also the target of Markwins International’s new line, represented by Victoria Jackson. According to Jackson, the line will help consumers who are confused about how to select palettes. There will be three major color schemes — peach, pink and red. The fixture will feature a how-to DVD that presents several before-and-after looks. Prices of the line range from $3.99 to $9.99. Grace Robas, cosmetics buyer for Duane Reade, was among those indicating interest in the collection. “It is just what we need,” she said.

Many other niche players showed their wares hoping for wows from buyers. Beauty 21 launched Arissa, a line designed to appeal to women ages 25 to 45. “There is a missing link in mass stores that Arissa fills,” said Charles Yu, vice president of sales.

Beauty Beat, a company that has risen on a youth product, called Bye Bye Blemish, also is aiming for older shoppers with a new item named Bye Bye Wrinkles. CRL showed Yakity Yak, a line that has been successful at Longs.

And Intermark Cosmetics introduced an upscale spinner display and a three-day counter unit for its Styli-Style. “You’ve got to get heads to turn in stores and these fixtures do that,” said Grant Berry, company founder and chief executive officer.

Realizing that shoppers don’t fit one mold, most manufacturers touted a multicultural approach to fixtures, advertisements and products. Prestige Cosmetics is adopting graphics with diverse models. According to Tom Winarick, executive vice president, many chains are asking for customized product selection and graphics to link with each store’s demographics.

Milani, a line from Jordana, has filled a market void for many retailers. Although targeted at ethnic shoppers, Milani has become popular with women of all colors. The success has encouraged Jordana to introduce seven new categories, according to Robert Wallner, vice president of sales. Among the new items are loose eye shadows, tinted moisturizers and new mascaras.

While those companies look to secure space, AM Cosmetics hopes to maintain its position in the value segment. The absorption of AM by Markwins was not without pain, admitted Shawn Haynes, vice president of sales for Markwins Beauty Products. “But one year later we have turned around the fill rate to 99 percent. We have good service and in-stock levels and we’ve made positive changes to products.” Wet ‘n’ Wild, he said, is benefiting from its first national advertising campaign. The brand also will play a role in Rite Aid’s new cosmetics wall look. For 2005, Markwins will set out to tweak the Tropez line so it better meets the needs of Latin consumers.

The nail category continues to evolve. Kiss Products hopes to entice women to the artificial nail segment with high-quality nails. “We feel that if women are impressed with the products, they’ll come back,” said Grace Tallon, vice president, marketing. The firm also promotes its Real Life nail, a shorter than traditional artificial nail product.

Pro10, under Dana Classic, has an innovative lineup of products, including a unique five-minute pedicure collection.

American International Industries continues to make strides with the 5 Second Nail franchise with additions including a bite-free nail formula and a special buffer to create a high-gloss shine. The company is building more of a following in the treatment segment of the business, according to David Woolf, executive vice president of retail sales. The firm also has a loyal following in the false eyelash category.

With beauty sales sagging, other categories within the walls of a mass market store vie for consumer acceptance. AirPlus debuted a line of products designed for women’s foot problems. The company hopes to get the displays in areas outside of foot care, an aisle many women bypass. Teeth whiteners, such as CCA Plus + White and Crest, continue to get more space in beauty.

With the success of Boots products at Target and CVS and Lumene’s fast start at CVS, more American chains are looking to import brands. Marketplace sported an entire International Pavilion where Groupe Batteur displayed items ready for entry to the U.S.

Another European import was a hair color machine from Germany, called Sempre. The computerized machine is set to be placed in hair color sections, adjacent to shelves, and will be manned by a cosmetician. Sempre, which is being distributed by HCD Inc. of Southport, Conn., is designed to dispense as many as 1,000 different shades of semipermanent, permanent or ultrablonde formulations, depending on the type desired. Along with a box of customized hair color, which will retail in the $14.99 range, consumers will receive a number for their color formula for easy replenishment. For users of hair color products by Clairol and L’Oréal, Sempre units will offer formula numbers that closely match their current formulas. Sempre aims to grow hair color margins to nearly 60 percent, and to improve inventory and the selection process of the category.

Other innovations in hair care include the launch of Radiant Red by John Frieda and a styling line under the Dove hair care brand.

Nicky Hilton took a leap from her uptown world to appear at NACDS to promote her new spokeswoman role for the Scunci hair care brand, specifically a line of hair extensions she will help design for launch next year. Scunci International, formerly known as L&N, also has acquired the rights to As-Seen- on-TV brand Topsy Tail, and is rolling out the hairstyling tool to retailers in October for $14.99.

In skin care, Yardley is presenting a new line to retailers, called Apothaderm, to launch next year. Formulations are based on alpha hydroxy acids, but with a twist: Apothaderm’s technology with vitamin B is said to help prevent irritation commonly associated with those acids. The line, which is scented with essential oils, consists of eight sku’s, including a gentle facial scrub, a cooling moisture mask, a day lotion, a night cream, a cream cleanser, facial peel pads, a mild cleansing soap and an eye cream. Prices will range from $7.99 for the cream cleanser to $14.99 for the facial peel pads.

University Medical’s new treatment kit regime is looking to capitalize on America’s obsession with looking youthful. There’s a Face Lift kit, which already has generated $40 million in sales its first year on shelves, according to the company. Its Acne Free kit, which has been in stores for three months, has generated $3.3 million in sales, excluding Wal-Mart. And next month, University is launching a Face Firming Activation kit, which the company compares to ProActive on packaging. Kits retail from $19.99 for the Acne kit to $34.99 for the Face Firming kit.

Other items at the show included Romero Britto’s new men’s and women’s fragrances, which are currently offered in Neiman Marcus, Nordstrom and Sephora. Cristina Quintero of Genesis International Marketing Corp., distributors of Britto beauty products, believes the items make worthy mass offerings. “The mass market wants their designers, as well,” she said.

Physicians Formula, which has had a stellar year with 32 percent sales increases in a declining market, is introducing 53 new items for 2005, in its core segments of face powder, blush, mascara and concealers. The company also is expanding its 2004 introduction into lip in 2005 with four new lip colors, as well as with several new baked dry powders.

White Rain is showing retailers its upscale Te Tao bath line, which includes a crackling bath salt, a body mist oil and stress-release bath salts.

And executives from Schwarzkopf & Henkel, formerly known as Schwarzkopf & Dep, spent most of Marketplace talking to retailers about its 25 brands, including LA Looks, Citre Shine, Dep, Smooth n’ Shine and Got 2 B.