Personal care products are a huge part of the beauty business. Retail sales for personal care consisting of baby care, bath and shower, hair care, men’s grooming, oral hygiene, skin care, depilatories and sun care totaled $32.9 billion in 2002, according to Euromonitor International, Chicago. And, the largest share of those sales is made through mass market retailers, drug store chains, grocery stores and big box discount stores.

While Euromonitor does not separate cosmetics and fragrances from personal care products when it reports on channels of distribution and market share related to the sales of beauty products, it does give market share information in terms of total retail sales of cosmetics and toiletries. Euromonitor’s data shows that within the mass market, the shift is from traditional patterns in which consumers picked up shampoo, toothpaste and hand cream while they shopped for groceries or when they passed through a drug store to the big box discounters such as Wal-Mart and Target.

Mass Is Where the Action Is
“The mass market has been the bright spot in the current retail picture,” said Wendy Liebmann, president of WSL Strategic Retail, New York, NY. “But, if you look at the categories, the traditional business was sold through grocery and drug stores and there is now a huge shift to mass channels on one side and another smaller but significant shift to specialty stores,” she added.

Charting this part of the market is especially difficult because, current sales figures for personal care products sold in mass outlets available from Information Resources and ACNielsen do not include Wal-Mart and warehouse clubs.

Consider that today, Wal-Mart is the world’s largest retailer, with $244.5 billion in sales in the fiscal year ended Jan. 31, 2002. The company operates more than 3,200 locations in the United States and more than 1,100 units overseas. More than 100 million customers per week visit Wal-Mart stores worldwide. It is no wonder then that industry experts estimate that Wal-Mart’s market share for personal care products is as much as 20% of the entire category or $8.2 billion in sales.

Warehouse clubs, such as BJ’s, Costco, and Sam’s Club are also significant outlets for personal care products. In addition to giant size bottles of shampoo, most are now offering smaller gift packs, such as an assortment of Johnson & Johnson baby products. BJ’s has 144 clubs in 16 states. Costco has 418 warehouses (309 in the U.S. and Puerto Rico, 61 in Canada and the rest in other countries) serving 19.7 million members. Sam’s Clubs, owned by Wal-Mart, number over 500 in the U.S.

Where We Go for What We Want
In the 2002, the How America Shops study done by WSL, consumers—18 to 70 years of age— were asked where they bought hair care and skin care products. The results (see chart below) clearly indicated a preference for big box discounters.

The trend has grown stronger this year. According to The Pulse survey by WSL, dateline July 15, 2003, among retailers today, there are “clear winners, losers and those on the brink.” The Pulse found that 51% of consumers said they were doing more real shopping and less browsing. Shopper reticence, related to the economy, is holding consumers back from purchasing items that cannot be justified as to need, value and price.

The Pulse asked 1,161 consumers whether they had shopped a given retail channel more, less or the same as six months previous. The biggest category winner was dollar stores, at which 30% reported shopping more, while 11% said they were shopping less for a net change of +19%. Mass merchants tallied a net change +5% with 19% of consumers shopping there more while 14% said they were shopping there less.

On July 30, The Pulse reported that 10% to 25% of shoppers report switching to a lower priced brand in the past six months. The trend to switch is much stronger among women, who are the primary purchasers of most health and beauty care, groceries and clothing. No category was exempt—hair care, skin care and cosmetics—16% of women shoppers are trading down.

The shift to shopping in discount stores is an opportunity for consumers to buy their preferred national brands at the lowest prices.

Why Consumers Like Big Box Stores
“We can go grocery shopping and pick up school supplies and clothes for the kids, all while we have the oil changed on the car,” explained a 30-something male consumer, who added, “We spend half our weekends at Wal-Mart.” That kind of convenience plus low prices are the main reasons shoppers are taking their shopping lists to stores like Wal-Mart Supercenters, which is now the largest national grocery chain in the U.S.

“The big box discounters, especially Wal-Mart and Target—have taken share away from other mass channels,” stated Liebmann. Wal-Mart’s ability to get new product first and fast has convinced the consumer that it is the place to find new products at low prices.

Liebmann explained that both Wal-Mat and Target are trying to do more with personal care products to make them more visible and appealing. She said, “Therefore, when consumers shop mass market stores, they see beauty products in as good or better a selection as in other stores, and there’s no reason to go other places. So now a family can get everything they need in one stop—Right Product, Right Price, Right Now (Wal-Mart’s internal theme).”

What Shoppers Can Find in Big Box Stores
Visits to a Wal-Mart Supercenter and a Target in late August supported the notion that big box discounters are doing a great job with personal care products.

Wal-Mart (Always Low Prices, Always) built its foundation in rural areas and is now moving into more suburban neighborhoods. The Wal-Mart flyer for August 31-Sept. 6, limited its personal care promotion to the Olay Regenerist assortment, which was on special for $17.42 each.

But at the Wal-Mart Supercenter in Harriman Commons, Monroe, NY, personal care products were well-represented and displayed in aisles and on walls that were bright with well-stocked shelves.

The color cosmetics and skin treatment department were in a direct, unobstructed line from the front doors. On a 6-ft. high, 24 ft long wall, skin treatment (anti-aging and problem complexion) products were arrayed on seven shelves. Brands included: Olay, Ponds, Nivea, Wal-Mart’s house brand Equate, L’Oréal, Neutrogena, Jergens, Dove, Cetaphil, Suave, Eucerin, Biore and St. Ives. L’Oréal’s new Pure Zone brand, along with the new Dove Essential Nutrients line were on end-caps.

Bath products were arranged on a wall perpendicular to the skin care wall and included all sorts of bubble bath products for kids (Mr. Bubble, Johnson & Johnson, Nascar Bubble Bath, Barbie and Spider Man). For adults, Simply Basic was a line of skin and bath products identified as “marketed by Wal-Mart,” was on shelf along with Calgon, Healing Garden and the Mary-Kate & Ashley Spa Collection.

Wal-Mart places deodorants, oral care, skin care (more traditional moisturizer lotions and creams) as well as hair care and shaving products in the pharmacy department. Garnier Fructis was on an end-cap, priced at $2.86. Dove shampoo was $3.34 and Pantene was selling for $5.87. Other shampoos included Suave, VO5, White Rain, Head & Shoulders, Herbal Essences, Pert, Finesse, Tresemme, Aussie and Infusium.

This Supercenter also had a hair salon right at the front entrance, where in addition to getting a quick hair cut, shoppers could buy salon brands such as Nioxin, Biolage, Paul Mitchell, TIGI Bed Head, Redken and Nexxus.

Target is Trendy
Target’s promise, “Expect More, Pay Less,” combined with its more hip approach in television and print advertising is out to attract a youthful audience.

As of Sept. 4, Target was operating 1,189 Target stores, including 106 SuperTarget stores. Target’s August 31-Sept. 6 sales flyers dedicated a full page to “beauty basics,” such as L’Oréal Visibly Clean gel cleanser for $5.99, Luxe body lotion, shower gel or bubble bath priced three for $12. and Garnier Fructis shampoos and conditioners for $2.69 each.

At the Target in the Palisades Center in Nanuet, NY, large blue and white signs hung from the ceiling, making it easy to find the Health & Beauty department. Most of the same brands were available as at Wal-Mart. Rather than a separate department, salon hair care was on an end-cap: TIGI Bed Head, Paul Mitchell, Biolage and Nexxus. Extending from that end-cap, was an approximate 25 ft. aisle with six shelves of skin care, creams and lotions. A bath products end-cap held Shower to Shower, Calgon, Essence and Village Naturals. A third end-cap held new skin products from L’Oréal—Nutri-Pure—and Dove’s new line. The department was backed with a wall of bath and skin products including the Luxe line with bubble baths, exfoliating lotions, bath and shower gels. Other brands including Yardley, Sarah Michael, Healing Gardens and Calgon.

Hair care products were well-represented on a 24 ft. wall that was half color products and half shampoo and conditioners. At Target, Dove was selling at two bottles for $6., Fructis was $2.89, Pantene was $5.99 and Tresemme was $2.79.

Dove Builds New Products on Firm Brand Foundation How could Unilever make sure its new Dove skin care line would fly off the shelves? By creating eye-catching packaging, that’s how. Laurent Hainaut, presi dent, Raison Pure USA, lead the company’s design team that worked with Unilever’s creative staff to create the packaging for the new Dove Essential Nutrients skin care line. The company has partnered with Unilever for about four years. “We knew that Dove’s credentials were in soap and the challenge was how to transfer that image to hair and skin care,” explained Hainaut. Unilever recognized the potential for the Dove brand to expand into a global “beauty brand,” for real women. The brand is both inspirational and aspiration in its appeal, which celebrates softness and uncomplicated beauty, according to Hainaut. “The shape of the (Dove Essential Nutrients) bottles and jars are sophisticated curves, feminine and simple,” he noted. A “smile” was carefully crafted into the design by adding a chrome band to the bottom edge of the caps, which is echoed by a silver arc on the label of the bottles that surrounds the copy, beginning just under the Dove logo and ending at a orange dot which acts as a subtle exclamation point. “The entire package design is both feminine and efficient,” stated Hainaut. The jar is frosted glass for an upscale touch. The colors chosen are blue and white to connect with the traditional Dove image. The white is used to communicate purity but the blue is a new, fresher shade.

What Moves the Mass Market
“Innovation is still the biggest driver for sales in personal care—anti-aging products for skin, whitening systems for oral care and new specialty shampoos, said Liebmann.

And packaging has more than kept pace. “The mass market continues to grow in sophistication as seen in the packaging of many mass products,” said Laurent Hainaut, president, Raison Pure USA, New York, NY.

L’Oréal is revamping and renaming its Plenitude line. Procter & Gamble has done a lot of work to update its Olay line in terms of packaging and product. “The difference now between mass and prestige packaging is minimal,” Hainaut added. “Service at the point of sale is a much bigger difference and we expect to see more help provided for consumers at mass channels.

Liebmann pointed out that the mass chains are experimenting with private label brands as well as outside brands that sell exclusively through a particular retailer. Rimmel is a Coty brand sold only through Wal-Mart.

Mary Manning, co-president of marketing consultancy firm Manning Abelow, New York, NY, said, “The product development technology now available to major marketers such as Procter & Gamble and L’Oréal is amazing. It is equal to and sometimes even superior to what is being done for prestige products. They are using licensed technologies and clinical testing to develop superior products that perform.”

Mass market brands are striving to upgrade quality of personal care products and in order to communicate that to consumers, are upgrading the look of the packaging, according to David Nicosia, principal creative director of Nicosia Creative Expresso Ltd. – NiCE Ltd., New York.

“There are new formulas and new technologies and the challenge is how to communicate that,” Nicosia said. “The first step is to study the competitors and try to create packaging that is different. Look for interesting colors that will stand out on the shelf.”

Neon shades are popular at mass now, Nicosia noted. Consumers are willing to look at other brands, so new products have a chance to break in.

P&G’s Olay Regenerist line is setting a new standard for excellence in the mass market.

Drug and Grocery Chains Fight Back
CVS is now adding Lumene, a Finnish line of skin care and color cosmetics to its assortment. In Europe, Lumene is a department store line but its positioning in CVS in the U.S. is an example of upscale European lines that are getting into the American market through drug stores. Prices on the line range from $3.99 to $17.99, which should pass muster with American consumers who are proving to be willing to pay that much and more for other skin care products such as Olay’s Regenerist line in mass venues.

Personal care products are growing as a category in grocery stores, where the competition between brands is fiercely competitive, according to Diane Garber, president of Insight Communications, Buffalo Grove, IL. Garber is a consultant with experience as a buyer of HBC products for a large grocery chain. She noted that innovation in oral care and hair care products has fueled consumers’ interest and sales. And while the average price point has gone up for the new products, “which ever channel you shop—grocery store, drug store or big box—the marketers and retailers are being very aggressive with coupons and sales, so the item is on sale somewhere,” she said.

Private label development is also growing in the drug stores, according to Garber. “Drug stores are being proactive, while big box and grocery stores are slower to get in to the act. The private label product has to be less expensive and have similar performance features—all making for personal care growth,” she said.

Skin care is also growing as a category, especially when it is linked to health care with beneficial ingredients. In terms of packaging, there has been a lot of improvement. Garber stressed, “The best products jump off the shelf and call out key ingredients. It’s important for packaging to look contemporary and trusted, to be in sync with demanding lifestyles and to have benefits that are easily understood.”

Unilever’s launch of a Dove line of hair care products is now being followed by a family of skin care. The packaging is a good example of a look that combines sleek, white packaging with the well-known Dove name and logo. Garber added, “It capitalizes on the trusted name and appeals to a younger audience.”

Garber said to watch for a re-launch of Pantene that will also build on the brand’s trusted image while reaching out to new consumers, because “P&G really understands how to leverage a brand.”

Grocery stores have accepted the influx of new products and generally have well-stocked, well-maintained personal care aisles, according to Garber, “which can be a problem for big box stores.”

Advice for Retailers
“Consumers are looking for more technologically advanced products, because the pace of innovation in the high tech arena has raised the bar for what consumers today consider a worthwhile new product, ” said Irma Zandl, president of The Zandl Group, New York, NY. The Zandl Group has been providing trends analysis, consumer research and marketing direction since 1986 for companies seeking to reach the 82 million young adults, teens and tweens in the United States, had advice for mass retailers.

Zandl explained that today’s consumers recognize that efficacy is tied to technological advances. Therefore brand marketers with strong research and development programs, such as L’Oréal will beat out competitors whose focus is strictly “cosmetic.” Retailers would be wise to forge strong alliances with such marketers because, “Needless to say, a technologically superior product also warrants a premium price—always a plus in today’s market,” Zandl pointed out.

Because dealing with stress leads the list of problems consumers are facing today, Zandl recommends giving more space and attention to de-stressor products. In the personal care category, products that pamper and sooth are a good place to start. It’s no coincidence that even dish detergent is now labeled “aromatherapy.”

Zandl explained that there’s an enormous market for consumers who are aging physically but who have the mindset of people 20 years younger. “The Baby Boomer generation is not like their parents and with plastic surgery, botox, hair color, gyms and online dating., they represent an opportunity for new categories of products that are positioned positively and dynamically (as opposed to menapausal or “silver” products).” Well designed products have a waiting audience in the mass market.