PHYSIQUE AT A PRICE

Byline: Julie Naughton / with contributions from Emily Holt, Los Angeles / Rusty Williamson / Holly Haber, Dallas; Anita Finkelstein, Atlanta, and Faye Brookman, Skillman, N.J.

NEW YORK — Is there a glass ceiling on shampoo and styling product prices at the mass market?
Judging by how some mass merchants are pricing Procter & Gamble’s new Physique brand these days, one would guess not.
While consumers have long demonstrated their willingness to spend salon prices — as much as $10 or $11 — at drugstores for gray-market salon brands, many mass companies questioned consumers’ willingness to pay those prices for what they think of as a mass market brand.
So even before its January launch, Physique — with prices averaging $7 to $10 — was under intense scrutiny by competitors and retailers.
Designed to bring salon-style technology to the mass market, Physique is divided into five hair-type-specific collections — Volumizing, Smooth + Contouring, Easy Styling, Intense Moisturizing and Color Bright — and one cleanse and styling collection. Like salon competitors, it offers educational components, including handouts and in-store promotions, as well as comparable price tags. And unlike many other mass-market hair lines — which generally are broken down by product type in mass marketers’ planograms — Physique items are merchandised together in a display fixture area called the Style Zone.
While many doors discounted Physique $1 or more per stockkeeping unit during the first three months of release — Rite Aid even offered a $5 rebate if a consumer purchased three Physique products, a move meant to encourage multiple sales — some major mass merchants are now pricing sku’s slightly above suggested retail prices, suggesting that the market is amenable to the higher prices.
Consumers with color-treated hair — who, arguably, already have a lot invested in their ‘dos — appear to be the most willing to spend. During the week of April 10, Vibrant Shampoo — with a suggested retail price of $9 — was on shelves in an Atlanta Kmart for $9.19. The same sku was retailing for $9.99 at Eckerd’s locations in Dallas and Skillman, N.J., and at Longs Drugs in Los Angeles.
The Amplifying Shampoo and Conditioner sku’s, both with SRPs of $7, were selling in Atlanta for $7.89 at Eckerd’s, $7.09 at Kmart and $6.99 at CVS; in Los Angeles for $7.49 at Longs Drugs and Ralph’s, $6.99 at Sav-On and $5.99 at Rite Aid; in Dallas for $7.49 at Walgreens, $7.89 at Eckerd’s and $6.99 at Kroger, and in Skillman, N.J., at Eckerd’s for $7.89 and $6.79 at ShopRite.
Sources say it’s difficult to predict how deeply Physique will affect mass market hair product prices in the long term, particularly given the fact that it has only been on counter since early January. However, one buyer said that the line is already doing “better than its fair share of business” in his stores. “Physique is doing very well for us across the board,” he said, adding that it was exceeding sales expectations. “I had a lot of confidence going into the launch, however. Procter & Gamble always does its homework.”
“Physique has been our most successful hair care launch to date,” said Mindy Montgomery Patton, manager of corporate communications for P&G’s beauty care business. “We’ve had excellent customer acceptance to both the products and to our marketing initiatives like the Style Zone and Club Physique, an Internet initiative. We’re very pleased with the results.”