Cosmetics Report: American Beauty

In the past, cosmetics were often marketed on the simple assumption that beauty is only skin deep. More recently, however, the message behind a growing number of popular cosmetics is that they can also improve mind, body and soul.Cosmetics companies are also finding new opportunities for growth by responding to demographic changes in the American population. As the American population ages and becomes more diverse, a wider array of products are targeted at older consumers and specific ethnic minorities.A recent study conducted by advertising agency Euro RSCG Worldwide, New York, details key trends that are shaping the $3.5 billion-a-year cosmetics industry. Recent growth categories include:Cosmeceuticals and aromachology products. "Cosmeceuticals," products that combine cosmetics with vitamins, herbs, or pharmaceuticals, are purported to offer additional health benefits, while "aromachology" products include essential oils claimed to improve a person's physical, psychological or even aesthetic sense of well-being. Examples include Coty Inc.'s newest Healing Garden bath and body products.Products targeted at men. Aramis, Estee Lauder's men's division, recently launched a makeup line for men. Clairol and L'Oreal are offering hair color products for young men and positioning them as more of a fashion statement than as a way to cover gray.Multifunction products. Many recent products serve more than one function, such as moisturizers with added sunscreen or lipsticks with moisturizers.Cosmetics for older consumers. Finally, with an aging population, the number of products to prevent or mask the signs of aging is increasing at a staggering rate. According to the study, retail sales of anti-aging products more than tripled in the United States between 1994 and 1998, to just under $1.7 billion.Changes at RetailCosmetics marketers are also adapting to changes in the retail landscape. Many agree that "open-sell" retailing, where unassisted shoppers peruse thousands of products on relatively unadorned shelves, is here to stay."Sephora really opened everybody's eyes and said that open-sell is the wave of the future," says Kipp Acton, vice president of sales and education for Avon Products Inc., New York. "People want to test, trial and sample the product right there."As Avon launches its new beComing brand with more than 400 different products in 75 JCPenney stores this fall, he says that all of the merchandising was centered on the open-sell concept."We wanted something that was very approachable and very open in the sense that customers can walk through it," says Acton. "There are no walls, no barriers, and it's easy to shop because of the way the products are displayed, the signage and the lighting. For us, though, it's also assisted-sell. We have our own lifestyle beauty consultants who are there to assist the customer."Susan Gardiner, assistant vice president of promotional purchasing for Lancome, New York, agrees that having a face behind the counter is still important, even though most of the company's retail environments are open-sell."We have beauty advisors behind our counters. In the stores where open-sell exists, the customer has a choice. We think it adds to the exposure we can give or get from a customer, but when you're buying a high-end cosmetic, you still have to have the input from a beauty advisor to figure out what you want."While open-sell may be a viable method of merchandising, it is not accepted to the same degree in other countries, notes Michael Alper, executive director of store design for Aramis and Designer Fragrances, New York. Alper adds that younger customers are more comfortable shopping from open-sell environments. "In department stores, when possible, it's preferred to offer a mix of open-selling along with traditional showcase merchandising to appeal to a wider base of customers."Universal BrandingOne of the biggest changes in the retail landscape is the movement away from each brand having its own identity in stores and more toward a consistent store branding approach, says Dennis Decker, design director for Prescriptives in New York."Stores want to create their own brand and an equal landscape among all the different products out there." As they create their own environment and look, he notes, more restrictions are put on manufacturer-supplied displays. "It creates a uniform environment for them, but it often makes it so we can't be as universal in our marketing and image because our brand will look different from one department store to the other."Graphics are not allowed in all locations, Decker notes, and some stores require that testers be made of certain materials and in specific shapes. "The stores have their own special tester line-ups. The impact it has on us is that along with creating more of a challenge to be universal, the quantities are lowered on the support materials our company orders, which makes costs go up. In general, we have to customize much more than we have in the past."Keeping consistency at the store level is key, says Patrick Ramsey, director of industrial design at Mac Cosmetics in New York. The company sells its products in 400 locations, including more than 200 of its own stores."We're just about to start a program in which we're trying to make things a lot more consistent-looking. We want to clean our counters up," says Ramsey. At the same time, however, Mac strives to maintain its own distinctive look."We're always trying to look different, so we're going to stay with our grassroots, modernist style and use unorthodox materials," says Ramsey. "We don't want to look like a cosmetics company. We're more of a makeup artistic-driven brand, so our stores are going to look like art stores in many ways."At the mass merchant level, marketers are facing the same obstacles. "Retailers know that P-O-P is a very important tool for them to sell more product," says Robert Werner, director-retail merchandising group, Revlon Inc., New York. "They rely on manufacturers to help them by creating more efficient and more attractive displays. At the same time, though, retailers seem to be putting more emphasis on getting involved in the process. Many of them are coming up with their own universal merchandising systems throughout their chains."In the home hair-color category -- which has grown to a $1.5 billion industry -- Karen Pinsker, senior manager for promotional purchasing at Clairol Inc., Stamford, Conn., says the shift from manufacturer-driven to retailer-driven merchandising makes it harder for the manufacturers to be creative and show their product off on the shelf."The Wal-Marts, Kmarts and Targets of the world are telling us what to do, so a lot of what we do is predicated on their requirements," she says. "Generally they want something that is very low maintenance, they want a uniform look to their shelves without a lot of interruptive pieces from various manufacturers."Knowing what retailers will and won't accept is crucial, says Pinsker. "We create programs within their parameters. The accounts will shoot it down if it is not within those parameters. We try to stay within what we know they are going to accept because we never have enough time to go back and change it a hundred times before we produce it and get it into the store."What works in one chain will generally work with some modification for another chain, Pinsker notes. "In making something special for Wal-Mart, it won't be that much different than another store's requirements because the store shelving is pretty much the same."In the end, Revlon's Werner believes that the most important thing for both retailers and manufacturers to keep in mind is the shopability of any merchandising unit. "Consumers don't really care about the unit overall as long as it creates an inviting environment," he says. "Basically, they just want a nice environment that is easy to shop."Getting NoticedIn fragrance marketing, interaction between the customer and the product is imperative, says Robert Aliano, president of Fragrance First Inc., a division of Robert P. Aliano & Associates. "When you talk about P-O-P and fragrances, the most important thing is sampling and getting the product on the skin. If you don't, then you're lost in a sea of mediocrity. You need uniqueness, affordability and creativity to break through the sameness at the counter, and P-O-P is the most important piece in helping you do that."For non-fragrance items, seeing is believing, says Mac Cosmetics' Ramsey. "One of the biggest concerns on the department store counter is the visual impact," he says. "It is very important that people can see the product from a distance. As they're walking around, we want to catch their eyes with the colors that we offer so we go with a lot more height. We need to attract customers from 20 feet away."As the number of cosmetics SKUs continues to rise, so does the importance of educating the consumer. In most cases, graphics play the part of the teacher -- on the packaging, on the shelf or on freestanding displays."Graphics that tell product benefits are very important for us," says Werner, "especially for the consumer who sees a new Revlon product or something that she's never tried before. In the past, we've always tried to cram as much product into a square foot as we could, but now we're finding we need a little bit of information. There are many more products competing for her attention, and we need to give her the information she needs."Nexxus Products Co. uses banners and posters to illustrate hairstyles that can be created with its products. Anne Luther, director of marketing for the Santa Barbara, Calif.-based company considers the graphics crucial to boosting salon revenue. "P-O-P is very important because the products provide the salon owner with a tremendous revenue source in addition to the services they provide," she says.Graphics are the main P-O-P element in the hair, skin care and fragrance departments at Kohl's Department Stores in Menomonee Falls, Wis. "There are changes that are requested by the manufacturers on a seasonal basis. As they bring in their new products, we change the graphics out to support them." says Kelly Tobias, graphics manager. The graphics use lifestyle imagery to showcase products and highlight what's new in that section.Planned vs. ImpulseBrand loyalty isn't always a given in the world of cosmetics, considering the multitude of ways consumers can primp and pamper. "A person can be an impulse shopper one day and then will know exactly what she wants and go directly for it wasting no time another day," says Revlon's Werner. "We want to cater to both of these consumers, depending on what day it is."Werner says Revlon strives to provide an inviting section for customers who have more time to browse, look at new products and decide to buy them on impulse. At the same time, however, Revlon makes sure all products are clearly visible so busy customers who know what they want can find products quickly.Lancome also believes presentation can improve impulse sales, says Gardner. "We as a company feel very strongly that P-O-P is going to help drive customers to our counter, and if the message is clear and strong, then there will be some impulse purchases."The level of impulsivity is affected by season, says Prescriptives' Decker. "We find that around the holidays, sales are often very impulse-driven. We hope that customers are brand-loyal, but if something new catches their eye, it will give that brand a chance to show what it has to offer."Many marketers agree that P-O-P is imperative for new product launches. "We do P-O-P units for virtually all of our launches to showcase a new product or new colors," says Mac Cosmetics' Ramsey. As a trendier cosmetic line, he says the brand operates like the fashion industry."We have new collections on a monthly basis, so we get a lot of repeat customers because they want to see what's new," he says. A new theme is created to launch each new collection. "We're doing a lot of vacuum-formed units right now that showcase the new products and have visuals that go hand-in-hand with them." Most of these units sell through, he says, but some remain in the line. After a promotion is over, they are replaced with a new set and are constantly being updated.Clairol's Pinsker says that retailers are more likely to accept a display vehicle for a new launch. "The stores are more willing to allow off-shelf placement with a new product because it's a good introduction for them and they want the consumer to learn about and buy the new product from them," she says.Department store retailers also rarely pass up the chance to have exclusivity for a new launch, says Lancome's Gardner. "If there is a special promotion for the launch of a new fragrance, we meet with our launch door accounts. Of our 2,100 counters, we give these accounts the upfront special deal of getting a real splash of P-O-P that will be bigger and greater than the department store down the street."Regular P-O-P MakeoversChange is good, especially when it comes to updating or refreshing display presentation, according to most marketers. "Our counters need to be changing constantly or consumers will look elsewhere," says Prescriptives' Decker. "Although we are continuing to upgrade and add to our current lines, we also have in-and-out items that hopefully will pique our customers' interest and add some spice to their visit.""In the future, manufacturers will have to tailor their displays to better suit the retailers and also the various consumers that are particular to that retailer," says Revlon's Werner. "It's OK to design one system that fits all, but there should be adaptability within that system for the different retailers and also within the stores." He points to the high-volume stores that stock all shades of a product versus the lower-volume stores that can only carry a smaller assortment. Equally important are stores with older or younger clientele as well as those in ethnic neighborhoods. "We want to help these retailers cater to their consumers with efficient units that will go into different stores."Nexxus' Luther sees the future of P-O-P in hair salons to be changing as well. "I would like to do some cutting-edge things because it's really our job to help the stylists and the salon owners presell the product," she says. "Hairdressers are artists, not salespeople, so they want to recommend what's right for their client, but they're not trained to stand behind the counter and talk about the attributes. What we're looking for are pieces that can help the stylist close the sale or encourage more impulse buying. We're looking at more ideas to help the smaller salons so they can be hairdressers and artists first instead of merchandisers. If we can help them do a better job, their profits will increase and our sales will go along with that."

Cosmetics Report: American Beauty

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