BATH BUBBLES UP
Byline: Julie Naughton
NEW YORK — Call it the beauty industry’s own soap opera.
Over the last five years, the bath and body category has gone from being a very small percentage of most retailers’ — and vendors’ — sales to constituting more than half of some vendors’ business.
According to Jim McDougald, senior vice president of sales for Coty U.S., the category really began to explode in early 1996. “In 1995, traditional fragrances were still doing OK, and there was no bath and body category the way we know it today in mass,” he said. “At the end of 1995, traditional fragrance business started to decline, and bath and body started to grow significantly in specialty stores.
“The growth for bath and body in mass really came when the industry realized that we had to do something to stop the decline of business in traditional fragrance and look for ways to get customers back in our class of trade,” added McDougald. “And then we noticed that they were interested in bath and body items.”
Today, Coty’s bath and body business — which includes the Calgon and Healing Garden brands — reportedly accounts for more than 50 percent of Coty’s U.S. volume. “That was the beginning of bath and body as we know it today,” McDougald said. “Our goal was to create a ‘better’ category in the mass trade. Today, bath and body accounts for 51 percent of Coty’s U.S. volume — and that’s happened in less than three years.”
An overall lifestyle change has been part of the engine driving the growth of the category, he said. “The biggest factor in this movement has been a change in lifestyle,” McDougald said. “People are allowed to dress more casually at work, and many are choosing lighter fragrances like body mists.”
Bath and body category’s meteoric rise hasn’t gone unnoticed by apparel and specialty store retailers. In recent years, the Gap and Banana Republic have introduced bath and body products, and chains devoted to bath and body — notably, Bath & Body Works, as well as H20 Plus and The Body Shop — have been siphoning business from traditional beauty retailers at both the mass and prestige levels for several years.
However, many credit these retailers with raising consumer awareness for the bath and body category — and with raising the merchandising bar.
“A few years ago, bath and shower the way we’re talking about it didn’t exist,” said Mark Pinvidic, vice president of Body @ Best. “Basically, it was soap and bubble bath at mass. That’s why many give a lot of credit to Bath & Body Works for giving the category a lot of attention and products — including moisturizing, color and fragrance options. That was part of the movement from bath as a commodity to bath as a huge category.”
“Bath & Body Works has done an amazing job of legitimizing the bath and body category,” added John Kang, managing director for Earth Therapeutics. “They made a long-term framework for the bath and body category, and they’re creative in how they are putting things together. They are putting some people out of business, certainly — but if you’re not doing your job merchandising, you’re not going to make it in the long term, anyway.”
As Kang points out, merchandising is a key element driving the category’s growth. But while the mass bath and body category has marked impressive growth and sales over the past four years, one long-running complaint from a number of industry sources has been that mass chains are loath to take too many merchandising chances.
Industry sources say that while buyers at the mass level may want to be more adventurous with their displays, those higher up in the chain of command have put in place restrictions that prevent them from doing so. Such restrictions are reportedly intended to present the store as the brand and destination, but the strategy may be backfiring when it comes to selling products.
To be successful competing with — and drawing business from — specialty retailers, said Kang, it’s critical to merchandise bath and body with a sense of fun.
“One reason that Bath & Body Works is so successful doesn’t have as much to do with their products as it has to do with their merchandising,” Kang said. “They create fun categories — say bath, foot, hand — and segment everything out so it’s easy to shop. They continually freshen their product mix, too, and are always doing new introductions, which keeps the excitement high. They do inviting displays, sometimes with props, and everything is colorful, fun and festive. Many mass retailers don’t do that.”
In retailers’ defense, said Kang, it’s hard to overcome the fear of risk, especially when the wrong decision can mean a buyer could lose his or her job.
While specialty chains like Bath & Body Works do have a certain advantage — they’re concerned only with retailing their own products, while mass retailers are selling products from a wide variety of vendors and attempting to tie them together in a cohesive display — there are a number of mass merchants doing the job quite effectively.
“The bath category has to be a pleasurable shopping experience, not just a shelf of products crammed together,” said Pinvidic. “Some retailers are really rising to the challenge. Look at Wal-Mart’s testing of a new bath atmosphere area in its Dallas store.” Other industry sources gave high marks to the bath and body departments of Fred Meyer, Phar-Mor, Target, Wal-Mart and Walgreens. “Fred Meyer, in particular, puts a lot of effort into its displays, and it shows,” said one source. “It draws customers in immediately.” “A retailer’s responsibility is to attract and retain the customer, not just in bath and body, but in everything,” said Pinvidic. “Take Target, for instance. It’s mass, but affluent clients are comfortable there, too, with their merchandising and product mix. And Walgreens is very organized, and that’s consistent throughout the chain. They are committed to convenience and in-store presentations, which definitely contributes to their success.”
Many food stores also are paying closer attention to the category.
Take Nature’s Northwest, a six-store grocery chain based in the Pacific Northwest. The chain, which has a natural products positioning, not only devotes considerable space to merchandising, it goes one step further in its Lake Oswego, Ore., store. That store houses a full-service salon and day spa, which offers various body treatments.
The salon and spa opened in 1998, and the strategy is apparently working: Industry sources estimated that the Lake Oswego store’s health and beauty aids department would account for 20 percent of the store’s projected $25 million sales in 1999 — and that’s excluding the revenues from the salon and the spa.
Another notable feature of the Lake Oswego Nature’s Northwest is its Fresh Face section, said another source. Set up like a salad bar, the department allows customers to cut their own bath soaps to size and to buy aromatherapy and other beauty products.
Industry sources also pointed to Wegmans Food Markets, a Rochester, N.Y.-based chain, as a leader in bath merchandising. The chain’s just-opened store in Princeton, N.J., features a large bath shop. Wicker baskets hold many products, and wooden fixtures covered with ivy comprise another part of the department. Brands include St. Ives, Suave, Village Naturals, Sarah Michaels, Freeman, Sinclair & Valentine and The Healing Garden, with product ranging from body massagers to bath gels.
But even within the most rigid retail framework, it’s still possible to make an important retailing statement, said Peter Acerra, vice president of Naturistics.
“In most cases, you work within mass retailers’ shelves — and it’s your job as a vendor to make your brand stand out,” said Acerra. “It’s necessary to make your products as pleasurable as possible, whether that’s through consistency in labeling, vibrancy in color or indulgent gift sets at different price points.It is also necessary to create comprehensive signage, with great graphic panels stating what the products do — and offer takeaway materials.
“One great way to raise your brand’s awareness in the minds of the consumers is to use the same imagery in your national advertising that you do in your wall panels and shelf talkers,” said Acerra. “It helps consumers to understand your brand.”
Producing offbeat and witty products — like Sal & Jo’s Dairy, the recently released, food-inspired line from Orchard International, which includes Bath Jam, a soap with the smell and texture of strawberry jam that is even packaged in a jelly jar — never hurts, either.
The ability to be flexible is also critical, particularly when it comes to in-store display.
“No matter what the channel of distribution, merchants are limited in the amount of space they devote to any one category — so this can sometimes be a tall order,” Kang said. “The more upscale you go, the easier it gets, but it’s possible to do it at the mass level and you can do it even if you’re a chain store.”
Kang points to Bed Bath & Beyond as an example. “Their bath shops vary by store — and that’s for one very important reason,” he said. “They give their store managers the flexibility to merchandise bath products in a way that’s appropriate for their store’s space and for their clients. They don’t dictate, ‘You can only do this.’ That flexibility gives the store manager, who knows her clients and store much more intimately than someone sitting in an office 3,000 miles away, a great advantage — and that effect has been obvious in the sales that the chain has done.”
McDougald noted that, given most mass retailers’ restrictions, it’s critical to work with them when developing fixturing. “We’ve created an environment for Calgon and the Healing Garden, each with their own display units, and we’ve worked with our retailers to create fixturing that they are able to use,” he said. “We do all types of display units, including freestanding and wall units, and we give retailers the flexibility to add onto their units. For instance, some stores allowed about 2 feet of display for bath and body in the beginning and now have as much as 16 feet.”
Merchandising — along with a few other factors — will help sustain category growth over the next few years.
Kang sees two distinct categories emerging. “The first is a fragrance and color organization, like Bath & Body Works and The Body Shop do. They will take one item and sku it out — offering, say, a bath gel in 10 different colors and fragrances. Then, there’s another approach — a functional approach, which is what I do. It’s ingredient-driven rather than fragrance- and color-driven. We concentrate on the ingredients and what they can do for you. In terms of which will win out, I don’t know that one will win out over the other. I think there will be a market for both.”
“In-store, you have to give bath and body good lighting, good colors — you have to grab the client’s attention,” said Pinvidic. “Then it becomes a destination — people want to come back for more.”
Advertising, while important now, will continue to grow, with even smaller bath companies investing in this area.
“Bath and body is more of a fashion item now, and advertising will be imperative in sustaining that growth,” said Pinvidic. “Advertiser promotion has to grow, and it will. “Good advertising can also help drive a brand,” Pinvidic continued. “In past years, bath and body has not had much specialty advertising, but you’re seeing more of a push toward that, and it will continue.” Pinvidic’s latest campaign will break in October in Rolling Stone magazine.
McDougald agreed. “Our brands are about name branding and are supported by national advertising, which in turn helps our retailers,” he said.
Added Pinvidic, “But in the end, the focus has to be the product itself and what it will do for you, and innovation, fragrance and delivery systems will be part of a whole mix spurring on the growth of this category.”
Going forward, Pinvidic believes that more mass retailers will follow the leads of Bath & Body Works and department store retailers by adding in-store consultants for the category. “You’re seeing a little of that now,” he said. “I visited one retailer which has a consultant, and in the half an hour I was there speaking with her, more than 15 customers came by to ask her questions about the category. It’s a wave of the future.”