STORES BANK ON BENEFITS OF PHARMACY FOCUS
Byline: FAYE BROOKMAN
NEW YORK — Drugstore chains are expecting an unlikely source to generate skin care sales this year — the pharmacy.
Buyers are high on two products that are being sold, for the most part, in the prescription section of the drugstore. The chains hope that the treatment category will also benefit from all the attention and store traffic these items are expected to generate.
One sales locomotive is considered to be Johnson & Johnson’s Renova, a prescription-strength skin care cream designed to reduce fine facial wrinkles, ease brown patches and smooth rough skin. The product started rolling out to 65,000 pharmacies in mid-February.
Ethocyn, which was created by the L.A.-based Chantal Pharmaceutical Corp., is said to be the other treatment powerhouse. Ethocyn, a chemically synthesized ingredient, is purported to spur skin cells into producing optimum amounts of elastin. Elastin, a protein and the basic substance of elastic tissue, keeps the skin firm and is a key component in preventing wrinkles.
While the product is nonprescription, Chantal has opted to sell the new item in the pharmacy section of most of its accounts, due to its high price points and technical nature.
The hope is that the pharmacist can not only explain the Ethocyn advantage, but that he will discourage pilferage, as well.
Ethocyn’s six-item collection, which started shipping in August, is currently available in 10,000 drugstores and 500 medical offices. It can also be procured on a direct basis via an 800 number.
Drugstore buyers were especially bullish about the new product because, currently, it is not being distributed in mass merchandisers or food stores — even those which maintain a pharmacy on the premises.
Buyers noted that in addition to being upbeat about Ethocyn itself, they are greatly anticipating the lower-priced knockoff versions which inevitably will hit the market. Additionally, buyers felt that the buzz created by Ethocyn, as well as Renova, will generate additional in-store traffic and have a halo effect on the rest of a chain’s skin care department.
And the buyers concurred that Ethocyn so far seems to be a hit, in spite of its lofty price tag. The new entry is being sold in a kit, with a suggested retail price of $120, that contains two 2.3-oz. vials of Ethocyn Essence, a 0.5-oz. eye cream, a 2-oz. moisturizer and a 6.7-oz. hand and body lotion. A refill kit also fetches $75.
Buyers noted that Ethocyn’s price points are at least three times that of traditional mass market skin care offerings.
“Ethocyn is selling extremely well,” said Judy Wray, senior buyer for Revco D.S. in Twinsburg, Ohio. “We’ve even looked to see if it is just in upscale areas, and we’ve found it sells equally well across all demographics.” Industry analysts estimate Chantal’s Ethocyn will hit a retail volume of at least $80 million by the end of the skin care firm’s first fiscal year on June 30.
William Gibson, an analyst with Gruttenden-Roth in Santa Barbara, Calif., projects sales of $200 million by fiscal year 1997. That estimate is based on pharmacies selling about five kits per month, plus physicians selling another 40 kits.
Drugstore retailers admitted that the possibility of an exclusive success, like Ethocyn, is a welcome relief — because lately competition has increased. Over the last few years, food stores and discounters have stepped up their efforts to attract skin care customers with larger departments and discounted pricing. So far, their efforts have been successful. According to Chicago’s Information Resources Inc., sales in 1995 of facial moisturizers, for example, dropped 4.7 percent in drugstores, to a volume of $603 million.
Meanwhile, sales in food stores climbed 2.3 percent to $315 million, and discount store volume increased 10.1 percent to $419 million. In addition to Chantal’s claim that using Ethocyn regularly will return the skin’s elastin levels to that of a 20-year-old’s, buyers noted that Ethocyn’s success can also be traced to the company’s television commercial. Chantal launched the campaign with a budget of at least $4 million, company executives said.
The ad features a woman who has treated half of her face with Ethocyn and left the other half untouched. The former appears to be significantly less wrinkled. “When that commercial runs, the kit sells, especially for the chain who is tagged in the ad,” maintained Rich Landers, president and chief executive officer of Landers & Associates, who acts as Chantal’s liaison with drugstore chains.
He added that coverage by local television programs, as well as a story broadcast nationally on Hard Copy that discussed Ethocyn, has also prompted consumer interest.
“A news story broke out before we even got it in, and women started to call us and ask us for it,” said Chuck Gautreaux, buyer for K&B in New Orleans. Gautreaux noted that because of this unforeseen consumer interest, he doubled the chain’s original order, before Ethocyn even arrived in the store.
An Eckerd spokesman said that Eckerd Drug has reordered Ethocyn several times since its rollout in August. Denise Valerio, assistant category manager for Longs Drug in Walnut Creek, Calif., noted that many of the chain’s units were selling in excess of 50 pieces of Ethocyn in one month. Valerio said that instead of the chain’s usual practice of testing an item in a few stores, she approved shipment of at least two kits and four replacement vials of Ethocyn into all Longs units simultaneously.
Longs is one of the few chains positioning Ethocyn in the cosmetics department, rather than the pharmacy, because many of its stores have cosmeticians who can devote more time to assisting shoppers than the pharmacists, since they do not fill prescriptions.
While May’s Drugs of Tulsa has been selling Ethocyn since February, Gregg Heller, the store’s cosmetics and skin care buyer, said the product concept will really take off once the company takes down its prices and when other companies knock off the formula — a parallel of what happens in the alternative designer fragrance industry.
“With all products like this, prices come down, and I’m sure we’ll see people knock if off,” he said. He was not aware of any companies who were planning to come out with alternative versions of Ethocyn. He added that May’s was expecting Renova to be another lure to the store’s skin care section, even though it is only available through prescription and has a hefty price tag — a 40-gram tube of Renova retails for about $60.
Renova is already paving the way for lower-priced and more easily accessible ancillary facial treatments. For example, in April, J&J’s Neutrogena division will start positioning many of its products as essential accompaniments to the Renova regimen. There will be a skin care kit that is designed for the special needs of Renova users, who may experience some minor irritation, dryness and flakiness and require daily sun protection with an SPF 15.
The kit, which has not yet been priced, contains 2-oz. sizes of Non-Drying Cleanser and Moisture SPF 15. Neutrogena will also recommend that women using Renova incorporate Neutrogena’s Light Night Cream and Sensitive Skin Sunblock SPF 17. Neutrogena will also push its Sunless Tanning Lotion for Face and Body as an essential. “[Renova and Ethocyn] are the next step beyond alpha-hydroxy acids,” May’s Heller said, referring to the spate of high tech, acid-based products which have been flooding the mass market over the last few years. “These products have performed well, but there were so many that the customer is confused.” To cut through the confusion, skin care manufacturers have unleashed huge advertising campaigns behind key new products.
L’Oreal is backing its PlAnitude Revitalift firming and antiwrinkle product with $20 million during its inaugural year.
Meanwhile, Chesebrough-Pond’s Prevent & Correct, which bowed in September, has a first-year advertising budget of $25 million. The product contains a preventative preparation in one part of the jar, and a skin-repairing potion in the other.
Other heavy-hitting advertisers include Neutrogena, whose Healthy Skin acid-based moisturizer, launched late last year, is reportedly being backed with at least $5 million. Nivea’s Optimale moisturizer, launched in January, has some $17 million worth of print and TV behind it.
“We’re seeing some good results, especially from Revitalift and Prevent and Correct,” said Paul Carlson, buyer for Snyder Drug Stores Inc. in Minnetonka, Minn. Added May’s Heller, “Chesebrough’s Prevent & Correct has been great. We’re doing well with everything Chesebrough has launched at the upper scale of the market.” Retailers estimate the four big new launches could add another $60 million in wholesale volume to the mass market skin care category. The items are also helping retailers nudge up price points in mass. “It used to be we couldn’t sell anything over $5,” said Carlson. “Now with Plenitude’s success, we’re up to $15 and $20.” Retailers said now that skin care items push cosmetics, appearance-improving properties and more cutting-edge benefits, rather than just comfort, it is no longer possible to merchandise them in the commodity section of stores, where they have traditionally been placed.
“Today’s skin care products are really more like cosmetics,” said Charles Monk, buyer for Harco Drug Stores in Tuscaloosa, Ala. “And you are seeing more cosmetics with skin care ingredients.” To capitalize on the synergy between makeup and skin care, chains such as Wal-Mart have moved skin care into the beauty department and out of toiletries. In about 200 of its stores, Wal-Mart is experimenting with situating skin care in the center aisles, between the peg walls of color cosmetics. To give these departments a more upscale image, Wal-Mart has installed special fixtures with new lighting and pamphlets that explain each product’s benefits and relation to skin care concerns.
Many other chains merchandise treatment products in dual locations, depending on the brand. Duane Reade, for example, has lines such as L’Oreal’s Plenitude in cosmetics, but P&G’s Oil of Olay is displayed in the toiletries section. Duane Reade has chosen to sell Ethocyn in the pharmacy section, but has a display in the cosmetics department with a note directing consumers to the prescription section of the store. Without the space to include skin care in its cosmetics department, CVS has erected signs in the area that are designed to send beauty shoppers to its health and beauty aids section.
Eckerd’s strategy was to move its skin care closer to its cosmetics offerings, in order to create a total beauty boutique.
Location and merchandising tactics are not the stores’ only considerations. Buyers are also concerned with finding enough space on their already crowded shelves to accommodate all of the market’s new entries.
May’s Heller said he is in the process of reviewing scan data to weed out the chain’s slow sellers.
“We’re actually downsizing skin care, and we just can’t fit everything in with all the new introductions. We’re cutting products off at the 200-piece-movement mark,” he said, referring to yearly unit sales. While the complex new skin care items bring in higher prices, buyers said many basic skin care stockkeeping units continue to be top performers. Heller noted that a big part of the chain’s treatment business is made up of basic drugstore fare, such as simple cleansers and moisturizers, versus the higher-ticket department store-inspired brands, like L’Oreal’s Revitalift.
“Our private label is still our number one skin care [brand],” he said. “That’s followed by good old Pond’s Cold Cream.”