LUSTRASILK SALE SETS STAGE FOR COMEBACK

Byline: Faye Brookman

NEW YORK — Gillette Co. made a deal this week agreeing to sell its Lustrasilk Co. ethnic hair care business to Alleghany Pharmacal Corp. of Great Neck, N.Y., a move that may signal a reversal of fortune for the lagging beauty brand.
The impending sale is expected to be completed Aug. 2. Terms have not been disclosed.
Industry sources speculate that Gillette decided to sell Lustrasilk because the Boston-based consumer-products giant was not getting a satisfactory return on investment, although the hair care company has shown improvement. Gillette also felt that Lustrasilk is not one of its core businesses, according to sources. Gillette confirmed the deal, but did not elaborate on it.
Industry experts estimate the wholesale volume of Lustrasilk at $3 million to $4 million. In the mid-Eighties, however, it had chalked up sales as high as $20 million through drugstore chains, supermarkets and discounters, as well as professional outlets. The ethnic hair care market was then driven by the Jheri wet curl look.
The style, made famous by celebrities such as Michael Jackson, required a shelf-load of hair care products to maintain. Buyers of ethnic hair care said Lustrasilk did not keep up with changes in ethnic hair styles, causing a decline in sales.
“They introduced some products that weren’t curl-related, and unfortunately — other than MoistureMax — did not perform well,” said Jim Normandin, buyer for Beauty Enterprises, a leading distributor of ethnic hair care based in Hartford, Conn.
Gillette purchased Lustrasilk from a Minneapolis firm in 1986. Although sales dipped in the late Eighties, Gillette is credited with starting a recent rebuilding.
“They went through the worst. Gillette started to turn things around in the last year to year and a half,” said Normandin. Gillette supported the brand with strong programs, especially displays.
“We were happy with the support Gillette put behind it, and we were pleased with the performance,” said Charles Monk, buyer for Harco Drug in Tuscaloosa, Ala.
Many chains, however, were stocking only one or two of Lustrasilk’s 45 items. The new owners hope to revive sales by increasing the distribution of the entire line.
“We hope to double sales over the next three years,” said Tessa Brown, president and part-owner of the Lustrasilk division of Alleghany.
The line is currently carried by about 100 food, drug and mass-market accounts, a total that can easily be doubled, according to retail buyers.
Alleghany hopes to build distribution by offering new products. According to Brown, a men’s line of relaxers and texturizers is in the works for later this year.
Lustrasilk also owns a separate salon line of 18 ethnic hair care products. Alleghany has no plans to delete any existing stockkeeping units at this time, said Brown.
Normandin believes the long-term success of the line will be linked to the curl look.
“The brand will come back if the curl comes back and we are seeing some signs of a return to the curl,” he said.
Alleghany has become known for taking lagging brands and reviving them.
The firm acquired the Hask hair care brand in 1986 from its founder, George Gotfrey, in Great Neck, N.Y. Hask sales were estimated at $2 million at the time and were tripled by last year, according to David Miller, vice president of Alleghany.
Alleghany also owns Hen-X and B&W hair care products.

Reaching the African-American customer has become a major goal not only for Lustrasilk, but for many others in the mass market.
But many mass-market retailers don’t have the sophisticated information systems needed to provide a demographic profile of each store’s clientele.
The problem is especially acute in cosmetics, where space on the merchandise wall is at a premium. Moreover, a bevy of new color cosmetics products targeted to black customers has been launched during the past two years, creating a category estimated by some executives at $200 million.
Different retailers — such as F&M Distributors Inc. of Warren, Mich.; Duane Reade of Long Island City, N.Y., and K&G of New Orleans — have devised various approaches to reach the black cosmetics customer.
At F&M Distributors, all 121 stores within the chain have ethnic cosmetics, according to Pat Gardocki, director of merchandising. The chain carries ColorStyle from Revlon and Maybelline’s Shades of You as well as the darker shades offered by Cover Girl.
In skin care, F&M added BioCosmetic Research Laboratories’ Black Opal after numerous customer requests, said Gardocki.
In addition to the newer lines such as ColorStyle, Duane Reade has turned over peg-wall space to an old line making a strong comeback, the Posner Laboratories line of ethnic cosmetics. In the last year, Posner’s packaging has been redesigned and greater support has been put behind the brand, according to company executives.
Several chains are attempting to identify stores where there is adequate African-American traffic.
K&B has surveyed its 178 stores to determine which ones attract substantial numbers of black shoppers. As a result, more than 112 units have been slated to receive ethnic merchandise.
Lower-priced lines such as Zuri and Posner are selling briskly at K&B, according to buyer Donna McManus.
Higher ticket lines such as ColorStyle have leveled off, she said.
McManus has also added Black Opal, and, based on initial success, has rolled it out chainwide.
Some manufacturers take a hands-on approach to help retailers determine which of their stores should be stocked with ethnic lines.
Maybelline, for example, works with a company called Market Metrics in Lancaster, Pa., to help determine where Shades of You should be distributed.
The company matches Census Bureau data with store addresses.
Buyers are also grappling with the question of whether it is better to have separate lines for ethnic customers or merely darker shades within existing brands, such as Cover Girl and L’Oreal.
“I think it is good we have both, because I’m not sure if the customer comes in looking for a brand or if they look for shades that appeal to them within an existing line,” said Gardocki.
Black Radiance is the top seller within the budget-priced end of the business, according to retailers. The other challenge in ethnic cosmetics is whether to target the line at all women of color, including Asians and Hispanics, or focus the marketing on black women.
At least one manufacturer believes ethnic lines should target individual groups.
“I think one reason for our success is that we were the first to say ‘black’ in the name and to be firmly aimed at black women,” said Stanley Acker, president and chief executive officer at Pavion Ltd., which introduced Black Radiance in 1992.
To address the needs of Hispanics, Pavion came up with a separate line last year called Solo Para Ti.

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