PALM BEACH, Fla. — The beach behind the Breakers here served as an appropriate backdrop for “a race against time,” the theme that quickly emerged at the National Association of Chain Drug Store’s annual meeting last week.
Several large beauty firms spent the five-day meeting — April 29 through May 3 — attempting to flip the hourglass, imploring mass retailers to give their new product programs, which in many cases were launched less than three months ago, more time to generate sales and excitement with consumers.
The chatter emanating from beach-side cabanas centered on the early read of these new cosmetics brands, including Vital Radiance by Revlon and L’Oréal Paris’ HIP (High Intensity Pigments).
Retailers and competing manufacturers noted that despite the onslaught of splashy introductions this spring, sales of color cosmetics had modest growth. With Revlon and L’Oréal Paris losing share, industry players suggested Vital Radiance and HIP were cannibalizing sales from core brands.
And while smaller firms are gearing up to pounce on space that may be up for grabs next spring, the beauty behemoths behind the new initiatives continue to encourage retailers to wait it out.
“Innovation does take some time to seed,” said Carol Hamilton, president and general manager of L’Oréal Paris, noting HIP bowed just eight weeks ago. Plus, she added, today’s consumers are inundated with messages, and it will take some time, perhaps as long as six to eight months, before HIP’s message penetrates, given that the pigment-loaded cosmetics line intends to “change consumer behavior.” Her message to anxious retailers: “We’ll work with you on inventory issues, but give us some time.”
HIP’s slow takeoff, according to several retailers and manufacturers, is a result of its dark shade range, which casts HIP as an ethnic brand. Hamilton defended HIP’s shades, saying they are for women who “like to express themselves with color.” In any case, later this year HIP will expand the shade range with bright hues and metallic eye colors — a move the industry said is a reaction to retailer feedback.
And while six months to a year seems like an appropriate length of time to test a brand’s worth, retailers are already making decisions about what to keep and what to trim for spring 2007.
“When you have a big launch with a lot of advertising behind it, I’m not sure it takes three months for the consumer to learn about it,” said Michel Coutu, president of Brooks Eckerd Pharmacy. “From the launch of the new items, you should be able to see the sales impact within one to two months.” He expects to see brands — namely, Vital Radiance and HIP — tweak offerings and store presentation in the second half of 2006. “It’s a good time to reposition and we are very encouraged,” said Coutu.
Revlon’s Vital Radiance was evaluated by the company’s retail partners and peers.
Jon Rudden, vice president of merchandising for Happy Harry’s, said the regional drugstore chain is currently rolling out Vital Radiance. “I think it will do well,” he noted. Walgreen’s Kathy Steirly concurred that the products will find an audience because they are “absolutely wonderful.”
Many manufacturer competitors said that both new offerings fell short of expectations. In turn, these manufacturers are clamoring for what could wind up as open space next year. But while there was negative feedback, some lauded the quality of the Vital Radiance products — tailored to suit the needs of women over 50 — but said their outer “clamshell” plastic packaging is retailer-driven and takes away from the premium positioning of the items.
Several industry sources also speculated that Vital Radiance’s high price points — which reach $20 — aren’t going over well with consumers. If that turns out to be the case, competitors are ready to swoop in with value-priced offerings.
“The average [mass market] retail ring for cosmetics is $4.12,” noted Dominick Vitris, vice president of sales for Jane & Co. “Customers don’t have more money to spend on cosmetics.” Citing ACNielsen data, Vitris noted that the value segment — which includes Jane Cosmetics, Rimmel London and N.Y.C. New York Color — was up 22 percent for the 12 weeks ended March 23. “Smaller brands are offering better value,” said Lisa Yarnell, president and chief executive officer of Jane.
Retailers also questioned the departure of Paul Murphy, who has left his post as Revlon’s executive vice president of North American sales. At its annual NACDS gala April 28, Revlon officially introduced drugstore executives to Murphy’s replacement, Karl Obrecht. Obrecht, well-known to discounters from his previous post as senior vice president of Mass Volume Retailers, takes the reins at a pivotal time for Revlon. In 2005, the beauty firm took back $44 million in product returns to make room for Vital Radiance and Almay, which is considered an early success by retailers. Should Vital Radiance not meet retailers’ expectations, more returns could mean a significant financial setback for Revlon.
In the midst of an aggressive race for space, the problem-solution brand Physicians Formula continues to gain ground. With 116 new products in the pipeline for spring 2007, Physicians Formula is asking retailers for another 2 feet of display space, which would bump its average real estate to 6 feet.
“Physicians Formula solves problems with a high level of innovation,” said Ingrid Jackel-Marken, senior vice president of marketing. “The consumer wants to see new items. If you are in the fashion business, you’re as hot as your next shade of pink,” she quipped, adding that Physicians Formula is not color-driven. Last year, the brand’s new offering fueled sales more than 30 percent in food, drug and mass retailers, according to Marken. Physicians Formula has a three-year expansion plan that includes skin care and benefit-driven items that cross over into the cosmeceuticals realm. Marken added that skin care will be a “slow build” because a full offering is needed to make a statement.
While cosmetics continues to generate news, hair care shelves are readying for a revamp. The second half will see no fewer than three new launches, items from Unilever (Sunsilk), L’Oréal (Vive) and Clairol (Herbal Essences.) The most exciting appear to be efforts from L’Oréal, which one industry expert said is spending close to $50 million to reposition itself with a quasi-professional bent.
L’Oréal Paris’ Hamilton said hair care only registers a 5 percent dollar share for the company and the company is out to change that so numbers better reflect the share it claims in other categories, such as hair color (47 percent) and cosmetics (16 percent). One retailer added “he was very encouraged” by L’Oréal’s new positioning, seeing that professional brands generate the most interest in mass retail HBA aisles. Sunsilk, on the other hand, will take on a fun, flirty positioning, and will likely go head to head with Garnier Fructis. Herbal Essences, complete with new formulas and new sleek packaging, is angling to reclaim its market share from yesteryear.
As Garnier prepares to launch Fructis skin care, American retailers are giving thumbs-up to dermo skin care centers. The centers are staffed with trained professionals and include lines such as Vichy and La Roche-Posay. “We are adding more centers,” confirmed CVS’s top executive, Tom Ryan. Added Jerry Kuske of Katz Drug, “We’ll take as many as we can get our hands on.” Retailers also expect other upscale skin care companies to bring similar premium boutiques to the mass market.
— With contributions from Andrea Nagel and Faye Brookman