STORES TO REVLON: STAY THE COURSE
Byline: Faye Brookman
NEW YORK — Retailers are having fun riding on the Revlon sales wave, but they also hope the firm hasn’t crested.
Buyers for major drugstore and discount chains are counting on Revlon executives not to get dizzy with their success and make the same mistakes committed by their predecessors, such as overloading chains with too many stockkeeping units.
Considering the impressive growth it has enjoyed in the last two years, many retailers think Revlon has now arrived at a critical juncture — a perception that was intensified with last week’s change of command, in which president George Fellows was elevated to chief executive officer.
He succeeds Jerry W. Levin, who will remain chairman and concentrate on acquisitions and the formulation of Revlon’s corporate strategy.
Optimism is still solid with stores, however, because there’s no mistaking it — Revlon has been on a roll. The company has been so successful of late that it is credited by many retailers with injecting new life into the entire mass market color cosmetics category.
“Our sales are good with Revlon and they certainly had a terrific quarter,” said Gerald Heller, president and chief executive officer of May’s Drug in Tulsa, Okla.
Last week, Revlon reported a fourth-quarter sales gain of 9.9 percent to $613.7 million.
Added Jim Harrison Jr., chairman of Harco Drug Inc. in Tuscaloosa, Ala.: “It is important for Revlon to do well because they sustain the entire drugstore cosmetics department.”
According to data from the market research firm Information Resources Inc., for the 52 weeks ended last August, Revlon had a 21.1 percent dollar share of cosmetics volume — up from an already impressive 16.1 percent from 1995.
Because of its recent track record, retailers have been willing to extend the shelf footage devoted to Revlon brands to accommodate new launches. Duane Reade increased Revlon’s space from nine to 10 feet, while Genovese cleared extensive space near a store entrance in one of its Manhattan units for Revlon’s ColorStay line.
In Kmart’s first Manhattan store, space was created on the main floor for Revlon. The other cosmetics brands are in the basement.
Much of Revlon’s growth has been fueled by launches such as ColorStay lipstick, Age Defying makeup and the New Complexion foundation.
“ColorStay wasn’t a flash in the pan,” noted Karen Durham, divisional merchandise manager for Duane Reade, which is based in Long Island City, N.Y. “Several of the lip products are still among my top sellers.”
Revlon’s reputation has also been buoyed in the trade by the introduction of Street Wear, a line of more fashion-forward nail colors that has been extended into fragrance and will also include pencils this spring.
But that’s where buyers give a word of caution.
“Street Wear should stick with just lip and nail, which is where people want funky colors,” said Durham.
Another buyer concurred: “Revlon has always run into the problem of overloading us with [stockkeeping units]. We don’t need 10 shades.”
Several others voiced concern that Revlon sometimes forces entire lines onto chains and dictates large and cumbersome fixtures that result in poor return on inventory investment.
For example, some retailers said that while the ColorStay lip products were a hit, the addition of ColorStay makeup and mascara has met with a less-enthusiastic response.
“Why would you need ColorStay mascara when you already have waterproof products?” asked one source, referring to the fact that Revlon already had a long-lasting mascara in stock. “It’s a duplication.”
Gail Hubert, buyer for Drug Emporium in Powell, Ohio, added that beyond the lip products, “ColorStay has not sold at the magnitude it did.”
Despite Revlon’s efforts to bring technology such as the ColorStay breakthrough to other categories such as skin care, eye color and fragrance, retailers don’t see a big potential for Revlon to wrest market dominance away from the leaders in those sectors.
“Skin care belongs to L’Oreal, and eye to Maybelline,” said one discount chain buyer. “You’ll never get people to stop buying Great Lash, and Revlon mascara just doesn’t do that well. My slowest L’Oreal mascara still outsells Revlon.”
Market shares in each category show Revlon has far to go in areas such as face makeup, where Procter & Gamble has a 42 percent share and Revlon 25 percent, according to IRI. L’Oreal commands eye color, with 45 percent of sales; Revlon accounts for 20 percent. Revlon has an edge in nail enamel among the Big Three, with a 25 percent share. But the remainder of the category is dominated by Sally Hansen and a range of niche players.
And while Revlon is battling to gain share in all facets of the color cosmetics business, its sister brand, Almay, is stuck in first gear, said buyers.
“They’ve tried to repeat too much of what they did with Revlon,” said one source, noting that Almay’s Amazing line is a duplicate of ColorStay.
Hubert at Drug Emporium said Almay has a solid niche presence, but she, too, wants to see better results.
The mass fragrance business, while slow overall, remains a particularly daunting hurdle for Revlon. Although the company’s management team has vowed to rebuild sales in recent years, buyers are still unimpressed with efforts to date.
Last year’s women’s introduction, Cherish, started off strong, but failed to make bestseller lists. Charlie Sunshine is just getting into stores, and buyers said it is too early to judge the product.
Another challenge for Revlon will be to live up to its impressive growth record of the past two years. To get an added boost at the end of 1996, buyers said Revlon sold in and shipped its first-quarter products at the end of last year. That could come back to haunt the company as the year goes on and the numbers don’t keep up, according to retailers. There are those who also wonder if stepped-up rebate and couponing activity are driving Revlon’s sales — rather than increased shopper demand.
“We’ve couponed Age Defying to death and don’t know what will happen when we stop it,” Hubert said.
Revlon recently switched from having its own staff calling on stores to using merchandisers hired from an outside source. Buyers said they’ve been pleased with the merchandisers. “Anything we’ve asked for, they’ve done,” said Hubert.
The recent management change was also embraced by the retail community, which views Fellows as an asset.
“George is very competent and understands the business,” said Heller.
Feb. 18 is the date of the annual preview party for the Sports Illustrated swimsuit issue, and for the first time there is a sponsor — English Leather from Dana Perfumes.
Al DeChellis, general manager of Dana, said he sees the event, to be held at Industria Superstudio here, as a powerful promotional tie-in. Sponsoring the party is another way for Dana to support the mature brands it has acquired.
“Since Dana Perfumes just acquired the English Leather brand with its purchase of the Mem Co., we felt it was important to do something unique and exciting for this brand,” said DeChellis.
Ulta3 will unveil three new stores in Las Vegas on Feb. 14, 15 and 16. Scheduled to make promotional appearances are Revlon spokeswoman Daisy Fuentes, Paul Mitchell and Dr. Howard Murad. The stores mark Ulta3’s first foray into Las Vegas and will feature the chain’s latest layout, which is modeled after department stores and intended to appear more upscale.
Rite Aid Corp., Camp Hill, Pa., has realigned category management and marketing departments. Kevin Mann, executive vice president of category management, will report directly to Beth Kaplan, executive vice president of marketing. Mann and Kaplan had reported to Martin Grass, chairman and chief executive officer.
Some industry experts view this as a sign that Kaplan, a former top Procter & Gamble executive, is being groomed for a top spot at Rite Aid.