BUYERS PLAY TO WIN AT NACDS MARKETPLACE
Byline: Faye Brookman / Andrea M. Grossman / With contributions from Laura Klepacki
LAS VEGAS — This town was an apt venue for this year’s National Association of Chain Drug Stores’ Marketplace Meeting as retailers have been forced to acknowledge there is no sure bet when selecting beauty brands.
Stalwart Revlon is still struggling to get back on its feet, and disappointing sales have moved P&G to pull Olay color. It was only two years ago that buyers were ready to sacrifice Physicans Formula to make way for Olay. Now Physicians Formula, with steadily climbing sales, is expected to assume some Olay real estate.
Meanwhile HBA players did a 180 degree turn from last year’s Marketplace conference, when hair care regimen launches and price hikes were all the rage. This year gone were the premium price tags — replaced by mid- to value-options.
The heat was on in Vegas. Under triple-degree temperatures — on Sunday and Monday the thermometer hit 120 — buyers struggled with their decision-making. Mass market color cosmetics sales are flat and beauty buyers remain under pressure to make the department — a cornerstone of drugstores — more profitable. None seemed ready to commit the Olay space to any one brand.
“We don’t know what we will put in place of Olay,” said Kathy Steirly, vice president of merchandising for Eckerd Corporation. She didn’t rule out expanding Eckerd’s own labels. Other retailers also cited private label as an option. Meanwhile, Cynthia Henry, category manager for Longs Drug Stores, is filling out some space with packet programs of spa products from Montagne-Jeunesse.
Most buyers trolling the massive Las Vegas Convention Center show floor also said they wouldn’t wait through 2003 to jettison Olay. Although retailers said P&G made the right choice, several noted that they’d miss the line and its fixture, which is credited with helping improve the overall image of the mass beauty department.
Many marketers were hopeful that their products could fill the footage left open by Olay. “Our booth has been crazy and the situation with Olay certainly helped,” said Tom Winarick, executive vice president of Prestige Cosmetics of Deerfield Beach, Fla.
Marti Bentley, cosmetics buyer at Duane Reade raved about Prestige’s new fixture and product lineup. She also pointed to Black Opal as a brand with impressive new products.
Revlon desires to at least maintain its footage, which had been trimmed by some accounts earlier this year. Several executives noted fresh thinking at Revlon. “They are really reaching out to our size chains,” said Judy Aspinall, senior category manager for the Chain Drug Marketing Association, which works with regional and smaller chains. Revlon is expanding properties such as Revlon Skinlights and Almay’s Kinetin, which will be extended into cosmetics. Revlon also showed retailers its new Absolutely Fabulous fragrance, a floriental and a new lipcolor dubbed Pure Dazzle.
Maybelline, which has shown dynamic growth over the past two years despite the onslaught of new brands, hopes to gain some footage. However, the company wants to be realistic. “We want more space where it is warranted. Not just space for the sake of space. Cosmetics needs to be productive,” said Ken Glenn, vice president of field sales.
AM Cosmetics showed its stuff and assured retailers it is in a good position. “We are the most stable we’ve been in years. We’re generating cash and we’re expecting sales to grow 12 percent to 14 percent,” said Arne Zimmerman, chairman of the board at the North Arlington, N.J. -based company. AM introduced several new items within Wet ‘n’ Wild such as a liquid lip gloss, a square tray for lip gloss and a glitter gel in a pump bottle. Although Marketplace is usually teeming with fledgling niche brands, there was a notable dearth of upstarts this year. However, a few firms who have emerged over the past several years were out in force attempting to muscle in on new footage. American Woman, a line from Toma Industries, showed an array of nail products including mood changing polishes.
As always, many of these companies turned on the glitter. Blue Cross Beauty Products touted glitter eye shadows and glitter eyeliner. Competition for new ideas is so fierce said executive vice president Alan Torgerson that a new Snowman display was stolen from the booth.
Marketers of ethnic lines also hope to expand. At Black Opal new products ranged from Patent Lips to new foundations. Black Opal is working with chains to find the right doors to expand ethnic lines. P&G, however, hopes retailers stay under its corporate umbrella. “We are bringing some of the technologies of Olay into Cover Girl. We are putting a big push behind Cover Girl,” said Barry Bickel, manager, cosmetics business development, design delivery at P&G.
The preteen and teen invasion continues. Caboodles is expanding its distribution and product selection. Among the innovations is a glitter pouf, liquid eyeliner and camouflage glitter.
New Barbie cosmetics were unveiled which expand on the “collectibility” of the line with all stockkeeping units featuring charms. Included in the program is a CD-ROM where kids can get makeup tips. Jane Cosmetics unveiled its new peg wall presentation as well as assured retailers of the companies’ commitment to further building the brand. Retailers were shown a few new items such as Aquashadow.
While the new kids try to get on peg walls, the venerable Bonne Bell continues to bring out innovations such as Crystal Graffiti, a tube of colors to create tattoo looks and Liquid Eyeliner and Lip Shox, iridescent flavored lip products.
Some excess space may move out of facial cosmetics and into a category that shows some claws — artificial nails. After years of stagnant growth, the artificial segment is starting to exhibit gains. “Easier and better nails are helping as well as consumer interest in longer nails,” explained Kiss Product’s Grace Tallon, vice president of marketing. New to the market from Kiss are Airbrush Glass nails, artificial nails that are clear with airbrush designs.
Buyers agreed that nail is looking up. Several singled out nail programs from companies including Kiss, Cosmar and Jonel. Worldwide Cosmetics even showed glue-on toenails!
In hair care, the trend to price down hair care products was seen as Lamaur, VS Sassoon, Pantene and Physique said they were revisiting Nineties prices in order to meet consumers’ price value perceptions.
Lamaur, for example, reduced its teen focused hair care line, B In10se (be intense), from $6 to $5. But rolling back prices means brands will rely on unit volume rather than gross margins to turn profits.
“Retailers are suggesting these price declines because Unilever and Procter & Gamble are theoretically driving the business on lower prices and higher unit sales,” said Bruce McQuiston, vice president of retail sales at Lamaur.
VS Sassoon and Pantene, both P&G brands, are also lowering their prices. VS Sassoon, which was relaunched last year with new formulas and prices ranging from $5 to $12, will now retail shampoo and conditioner for $3.99 — down from $5 and $5.99, respectively. Pantene’s Pro V Essentials, a $10 line of styling products launched last year, will be priced down to $7. Physique, considered last year’s HBA hero for raising the pricing bar to $10, has also lowered prices to a more reasonable $7 across most of the line and is now being pointed to as one of the reason’s for hair care’s overall price decline trend.
Frank Gibson of Procter & Gamble said price points had been tested before Physique was launched and that the line tested very well. He suggested more marketing dollars may have made a difference in overall performance of Physique but that ultimately consumers changed their value perception of the line.
Mary Sammons, Rite Aid’s president and chief operating officer, agreed with Gibson, explaining that the price decline trend has more to do with consumers perception of value than with effective advertising campaigns.
“The consumer may be coming away with ‘What is the perceived value here?’ We need to ask ourselves when does value pricing versus higher pricing work,” Sammons said.
Gary Raymond, president of The White Rain Company, explains the recent trend to price down is directly related to what the consumer will pay in the mass market.
“People are pulling back a little now and are being a little more cautious on what they spend. And they don’t want to spend that much on hair care in a drug store. If they want to pay more they will go to a salon,” Raymond said.
Despite the price roll backs, several hair care standouts were at at the conference. The name Charles Worthington, for one, seemed to be on the lips of most hair care buyers, including Valerie Cheney of Happy Harry’s, who eagerly said Worthington was the “hit” of the show. No doubt since Worthington’s stark white booth, accented with glass shelves touting dozens of pastel-colored Results shampoo bottles contrasted sharply with booths relying heavily on poster-sized images of models to draw crowds. A colorful bottle display forming the British flag, a nod to Worthington’s home country, also added flair.
While many retailers met Worthington for the first time at Marketplace, his Results line of hair care products are no stranger to Target and Walgreens, where the line has exclusive distribution. As a Marketplace first-timer, Worthington and his team attended the show to evaluate the retail landscape and decide which drugstores and upscale mass stores are best for the mid-priced, fashion-forward 21-sku Results line.
“We definitely don’t want to do the discount thing,” said Worthington, who doesn’t view Target as a traditional discounter.
Another British stylist will make her way to the U.S. next year. Jo Hansford, a well-known colorist with a salon in the tony Mayfair section of London, will launch a 10-sku line of shampoo, conditioners and styling products specifically designed for color treated hair. Currently it is offered exclusively in Boots. The line, packaged in violet bottles, will be priced between $4.99 and $5.99.
News from other HBA suppliers circulated throughout the show. Progressive Beauty Brands is entering facial cleansing with Model Secrets, single-use face masks packaged in foil sachets. Model Secrets will retail for $1.50 and be merchandised in clip strips.
Burlington signed a license with the Pink Panther and is set to launch both a cosmetics and bath and body line next spring. Both will be offered on a promotional basis and supported with advertising on MTV.
Advanced Research Labs added a new sku — a water resistant hair spiking glue — to its highly successful teen hair care line Got 2 Be. It will retail for $6.99.
Hot Head has repackaged its line of color-in-a-brush sku’s and is set to launch seven sku’s of colored mold putty.
Pro-Line is launching three new sku’s targeting men with afros, braids and bald hair styles. Soft Sheen/Carson has designed a relaxer for color treated hair, which is being promoted by Mary J. Blige. A Heat Strengthening Curling Creme, designed to strengthen hair when used with heat, has been added to the Breakthru line of styling products.
Luster showed its New Growth Relaxer Kit, a niche product for the 18- to 24-year-old group that is designed to relax only new hair growth.
Another positive note is a glimmer of hope in fragrances. Reception to The Healing Gardens Waters, a two scent collection, was strong, according to Eric Thoreux, president of Coty US. Revlon has extended its way back into fragrance by showing its Absolutely Fabulous fragrance. The bottle has been reworked since its inception and now includes a fluffy feather band around the bottle neck that can be used as a hair elastic. Responding to questions about expanding the Absolutely Fabulous franchise even though initial takeaway on the lipsticks has been less than anticipated, Revlon’s Cheryl Vitale pointed to new information that showed sales of the lipcolor are picking up.
Meanwhile, a company from Germany called ARS Parfum displayed creative fragrances in frosty upscale vials aimed at young customers. New Dana has relaunched several brands including Canoe and Heaven Scent.
Several retailers continue to try to revive the designer portion of sales by bringing items out from under glass. However, one major retailer fears the efforts which package scents in hard plastic for protection will be the “end of the prestige fragrance business” for mass because the presentations take the look of the category “down a notch.” Others, however, said they are looking at similar programs that they hope won’t tarnish the image of premium scents.
“When you take fragrances out of lock-up, sales rise 25 percent to 35 percent,” said Mark Erickson, national account manager for Sensormatic, which offers several source tagging options.
Aladdin Fragrances is looking for growth in fragrances with what it calls Scentology. Under the Realm umbrella, the company has launched fragrance, bath, body and home environment items. Also, the firm is taking the Pierre Cardin moniker into men’s grooming.
With products that carry entry level price points, Mark Laracy, president of Parfums de Coeur Ltd., said his business has been strong this year and expects it to continue through the second half. Under its Prince Matchabelli umbrella, in August it will introduce Ginger Lotus, a scent for women. “Our prices are less than half the market. We are well-positioned in this economy,” said Laracy.
In the bath category, some new players emerged while some familiar faces were spotted. Mark Freeman, formerly of Freeman Cosmetics Corp., was seen at the show. He and sister Jill Freeman Bucksbaum are heading up Freeman Company LLC, a newly formed company that plans to buy and remarket brands in the mass hair and bath categories. Freeman’s father, Larry, was at the show too. Larry has been busy heading up PureBeauty, a 43-store chain in California, Nevada, Arizona and Missouri that sells only professional hair, skin and bath products.
The Body Care Group is launching a value-priced aromatherapy bath line targeting 5 to 12 year olds, which will be priced at $2.99 and ships in September. And Alberto-Culver expanded its St. Ives Apricot line with a body scrub.
Minnetonka Brands, one of the few bath suppliers to introduce a new line, is launching Village Naturals Spa in January 2002. It is positioned to bring a spa line to the economy adult section of stores.
Sungirl hinted at its new sun offering — Sungirl Sun Silk — which uses a formula that goes on skin so light it seems it’s not even on skin. Silk, which uses a proprietary formula, will have a SPF of 22 and retail for $9.99.
Retailers were also shown a new men’s skin care line from Neutrogena. One buyer described the seven-sku line as mid-priced and complete with shaving balm and exfoliating facial scrub. The line is reportedly set to launch January 2002.
John Frieda also has some news, according to buyers. Set to launch this fall is a nine-sku hair care line under a new brand, marking a fifth brand for the company.
Although NACDS claimed Marketplace hit more than 5,000 attendees with 1,000 companies — making it the largest ever — some beauty suppliers moaned about a lack of traffic. The timing, the growth of other beauty shows and industry consolidation were often blamed. Although there was a growth in international firms. Also first for this year, NACDS broadcast segments from the show on its Web site and called the program NACDS Live. It included interviews with industry executives including Rite Aid’s Mary Sammons.
NACDS continued to support its Chaindrugstore.net, which it feels, can be particularly useful for small beauty vendors who want to reach its members. “This can give smaller suppliers reach to access our members everyday of the year,” said Brad Mitchell, president and chief executive of the service.