MASS COSMETICS SALES ARE UP, BUT NOT ALL SEGMENTS ARE GROWING
Byline: Laura Klepacki / with contributions from Faye Brookman
NEW YORK — Like this season’s popular opalescent shades, the mass beauty business is reflecting a bright sheen. Yet when viewed from certain angles, a flat undertone washes over.
For the most part, the industry has successfully come through last year’s anxious rollouts of Oil of Olay and Neutrogena. Brands feared a loss of market share. Retailers anguished about handing over productive space to unproven properties. There was some brand sufferage, but no one was deeply hurt.
However, the plan to lure more shoppers into mass stores with the higher priced, prestige-type lines didn’t materialize to the degree hoped. Still, cosmetics dollar sales have continued to grow, although unit volume has not risen in kind. Expanding face makeup sales have maintained category momentum as nail polish took a nosedive. According to Information Resources Inc. cosmetics sales — excluding the nail segment — rose 10.5 percent to $2.8 billion for the 52 weeks ended May 21, while unit volume grew 6.7 percent. Nail polish fell 7.3 percent to $425.7 million, with unit sales down 10.4 percent.
As noted by Marc Pritchard, vice president of Procter & Gamble Cosmetics for North and South America: “I expect the growth in this segment to continue to drive category growth in the second half of calendar 2000, particularly since face makeup tends to have higher price points than other cosmetics products.”
He said P&G would sustain its efforts in that area.
“We’ll continue to leverage the momentum that we’re building in the face segment — putting significant marketing support not only behind CG Smoothers but also on new products like Cover Girl Clean Stick and Fresh Look liquid foundation and pressed powder,” said Pritchard.
“Max Factor, which stabilized last year and is delivering strong profitability, will also focus on face with support behind the new Seamless Foundation launch. We’ll continue building on the launch of Olay Cosmetics with support on All Day Moisture Foundation in liquid and stick versions, which are among the leaders in their segments, and the new Complete Radiance family of foundations.”
Revlon, a name typically strong in drugstores, has come back with a new leadership team and pledges to restore the brand’s eminence by emphasizing its color heritage.
At the same time, retailers are beginning to do some cosmetics branding of their own. CVS is testing its Essence of Beauty cosmetics line. And sources said another major drugstore chain is preparing to follow suit. Target successfully launched its own collection with makeup artist Sonia Kashuk last fall, and now Wal-Mart has an exclusive agreement with Coty to carry Rimmel London.
Going into the second half, retailers and manufacturers, like Pritchard, are expecting growth to continue, but at a moderate pace.
William McMenemy, vice president, marketing for Del Labs, whose brands include Sally Hansen, Naturistics and NYC New York Color, expects innovation by manufacturers to start picking up.
Speaking about the market in general, “The color business is a little bit in the doldrums, but we are optimistic. We are trying to do things to jump-start it,” said McMenemy. He suggested that product innovation had taken a backseat in recent months as manufacturers launched defensive measures to preserve market share during the Neutrogena and Olay launches.
“Our color business is really strong. But we’ve been aggressive with color promotions and shades, and our NYC business is booming, so that has been very positive,” said McMenemy.
Retailers have been encouraged by early results of Cover Girl’s new fixture and CG Smoothers collection.
Robert Berman, vice president, buying and merchandising at May’s Drug Stores, said the two companies doing well in his stores are L’Oreal and Cover Girl. “That [Cover Girl] has done exceptionally well,” said Berman. “The new fixture has made all the difference. It shows that companies, when they do anything to the walls, whether it is refixturing them, or straightening them up, it makes all the difference in the world.”
With sales up about five percent for the first half, Berman is expecting similar gains in the second. “I am projecting basically about a five percent increase. I don’t see it being anything exceptional. Everyone seems to be more in a defensive mode. No one is being really aggressive,” said Berman.
At Medic Drug in Ohio, cosmetics director Sally Yanke also cited Cover Girl and L’Oreal as brands to watch. Additionally, she noted, “Maybelline is going gangbusters. And the teen market is exploding.”
Maybelline is expecting its strong sales to continue.
“We are very excited for the second half of the year since we have two significant launches in the largest segments in cosmetics, lip color and foundation. Both Non Stop All Day Wear Makeup and Wear ‘n Go Long Wearing Lipcolor are not only innovative product formulations, they also perfectly complement today’s woman’s active lifestyle,” said John Wendt, president Maybelline-Laboratoires Garnier. “With these uniquely positioned products, and our trend-setting fall and holiday color collections, we expect Maybelline’s second half to be even stronger than the first.”
In addition to teen cosmetics, Yanke said she was searching for a way to squeeze a new bath collection from Caboodles into her stores. “It is gorgeous. I was so impressed with that. It really offers something different,” she said.
Rick Goldberg, cosmetics manager for Coty Beauty’s Rimmel line, also sees the market as somewhat soft. “It’s not flat per se, but it’s not the kind of growth that you had been seeing.”
To spice up the category, he, too, wants to bring unique items to market. He thinks he has one with Finger Colors, a three-in-one cream-based item in a compact used for lips, eyes and cheeks. It will be offered on a promotional basis this fall. It comes in deep, rich seasonal shades, he said. “The idea was a little more original than other products out there. That is what we are looking for.”
Arnie Zimmerman, chairman of AM Cosmetics, said he’s concerned about a slowdown in the mass business. He believes the value segment is driving sales and will continue to do so. “When you look at the numbers, you see that budget brands are keeping sales afloat.”
Reflecting on the first half, Revlon president Jeffrey Nugent said, “We are certainly expecting to see a lower growth rate in the back half.” He attributed the lackluster numbers to the anniversary of the Olay and Neutrogena launches. “It is not surprising that growth rates are going down.”
He agreed that brands like his were trying to hold back the onslaught. “There were a lot of defensive moves, including from Revlon. Now, the heavy promotion and advertising is being reduced.”
Nugent also believes that department store shoppers are not coming into mass stores and that some drugstore shoppers are looking elsewhere for excitement.
“We are seeing a lot [of innovation] from prestige right now. A lot of our consumers shop both prestige and mass,” he noted. “There is a movement towards a number of those brands in department stores.”
For Revlon, said Nugent, “I think our primary strategy is to go back to Revlon’s core strength. Our line is, ‘Nobody does color like Revlon.”‘ Additionally, Revlon intends to break into the skin care market, maybe as soon as this fall, with some product lines currently sold in Europe. One is a milk-based line that will be marketed under the Almay brand.
Nugent said he expects the relaunch of Cover Girl to have positive effects on the category, and he anticipates more manufacturers will invigorate existing brands.
Ira Adler, president of Fira Cosmetics, a teen line from Fisk Industries, doesn’t see any let-up in teen interest. “Everybody is really running after the market,” he said.
“It is my belief that it is not just the teens that are buying the teen items. It is an older group that sees all this fun. Everybody is looking at it, not just 14-year-olds,” said Adler.
Overall, said Adler, “The cosmetics business is very strong, but you have to have the unique and creative item. It is more item driven now than I have ever seen in the past. There is brand awareness out there, but the teen shopper doesn’t pay as strong attention to that.” Fira thinks they will have an answer in a new nail polish packaged in miniature paint cans.
But a buyer for an East Coast chain said she fears the flood of teen products is creating unexciting departments. “I’m looking at our shelves and saying, ‘Where do we go from here?”‘
The teen products were created to help mass merchants keep up with specialty, but the end result has been rows and rows of the same products, she reasoned. Sources said another specialty chain called My Emotions is set to open in the Florida market. That retailer is planning a store modeled after Sephora, but aimed at tweens and teens.
A lack of newness was echoed by a topsider at a major drug chain. “There just aren’t any new breakthrough products to support sales other than a few feather mascaras,” he lamented.
For some, the excitement might have to emanate from private labels. Prestige Cosmetics executives said many drug chains stopped by their booth at the National Association of Chain Drug Stores’ Marketplace meeting on the prowl for private label lines. Prestige has been the contract manufacturer for brands such as Hard Candy and a makeup-artist-type line for Sears.
Whether private label is enough to save drugstores — which have been losing market share to discounters — is a question posed by Wendy Liebmann, president of WSL Strategic Retail. Drug chains continue to lose steam. Although they still dominate, according to ACNielsen, drug chain sales were actually down 3.6 versus last year.
Liebmann said drug chains have taken their eye so far off beauty that they’ve lost the edge. “Many do a better job with departments like photoprocessing and greeting cards than beauty,” she said.
She added that looking at market numbers doesn’t do the business justice. “The numbers don’t take into account the business that is going to Bath & Body Works or Victoria’s Secret,” she pointed out.
Liebmann sees a fresh approach at food/drug combination stores. “Some of the best mass retailers in beauty are food chains like what you see at Wegmans,” she noted.
Still, food chains told WWD that they are getting a cold shoulder from some beauty suppliers. One source said that although he’d like to add L’Oreal and other lines suited for his mature, female customer, those manufacturers have yet to knock on his door.
Frustrated with drug, however, there are vendors ready to turn to food chains. Among those coveting greater food penetration are Townley, Caboodles and AM Cosmetics.
Meanwhile, in the fragrance arena, market leader Coty wants to liven up the women’s segment with its new Adidas Moves for Her, the female version of its extremely successful Adidas Moves for Him.
Eric Thoreux, president of Coty Beauty, said the company posted double-digit gains and strong share growth in the men’s and specialty bath segments. To continue that momentum in the second half, Coty plans to support Adidas for Him and Aspen Discovery, which he describes as an “emerging success.”
Additionally, he said, Adidas Moves offers great holiday opportunities. “This is a highly giftable brand, and this is a clear weapon for us to fight against the diverted prestige products we find in our trade.” He added that it has the power to attract young consumers.
In the bath segment, Coty is rolling out ZZZ Theraphy, a sleep enhancer that Thoreux believes can be helpful to people with sleeping problems due to high stress levels.
“And finally, with Calgon, we have a solid plan to fuel our number one position in the market, with a complete restage of our Calgon Home line,” said Thoreux.
Initiatives include reducing stockkeeping units “to improve efficiency” and merging the line with Calgon bath. “It will make it one complete bath experience,” said Thoreux. Furthermore, the company will promote large-sized shower gels and bath lotions “to encourage total family usage and increase consumption,” added Thoreux.
And Larry Couey, whose resume includes stints at Bath & Body Works and Parfums de Coeur, is launching a new women’s scent called Truth under his Revelations Inc.
While Couey agrees the traditional women’s fragrance market is still flat, he expects a strong Christmas this year: “One, the economy is still strong, and two, consumers will be looking in drugstores for something new.”
“Anybody launching something new will sell well,” he predicted.