Cosmetics Branch Out

While America's aging baby boomers continue to drive sales of high-tech "cosmeceutical" products to smooth wrinkles and mask the effects of aging, cosmetics companies are also looking to less saturated markets in an effort to boost sales. A flurry of new introductions have included cosmetics for tweens and teens, skin care products and fragrances for men, and hair products for various ethnic groups.In 2001, the industry racked up $7 billion in sales for prestige beauty products sold in department stores alone, according to market research firm NPD BeautyTrends, Port Washington, N.Y. Both makeup and skincare were up, by 7% and 3% respectively, while fragrance sales fell 2%. In supermarkets, drugstores and mass merchants, three top cosmetics categories -- skin care products, eye/lip makeup and hair coloring -- posted sales increases of 5.1%, 7.5% and 2.7% respectively for the 52 weeks ending Aug. 11,2002, according to Information Resources Inc., Chicago.According to a state of the industry report in GCI (Global Cosmetic Industry) magazine, products touting all-natural ingredients went head-to-head with those utilizing technologically enhanced formulas. "Despite consumer clamor for natural and organic products, sales of anti-cellulite creams and cosmeceutical skin care products continued to grow, evidence that consumers are willing to sacrifice nature for perceived results," the report says. Not to be left behind, however, some botanicals are now being marketed for their topical effects, such as anti-aging or skin clarifying, the report points out.Technological advancements in the skin and body care category began in the premium sector, but can now be found on mass market shelves as well. "The lines between mass and prestige are blurring, especially in the cosmeceutical category, driven by new product introductions targeted at rapturing market share among aging baby boomers," the report says, citing Beiersdorf's Nivea Body line that includes Q10 Firming Lotion as an example. The coenzyme Q10 is an anti-aging ingredient that is also found in Beiersdorf's facial products.Just as the number of products coming to market continues to grow, so do the types of stores that carry cosmetics products. Specialty stores, salons and boutiques continue to pop up on every corner and in shopping malls, vying for market share with department stores and mass merchants. Despite this proliferation of alternative channels, some feel department stores will remain the primary channel for premium brands. Dennis Decker, design director for New York-based Prescriptives, says the ability to provide better customer service is one reason."The customer has a different perception of mass market than they do of department stores," Decker says. "If a consumer is shopping for a lipstick, for example, she may find a color in mass that she likes, but when she needs more expertise, such as a lipstick with more properties, she will come to us."Tween & Teen SpiritAlthough the buying power of baby boomers isn't to be ignored, some companies are paying attention to other segments with plenty of disposable income. An increased emphasis on marketing to teens has brought about a barrage of products in-store."The teen and tween market has grown considerably because they have a lot of big spending dollars and everyone is going after that," says Dana Siegel, marketing director for the Hotsie Totsie division of Worldwide Cosmetics. "Everyone is racing to come out with the coolest and cutest thing first."The North Hollywood, Calif.-based company markets junior novelty cosmetics for 6- to 13-year-olds. "We're taking over where Tinkerbell left off," says Siegel. All of the products come in novelty cosmetic packaging and bottles, such as nail polish in an ice cream cone or gumball machine, and scented glitter body gel in frog-shaped bottles (called Happily Ever After...), which Siegel says is key to selling these fun, impulse items. Other products include Fluttering Fairies lip gloss, I-C-U mascara, and B.Jeweled sparkling hand and body lotion."The name of the item has to relate to the product and be cute and catchy. Then we come up with displays that reinforce that," Siegel explains. In less than a year, the line already has a big following. "Everything is a keepsake that girls can show to their friends."Like many cosmetics companies, Worldwide seeks out alternative distribution channels to increase sales. The company markets the Hotsie Totsie line everywhere from toy and gift stores to novelty shops and amusement parks. Another line from the company, China Glaze nail lacquer, is found predominantly in salons and beauty supply stores. In these locations, quality P-O-P is extremely important because space is at a premium, says Liz Allen Hardy, marketing director."There is a lot going on with floorstands, counter units, permanent and temporary displays," she says. "The salon industry is so much about visual impact that the merchandising side of it is very important. Everyone's concern is being space efficient and visually impactful."Her team has started creating themed displays for temporary promotions. "We just launched a polish collection called 'Crown Jewels' in honor of the Queen's 50th Jubilee. We shaped a temporary display like a crown that holds 18 bottles of polish and a nine-piece display like a throne," she says. "Every time we do these, the response is overwhelming and we sell out."Clairol, which was acquired by Procter & Gamble in 2001, is watching as younger consumers look to hair colorants to follow fashion trends. "There is definitely a wider range of age groups who are coloring their hair now," says Rose DeMarco, assistant marketing operations manager for the Stamford, Conn.-based company. "They are getting younger and younger." Herbal Essences Haircolor was launched last year to grab the teens and young adults who color their hair as a fashion statement.DeMarco says Procter & Gamble's acquisition of the company will open up new merchandising opportunities. "We now have more ideas to pull from. They have given us a lot of direction and offer their own expertise in regards to things they've tried before."Some apparel retailers are also dabbling in the fragrance and cosmetics arena. American Eagle Outfitters Inc. recently launched its first line of cosmetics for the back-to-school season. Created with 16- to 24-year-old females in mind, the aecolorkits collection includes eye shadows, lip glosses and nail polishes.The Warrendale, Pa.-based retailer's movable, freestanding units near the cash registers, window displays and signage are leading the in-store charge. Already in AE stores is a two-story fixture that houses the company's bath and body products and fragrances. Alive, a unisex fragrance line that includes sprays as well as lotions and body washes, was the company's first launch in the beauty segment two years ago."All of our displays are consistent with the store environment. We use the same kind of metals and woods to maintain the brand integrity," says Lisa Downham, senior buyer for personal care. "When we developed the fixture for the new cosmetics line, all of this was taken into account." The brushed metal fixtures carry the entire collection, which is changed out every two months. "We're taking a much more seasonal approach to cosmetics than what you might find in a department store assortment."Michael Alper, executive director of store design for Aramis and Designer Fragrances, New York, says P-O-P is critical to differentiate a brand at retail. "Each season there are hundreds oflaunches and it becomes increasingly important to stand out among the crowd. Innovation in packaging and P-O-P materials helps to attract new customers and create 'theater' in each of the retail environments."The company has recently launched T-Girl by Tommy Hilfiger. It's billed as "the tempting new fragrance" and is targeted toward younger females. Alper says tester units, on-counter and floorstand merchandisers, printed pieces and open-sell materials were created for the introduction that feature extensive use of the T-Girl logo and national ad imagery to convey the brand's identity.Becoming a Guy ThingMale consumers are the driving force behind many new cosmetics products and marketing efforts in-store. "There has been an evolution in the last five years in the importance for men to look good," says Catherine Lair, director of marketing for Nivea for Men at Beiersdorf Inc., Norwalk, Conn. "Women are more demanding for them to look good, and looking good is also a measure of success. More men want to look young and fit, and that's why there has been this emergence of skin care products for them."The movement, she says, first started in department stores with companies such as Estee Lauder, Aramis and Clinique leading the charge. Beiersdorf was the first company to launch a regimen of skin/face care products for men in mass channels."We really had to encourage retailers to think differently about this category," says Lair. In the past, retailers were stocking shaving gels and shaving creams apart from aftershave products. "We explained that Nivea for Men is a skin care regimen and everything needs to be together. We pushed them to think outside of the box," she continues. "They saw what was happening in department stores and wanted to capture the men that use these types of products but who also want to find them at an affordable price."Beiersdorf used advertising and direct marketing with coupons and samples to educate consumers. Brochures detailing the different steps that a man should follow were also created along with the merchandising pieces in-store."Retailers were waiting for this opportunity," Lair says. "The category was down and was mostly captivating an older target group. This line began bringing in products for the younger man," specifically 18- to 34-year-old males, she says. Neutrogena is now targeting a slightly younger group -- men 18 to 25 years old -- with an acne product. "This category has great potential," she says.New York-based L'Oreal USA launched Armani Mania for men in August and Polo Ralph Lauren Blue in September. Doug Huffmyer, vice president and creative director for Designer Fragrances, a division of Luxury Products, says the fall season has proven to be active for launches."This is one of the heaviest launch seasons in several years, for both men's and women's fragrances," he says. "Obviously it's been in a sluggish economy, so that requires us to be that much more focused and make a much stronger statement in-store."Huffmyer says the company's marketing challenge is two-fold. "In a saturated marketplace, we need to come up with something that is -- believe it or not -- new or different, that will get people's attention and at the same time do it in what is now a very cost-efficient economy."Huffmyer says retailers are often creating collateral P-O-P or signage for these launches as well. "Retail partnerships are very important right now," he says. "That relationship with retailers is key to having success in-store because we can't do it on our own. We need their acceptance, their support and their contributions."The "open-sell" concept of retailing is not getting the big push that it was a few years ago, Huffmyer says. "I think it has slowed down a lot right now. Again, with the change of economy, it is felt that we need to have more contact with the consumer -- it's a harder sell."The company is offering more sales as well as merchandising support in-store. "It's having a person in the store who can approach the customer instead of expecting them to come on their own. We're also doing more sampling and special offers in magazines to get customers to the store," Huffmyer says. "Everything ties in together in-store then, and that's where things have become more focused on our part to make sure that everything is consistent. There should be immediate recognition from consumers when they walk in the store."Ethnic MarketingThis year has also seen increased demand for versatile hair care products that speak to a variety of hair types and fashion trends. According to industry reports, Asian women are more willing to experiment with new products than in the past, which has played a role in the growth of the hair care market. Meanwhile, the growing Hispanic community reportedly follows fashion trends closely and believes presentation is very important, leading to increased sales of everything from shampoo to hair color.Toi-Ann Bailey, production/purchasing manager for SoftSheen/Carson, a manufacturer of hair care products for men and women of color, says these consumers use a significantly higher amount of products than the Caucasian market.The Chicago-based company, a division of L'Oreal USA, markets its Optimum Care (anti-breakage strength system), Dark and Lovely (no-lye relaxer for color-treated hair), and Dark and Lovely Naturally (soft waves texturizer) in drug and mass channels across the country. Bailey says P-O-P supports each new product introduction."We create displays for new launches as well as when we're relaunching a product to tell our customers that there's something new about it." The company's products are geared to the hot new hairstyles, which it communicates through its P-O-P."We use P-O-P as a vehicle to tell our customers that we're aware of the new looks and hairstyles," says Bailey. "Our products make it easier for consumers to achieve the look they want."Also introduced in June was the Debbie Allen 5-Step Skin Care Collection. Teaming with Key Brands International Ltd., Irwindale, Calif., the entertainer's line reportedly combats a variety of skin care challenges faced by women of color. The products made their debut in select Wal-Mart stores across the country.Modular... Yet CustomizedOne challenge for cosmetics marketers is to deliver displays that provide a unique look for retailers while at the same time keeping manufacturing costs down. That often means taking certain core displays and customizing them for particular accounts, says John Pender, director of retail promotion for Schering-Plough Healthcare Products, Berkeley Heights, N.J."There are certain design requirements that retailers have in terms of space, efficiency and how the product shops, but at the same time they are really looking for innovation," Pender says. "When we're talking about on-pack offers and the look of the displays, there is the desire to do different things for different stores."The company's Fun Center -- a rack system that merchandises its suncare products as well as the whole category in supermarkets -- has featured a variety of different headers, depending on the account. "One account had a surfboard. Retailers are demanding that we make things unique for them."Because the product packaging is also critical in making the sale, Pender says Schering-Plough always strives to build P-O-P that leverages the look of the product package. "We always want to marry the look of the product to the display and communicate what the product's benefits are to the consumer." A new product for next year will do both, he adds. "We're spending the money to make sure that the display has a unique look to match that package."Despite the challenges, P-O-P is vital in the suncare category, Pender says. "It's basically the lifeblood of merchandising. Consumers spend a lot of time at retail making a decision about what they're going to buy."Another company with merchandising muscle, M.A.C Cosmetics, has recently been given even more firepower following its acquisition by Estee Lauder. "They've pumped money into the brand and allowed it to expand in a way that was never feasible before," says Patrick Ramsey, director of industrial design. "They helped finance store openings and have put a lot of money into product development. With more exposure, sales jump because those customers who could never get it before suddenly have access to the brand."Ramsey says the New York-based company is rolling out a new line of permanent units to hold its core line of lipsticks, eye shadows, blushes, etc. By next summer, he says the entire store will have a consistent look. "It's not really a revolution for us, but it's definitely an evolution in terms of aesthetics."Each unit is a frame that has an insert that can be swapped out when it needs to be updated, Ramsey explains. Rather than replacing the entire unit when a collection changes, the inserts can be changed so the unit can hold a different quantity or type of product but still remain in the same footprint. "Our costs will be slashed in half," he says.Ramsey says this innovation and modularity is a first for the industry. "There is nothing out there like it. Everyone has permanent units that hold maybe 30 lipsticks and if they add to the line, they often throw those displays away and come up with a new one. This gives us a certain amount of control and consistency."The displays incorporate the signature metal look that the company has used in the past, but now feature a matte black finish for a more updated look. Sophisticated visuals "that make people want the products" are also new, says Ramsey.The visuals are specific to each collection and are changed out almost every month. "People consistently visit our stores because there is something new every time they walk in," Ramsey says. "Every four weeks customers will see an entire new line of product. That keeps people excited and keeps them coming back."The $1 million program is going into department stores as well as the company's freestanding stores. "We did a lot of research for this program. We looked at our own counters and those in department stores," he says. 'We came up with a shape, size and format that we knew could fit every counter."All of the materials are the same for the global launch as well. "That is really important for us just from a brand positioning point of view," Ramsey says. "We want that consistency and we want people to see the same unit in a Nordstrom as they do in a M.A.C store."Revlon's newest merchandising innovation, Her Wall, began rolling out last spring. Composed of a few simple parts, including a back structure, trays and cubes that can be put together like a Lego set, it has garnered positive responses in stores because of its modularity. "It accommodates whatever planogram a retailer has," says Robert Werner, director, retail merchandising group for the New York-based company. "Modularity was so important because the market is so varied. Different products sell better in different locations and some stores are busier and carry more products, so it had to be adaptable to different environments."The system was designed to be easy to shop. "We feel that by making the product the hero -- very easy to see and not covered with graphics or plastic shelving of any kind -- it is almost as if it is being handed to her. That's good for the shopper and also for the retailer. It's a win-win situation."

Cosmetics Branch Out

P2PI MEMBERS

JOIN P2PI

Related Images

Business Topic

Company

Market Segment