STORES FUEL THE GROWTH POTENTIAL
Byline: Faye Brookman
NEW YORK — Two events in 1995 altered the face of mass market cosmetics. First came the success of Chanel’s Vamp nail color in department stores; the demand for similarly unusual shades quickly made its way to drugstores. Next, came Revlon’s revolutionary launch of ColorStay lip color, which for the first time delivered on the promise to provide budge-proof color and made women take another look at lipstick.
These factors began a return to growth in sales of color cosmetics that until 1995 were showing declines. According to Information Resources Inc., the category kicked into gear in 1996, when color cosmetics volume jumped 7 percent in drug, food and mass market stores. For the 52 weeks ended July 27, sales were ahead of last year’s by 5.3 percent to $2.5 billion.
The categories with particularly dynamic sales growth were nail polishes, with a 17.3 percent gain from 1995 to 1996, and lip color, with a 4 percent increase.
The vibrant growth rates have retailers wondering if and when the color will fade. Retailers, always optimists, are taking bets that the color revolution is here to stay. “We’re blowing out of color, especially glitters, and we don’t see an end in sight,” said Ken Lane, buyer for Texas Drug Warehouse.
Lane and other buyers now expect increases in face products. “Customers have started experimenting with nails, and now we think we’ll see even more action for eyes and lips,” Lane said.
Buyers for the nation’s mass market doors believe there has been a fundamental change in how women are treating color cosmetics.
“Women aren’t going to give up color. It has become an accessory,” said Karen Durham, divisional merchandise manager of cosmetics for Duane Reade. Durham thinks colors might not be as dramatic in the rest of 1997 and 1998 as they were in 1996 and early 1997. “But we’ll see more tone-on-tone and duo-tone looks. People will be mixing glosses and powders for new looks,” she said.
Beth Kaplan, executive vice president of marketing for Rite Aid, agreed the color revolution is here to stay. “You know that when you have executive women experimenting with new colors that there has been a change in the way people view cosmetics. We’re expecting to continue to see gains, especially as we reformat our Thrifty/PayLess stores,” she said.
Just to make sure customers think of mass outlets for the vibrant new shades, buyers are working to keep the momentum going.
To establish their stores as beauty authorities, chains said they are engaging in more vendor-sponsored in-store promotions. When a new Phar-Mor Inc. store opened in July, for example, Revlon staged makeovers and giveaways.
When Ulta3 opens a store, sales are triggered by guest appearances from representatives from MProfessional and Murad. “We have people waiting in line for makeovers, and it introduces people to our vast array of cosmetics,” said Bob VonderHaar, vice president of merchandising for Ulta3.
Hill’s Department Stores is zeroing in on monthly promotions to boost sales. In February, for example, the discount chain will have a huge nail color special incorporating several of the new players in the thriving nail color category.
Mass marketers are trying to make beauty a priority in their stores. “We are working on a new store format,” said Allan Goldman, senior vice president of marketing for Cosmetic Center. “We’ve done a good job of talking about fragrance; now we’re trying to make more of a color statement.”
To make sure their statement is heard, retailers are increasing the visibility of beauty departments.
Perhaps the best example is Rite Aid, which has a new beauty prototype with illuminated signs. Cosmetics is front and center in the stores. Aisles have been widened to allow customers more room to browse.
VonderHaar said Ulta3 is working on a new store look that will put a stronger spin on color. It will bow in 1998.
Discounter Target has made cosmetics a focal point. Although Target has been experimenting with the location of beauty, in jewelry and near pharmacy, in newer stores cosmetics is the first category at the right of the store entrance.
Target, known for its clearly marked and easy-to-shop stores, has adopted this tack in beauty: All subsections of cosmetics are clearly marked with signs on top of the fixtures. An area totally devoted to children’s cosmetics, for example, has its own sign and includes products from Bonne Bell and Tsumura.
There is a 12-foot nail care department featuring Sally Hansen, Orly, Ultra Gel, Cosmar’s Color Power nail kit, Kiss Nails and Fing’rs.
Cosmetics lines include Revlon, L’Oreal, Cover Girl, Wet ‘n’ Wild and Maybelline. The L’Oreal fixture has special tinted chips affixed to the wall to help women determine their skin type.
Kmart continues to boost its presence in cosmetics and has started experimenting with more niche players, suppliers said.
Discounters, in fact, are making great inroads at the expense of chain drugstores, a development fueled by the rampant consolidation in the chain drugstore industry. Several industry sources expressed fear that drug chains are so busy digesting new stores, they are losing day-to-day awareness of what it’s like to shop their stores.
“Both Rite Aid and CVS are so bogged down trying to digest the new stores they’ve purchased that stores are suffering,” said one source. “We couldn’t even get our best new items in CVS in time for demand.”
One buyer for a chain recently acquired agreed. “There’s a great deal of confusion about how to make a seamless transition, and the stores are suffering,” she said.
Drugstores’ share of cosmetics sales, in fact, declined one full point from 1995 to 1996, and some industry observers fear the losses will be higher when 1997 tallies are taken.
Concluded one source, “Drug chains better get their act together or all of their hard work will be wasted.”
These small declines aren’t enough to dampen spirits, though, and the nation’s teenagers are credited with keeping cash registers ringing up cosmetics sales in drugstores.
Young shoppers are starting many of the trends being adopted by older customers, said industry executives. Buyers said that whereas department stores used to launch new shades and products, it is now America’s youth that kindles the flame.
Mass marketers used to ignore teen customers because they thought they didn’t spend on cosmetics. It turned out they were wrong. Now chains such as Longs, Rite Aid, Pharmhouse and Medic are doing all they can to court teenagers.
“Thank God for those young customers who keep the business exciting,” said Sally Yanke, director of cosmetics for Medic Drug in Cleveland. Medic recently participated in a program from Bonne Bell called Color Crew. Bonne Bell had trained teenage representatives in Medic’s stores to assist young shoppers and make product selections. The result was dramatic sales gains across the entire cosmetics category.
The spending power of teenagers is reflected in drug and discount stores, where lines targeted at these customers — such as Jane, Loud Music and Bonne Bell — are being given more shelf space.
Pharmhouse, based in New York, is an example of the many chains installing specially created teenage departments. “We are extending our brands with Loud Music and others. That’s what is selling,” said Marsha Gaynor, senior buyer for the chain.
Most buyers said they have been able to free shelf footage for youth brands by slicing space from Max Factor or other slower-moving lines. Many are squeezing in new brands in promotional displays and space.
“We’ve taken some stores and put in a three-foot section with one foot each for Colours of Australis, NatRobbins and MProfessional,” said Steve Lubin, divisional merchandise manager at Walgreen Co. of Deerfield, Ill.
Because the beauty business has become so driven by what’s new and hot, retailers said they’ve restructured their departments to emphasize promotional displays of either niche players or shade breaks from major firms.
For many, promotional displays are a way to test the waters with new vendors before deciding to clear space for them on the peg wall.
Several retailers are tinkering with newer brands such as Beauty Finds from Resource Options to generate excitement.
Wal-Mart, Eckerd and Ulta3 head the list of firms adding Beauty Finds, which started out as pencils and is now a full-blown line. “What you have to do is find products that make your stores stand out from the competition, because every one is going to have Revlon and Cover Girl,” observed Eckerd’s director of beauty, Lorraine Coyle.
Phar-Mor has an entire aisle in its new prototype devoted to prepacked displays. Harmon Discount Stores devotes a table at the front of its cosmetics departments to promotional offers from brands such as Nat Robbins, Prestige and Lord & Berry. Two other niche players, Cabot and Physicians Formula, are on the lower half of the peg wall.
Buyer Naomi Germano said she puts niche players up front to attract traffic. “These brands are what are stopping our customers. We’ve even worn out the floor in front of it — and it is a new store,” she said.
At CVS, the table that used to house fragrances has been turned over to color promotions such as Sinful nail colors, which the chain hopes will produce volume to offset sagging fragrance sales.
Major manufacturers also use promotional displays to test the waters. Maybelline is starting to integrate its special Express products into chains using a fixture that houses the new Volum’ mascara and Express nail finishes.
“Manufacturers,” added Duane Reade’s Durham, “have returned to giving us color statements. You are seeing companies such as Cover Girl and Maybelline get back into shade promotions.”
But the rush to offer shade breaks and promotional deals has fueled fears that shoppers will stop gravitating to the wall. “That’s always a concern,” said Lubin, who added he has actually decreased his promotional buys. The goal, said Lubin, is to balance promotional displays with the wall so that customers look at promotional displays first, but know they can find basics and new items on the wall, too.
Durham at Duane Reade said the chain has a similar strategy. “We try to show customers that once an item is new and popular, we quickly get it onto our wall.”
To keep peg walls from becoming staid and boring, chains are working with suppliers to install more scintillating fixtures. Paramount in the new displays have been more educational materials. Rite Aid has started producing its own magazine with beauty tips; it is distributed on Rite Aid fixtures. And several suppliers are trying to work “what’s new” areas into their wall displays.
Pentech Inc., for example, has an area for new items on its fixtures. Sweet Georgia Brown also has a new area, and a new newsletter that tells shoppers about new products. Buyers singled out Maybelline for its innovative fixtures, which feature an area where shoppers can quickly find new items on the peg wall.
Industry sources said a major discount chain is adding special sections to its cosmetics walls that will be dedicated to trendy colors, and stores will be able to change selections more frequently than the usual once a year for planogrammed sections.
With the influx of edgy colors, mass merchants have begun programs to coax customers into being more adventurous.
Medic Drug was the first to create a money-back guarantee. The move was then copied by Rite Aid and CVS. CVS is putting signs throughout its stores informing people that they can get refunds if they don’t like the product. Retailers said to date, returns are nominal.
CVS has increased its Beauty Days promotions as a ploy to boost beauty business. During Beauty Days, the chain offers discounts and coupons on items throughout the store.
Fall Beauty Days, for example, touted new Revlon Top Speed nail polish for 99 cents and a buy one, get one free deal on Street Wear.
Once upon a time, drugstores and discount stores concentrated on luring shoppers from department stores, but the goal now is to keep them from migrating to malls, where they can choose from beauty products at Gap, Victoria’s Secret and The Limited Too.
Gap recently added an entire line of nail colors priced competitively with those at chains.
“The quality of products is the best ever in mass stores now and our colors are the same, so there aren’t reasons to go to department stores as much,” said Durham. However, she conceded, clothing stores are tough to compete with because they have shoppers when they’re in the mood to experiment with fashion.
Industry consultant Allan Mottus said if mass marketers can keep the niche brands coming, they’ll win shoppers. “Customers are very value-driven and many of the new lines such as those from AM Cosmetics and Nat Robbins have the right colors and the right pricing,” he said. These lines fall price-wise between Revlon and budget brands such as Wet ‘n’ Wild.
Chains hope they’ll have a competitive edge when it comes to holiday shopping.
This year, retailers said they are reducing their traditional fragrance open-to-buy in favor of more blockbuster cosmetics sets, bath items and body mists. The emphasis on color kits is twofold. First, buyers think more shoppers will opt for these as gifts. Second, customers looking to add sparkle to their holiday wardrobes will see the value in the kits and purchase them for themselves.
Among the new kit offerings at such chains as Eckerd and Kmart are cosmetics assortments from Color Workshop. Color Workshop already has a reputation in the industry for prestige kits sold via direct mail from Lord & Taylor. Now the company is packaging similar assortments for the mass market.
Buyers hope the invasion of the hair mascaras will bolster holiday sales. These temporary hair colors that are applied with a brush similar to a mascara wand have been creating quite a stir since Christian Dior introduced Mascara Flash earlier this year.
Although some companies won’t ship their versions until 1998, buyers said there are at least three resources pumping products into retail outlets.
“I think hair mascaras are cute and will have at least some strong initial sales,” said Yanke.
Retailers, noting Christian Dior is having trouble keeping in stock in department stores, hope they’ll fill a market void with their knockoff versions.
“It shows how fast mass marketers can react to what is new,” said one retailer, who plans to offer two hair mascara lines for the holidays.