Beauty Begets Beauty
In-depth assortments and effective merchandising buoy supermarket beauty sales.
A supermarket can't wear "just a little lipstick" if it wants to be successful in beauty. It must carry almost every SKU and make impactful merchandising statements in cosmetics, hair care and other key categories. Otherwise, beauty is generally not worth the bother.
In recent years, some grocers have decided that beauty involves too many SKUs and too much space. Those that remain in the category, however, understand these commitments. They also understand that beauty departments must look beautiful to stand out. This can involve special merchandising, fixtures, packaging and lighting. Frequently, beauty is separated from in-line categories in its own corner or department.
"For the most part, grocers haven't paid a lot of attention to personal care or beauty," says John Coyle, director of in-store visibility at Englewood Cliffs, N.J.-based Unilever. "Much business has gone to drug and mass. The challenge for supermarkets is to make consumers aware that they have these products. Some, like Meijer, H-E-B and Safeway, have dedicated space to beauty and made it look different. It's all about the shopping experience."
Beauty can help supermarkets differentiate. And comprehensive departments move the category beyond the realm of low-end impulse purchasing. Supermarkets also have an advantage in that many shoppers visit weekly; this isn't so with mass and drug retailers.
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"Retailers are differentiating in a competitive market while driving loyalty and gaining that extra trip," says Henry Hendrix, senior brand manager, winning in-store, at Scottsdale, Ariz.-based Henkel Consumer Goods Inc. "While price is still important, leading grocery retailers are competing on a different level where price isn't necessarily the principal factor. They are delivering comprehensive solutions by enhancing their experience and driving that extra item in the basket."
Locations and adjacencies of beauty departments are crucial. Unlike drug stores, supermarkets are not "grazing" channels. "The consumer has a list of things they want," says an anonymous bath products supplier. "It's not like CVS, where people browse. If beauty is too out of the way, the shopper won't bother. She'll pick up what she needs at the drug store."
Leading Beauty Merchandisers
H-E-B's SKU-intensive department leads the pack with brands like Bare Essentials, Burberry and O.P.I. These names aren't usually carried by grocers. Overhead signage and TV advertising reinforce H-EB's aggressive price positioning. In 170 stores, H-E-B staffs sections with "beauty advisors." Clad in black smocks, advisors help customers with problems like matching skin tones. They also give the department a serious, professional look.
San Antonio-based H-E-B is serious about micromarketing. "H-E-B may have 10 different planograms." says Jeff Rogers, president of Physicians Formula. "They understand each store and its customers, whether they are Asian, Hispanic or urban."
Giant-Carlisle operates "mini drug stores" in 73 locations. The two-aisle section employs 84-inch-high gondolas on each side and two 60-inch-high gondolas in the center. The department is broken into 20-foot linear sections. Overhead signage and in-line lighting attract attention. "By having lower gondolas in the center, they create a 'valley' within the store," says John Coyle, director of in-store visibility, Unilever. "By breaking up sections, they have more end cap space to showcase new products."
Rogers says the Carlisle, Pa.-based Ahold USA division's beauty merchandise performs two or three times better than in traditional supermarkets. Physicians Formula uses its own 4-foot fixtures. With prices of $10 to $15, the brand requires more ambiance than others. Physicians Formula's high-end fixtures are also used in Pleasanton, Calif.-based Safeway. Shelf labels showcase color ranges.
Giant Eagle has expanded the HBC department in its flagship Market District store in Robinson Township, Pa. On-site certified aestheticians and nutritionists help shoppers navigate natural and organic cosmetics, vitamins and supplements. They also make recommendations from the Pittsburgh-based retailer's selection of bulk handcrafted soaps, bathing salts, scrubs, oils and French-milled soaps.
Walmart's "mini-supercenters" place beauty adjacent to fresh food. Wooden floors and a dozen wide, diagonal aisles call out the department. Comprehensive offerings include about 16 feet of L'Oreal hair color and 20 feet of Maybelline cosmetics. Ample space is devoted to Cover Girl's brands as well. A Super Stay s.ection segments color cosmetics by ethnicity and race. Other features of the Bentonville, Ark.-based mega-retailer's beauty offering are two aisles of shampoo and conditioner as well as 8 feet of salon-style products.
The Whole Body department at Austin, Texas-based Whole Foods employs a wood-paneled color cosmetics test counter with recessed lighting. Inventory from suppliers like Zuzu, Gabriel and Primitive is kept in cabinets. Nearby, wooden shelving showcases multicolored bulk bath salts in aluminum buckets. Two round wooden displays hold shampoo, and bar and hand soap. Opposite these fixtures, an 18-foot-long wooden wall shelf is divided into 2- and 4-foot sections that display more soaps, along with aromatherapy oils, shower gels and other items. An in-line section holds additional merchandise.
Jacksonville, Fla.-based Winn-Dixie relies on aspirational graphics, enhanced lighting and POP materials to educate shoppers. "One of the top purchasing influencers is family and friends; the other is browsing," says Michael Matulis, SVP sales and category management at Pacific World Corp. "When you go beyond opening price points, you need that educational element."
"Showcasing private label is a function of the economy. Private brands could otherwise be overlooked."
— Jon Hauptman, Willard Bishop
End Caps Entice
End caps can play a major role in attracting new consumers at the point of purchase. At Walmart, Unilever's Master Brand end caps are part of an 18-month-old initiative with this goal. "We'd spend money on ads, but we never used those dollars to communicate to consumers in stores," says Coyle.
Master Brand end caps display products from multiple Unilever categories. They tell shoppers about merchandise they may be unaware of. End caps also attract customers shopping the adjacent fresh food area. "End caps can go from Dove to Suave to Axe," says Coyle. "You might be a core body wash user of Dove, but not be aware of our other products."
Unilever rotates offerings at three-month intervals. "This keeps it fresh," says Coyle. "Merchandise is ordered as if this was a primary shelf location." For Christmas and Mother's Day, Unilever has used the end caps to merchandise cross-category gift sets.
End caps can also inform shoppers about less costly private label alternatives. "This is happening across the store," says Jon Hauptman, partner at Barrington, Ill.-based retail consultancy Willard Bishop. "Retailers traditionally use end caps to attract consumers to higher-end stuff. Showcasing private label is a function of the economy. Private brands could otherwise be overlooked."
Packaging is another focus. Pacific World Corp. has implemented a different packaging color for each of its artificial nail sub-brands under the Fingers umbrella: Flirt, Edge and Girly Nails. It has also removed much of the wording, and graphics are uniform. These changes allow consumers to relate to the brands, but understand their nuances.
Green and Crowing
Sales of natural and organic beauty products are expected to hit S542.7 million in 2011, an 11.9 percent increase over 2010, according to Chicago-based market researcher SymphonylRI Croup. This would make 2011 the category's biggest growth year ever, despite the generally sluggish market and the higher price tags some products carry.
This phenomena appears to defy economic reality. But consumers have become genuinely concerned about irritating or toxic ingredients, particularly in color cosmetics and skin care.
Virginia DeSimone, sales and marketing project manager for Simi Valley, Calif.-based derma e, says, "Consumers are becoming increasingly aware of the harmful effects of chemicals on sensitive facial skin," which in turn leads them to natural HBC products.
Indeed, global market research company Datamonitor finds 28 percent of consumers deliberately avoiding certain cosmetics or toiletries due to ingredient fears, while 39 percent are "somewhat" or "extremely" concerned about parabens or petrochemicals. Parabens are a chemical preservative found in makeup, shave gel and moisturizers. They have endocrine-disrupting properties that can harm women's reproductive health.
Conditioning polymers and surfactants are another issue. They are used in beauty products' bases and account for almost a third of all cosmetic ingredients sold in the United States by volume, according to trade publication Cosmetics Design on July 25, 2010. Polymers improve texture and formulation consistency.
Surfactants allow skin care products to be spread on the body more easily and facilitate the formulations of liquids. Demand for alkyl polyglucosides (APC), a "greener" ingredient that's a natural-based surfactant, has grown, says Cosmetics Design. This has spurred much of the sales growth of natural personal care items.
Retailers are addressing shoppers' concerns. In private label, Walmart has introduced GeoGirl, an eco-friendly 'tween line, and Safeway's In-Kind features 30 SKUs that are 90 percent to 95 percent natural. Safeway defines "natural" as free of petrochemicals, pesticides and other potentially damaging ingredients.
In June, Whole Foods began offering Canus Coat's Milk bulk soap under an exclusive agreement. Soaps come in five scents and are available in select stores. Additional scents will be offered during the fourth quarter. Retail price is $2.29, or three bars for S5.49.
DeSimone of derma e says product packaging of purely natural beauty and skin care lines is increasingly taking on a mainstream feel, "as many of the natural brands have evolved their look to be more upscale. Consumers continue to try and distinguish between naturally inspired and truly natural, and there is a lot of confusion in the marketplace," she notes. "This is why some of the governing agencies and full disclosure on labels have become very important."
"Enhancements make products easier to shop."
— Michael Matulis, Pacific World Corp.
"We needed a look that blended it together," says Michael Matulis, SVP sales and category management at Lake Forest, Calif.-based Pacific World. "But we wanted consumers to understand the price differences between our highly decorated nails vs. our French nails. The packaging is more impactful. Enhancements make products easier to shop."
POS and Beyond
Some merchandising strategies combine in-store and outside initiatives. Last year, shoppers who took smartphone photos of in-store QR (quick response) codes on Unilever's Axe brand received free concert tickets, notes Coyle. Unilever is also experimenting with tying loyalty card data to smartphones, and then marketing to consumers in store.
Procter & Gamble's "Have You Tried This Yet?" campaign aims to persuade people to purchase additional items in particular categories. Introduced in the fall of 2010, it involves in-store signage, FSI coupon booklets and a website, pgtryit.com. The site provides reviews and information on the 18 products being promoted.
There are also "bonus" and combination packages. An Olay item may come with a free Gillette Venus razor. In oral care, whitening strips, mouthwash and Oral-B toothbrushes are part of the 3D White collection. Items in the campaign were introduced over the past 18 months.
P&G is also targeting high-end beauty. In 2008, it acquired the Frederic Fekkai salon hair care line under its Prestige division. Products were launched in several supermarkets.
While Fekkai's $30 pricing seems prohibitive, P&G's marketing muscle shouldn't be underestimated. In 1999, it raised eyebrows when it introduced $20-plus Olay Total Effects. Not only did the brand prosper, it also heralded the competitive anti-aging skin care category.
Despite such successes, even well-done beauty departments aren't top destinations. At Cincinnati-based Kroger, for example, 35 percent of visitors said they shopped HBC, according to Meyers Research Center in New York. In contrast, 90 percent shopped center store, 83 percent dairy, 74 percent perimeter/fresh, and 69 percent shelf-stable beverages.
Due to space constraints and other priorities, some supermarkets have determined that having a lower-turning department isn't in their best interest. "Whether or not beauty is a destination depends on a retailer's positioning," says Willard Bishop's Hauptman. "A particular retailer may have more advantages in perishables."
Some have created to 2- or 4-foot convenience sections. Emphasis is on broad-appeal, high-velocity basics like mascara, eyeliner and lip gloss. "They'll decide they don't need six tweezers and will narrow it down to two," says Pacific World's Matulis.
Through trial and error, these grocers have found that there's no middle ground in beauty. "If you're in the business, you have 3,000 to 4,000 SKUs," says Jeff Rogers, president of Azusa, Calif.-based Physicians Formula. "There's nothing in between that and the basics."
Virginia DeSimone, sales and marketing project manager for Simi Valley, Calif.-based natural body care manufacturer derma e, says the natural HBC category continues to experience strong double-digit growth in the grocery channel as more retailers continue to emphasize the category. "The merchandising philosophies continue to evolve, with the integrated yet segregated philosophy being the most prevalent. Retailers understand that to attract the truly natural consumer, they need to capture them where the consumer is looking for skin care products," says DeSimone, adding that skin care "also happens to be the largest subcategory within the natural segment, so integration is important to its success. The consumer is also looking for the retailer to define the category, and separate mainstream and naturally inspired from truly natural."
The retailers that are winning, DeSimone continues, "are calling out the segment in each aisle in the store — be it with a bowed shelf or different facing," with an emphasis on signage, which she says is very important, "since consumers are becoming more and more aware of the subcategory differentiation that is drawing them to these areas."