BEAUTY CARE

Study shows substance succeeds sizzle as hair care target

BY Antoinette Alexander

While product innovation remains a driving force in the hair care sector, looking ahead companies must set their sights on meeting the needs of beauty shoppers to achieve growth rather than launching products for the sake of simply introducing a “new” product, recent research suggested, especially given today’s weak economy.

According to the most recent U.S. hair care report by research firm Euromonitor International, the U.S. hair care sector value grew by 1 percent in 2007, with shampoos, conditioners and styling agents leading the charge. Together, these products account for roughly 70 percent of total mass market hair care sales.

However, 2007 failed to match the robust growth experienced in 2006. According to Euromonitor, the slowdown is because most major brand launches and relaunches of 2006 have run their course, and the trading-up trend has slowed. In 2006, it is estimated that manufacturers spent about $1 billion on hair care advertising, with the launch of the Sunsilk brand accounting for $200 million of that amount, the report stated.

Hair care sales

Source: Euromonitor International*in millions
Segment 2002 sales* 2007 sales*
Salon hair care $2,827.2 $2,843.8
Perms/relaxants 205.9 188.8
Shampoo 1,694.5 2,019.7
2-in-1 products 486.0 508.0
Conditioners 1,315.3 1,649.3
Hair color 1,708.4 1,649.9
Total hair care 9,709.6 10,471.5

“Given the uncertain economic environment and reduced promotional spending, consumers in 2007 were less eager to pamper themselves with higher-priced, value-added brands than they were in 2006,” the report said.

Not only are beauty shoppers watching their dollars in today’s wobbly economy, but the launches and relaunches in recent years have cluttered the hair care aisle with a hodgepodge of brand and treatment options.

Hair color proved to be stagnant in 2007, growing by 1 percent in value. Euromonitor estimated that the subsector’s sluggish growth is due to the growing acceptance of gray hair among the aging population. Underscoring this notion is the new Just for Men Touch of Gray from Combe Inc.—the first and only gradual hair treatment that lets guys keep some gray in their hair.

The salon hair care market, however, experienced a 2 percent decline in 2007, as the diversion of salon products into mass market retail channels chipped away at sales in salons. Euromonitor predicted that in 2008 the salon hair care market will see a 4 percent drop, largely due to Wal-Mart’s entry into salon diversion.

“Historically, Wal-Mart has avoided the gray market for salon quality products, although in early 2007, the company planned to stock diverted salon brands in some of its wealthier locations,” the report said.

The Beauty Industry Fund, an antidiversion association comprised of manufacturers, distributors and salon owners, did note that total professional salon hair care products diverted dollar volume between the third and fourth quarter of 2007 decreased by 0.2 percent.

In 2008, Euromonitor estimated that sector decline will be the most severe, as U.S. consumer expenditure is predicted to grow by only 3.5 percent—the lowest rate in nearly two decades.

“The slowdown in the U.S. economy has already reversed the trading-up trend in big-ticket items, such as housing, domestic appliances and automobiles, and it is reasonable to assume that consumers’ ‘aspirational spending’ on daily products, like hair care, will slow,” the report stated. “Most importantly, this trend will deter new consumers from trading up to higher-priced, value-added hair care products, while those already accustomed to the added benefits of premium-priced products are likely to continue paying for that luxury.”

Hair accessories is, according to IRI data provided by Goody, a $1.1 billion category that has remained essentially flat over the past 52 weeks. However, such companies as Goody are taking steps to drive growth and jazz up the fashion-driven segment.

For example at Target, Goody offers an exclusive line of hair accessories. The newest offerings debuted in March after a major overhaul of the in-store layout. The entire look of the hair accessories section in the health and beauty department at Target has been revamped for a more upscale look and feel. The new hair accessories wall features a department-store-style design and exclusively showcases such Goody collections as headwraps, clips and pins. All of the Goody products have new Target-exclusive white packaging for a streamlined look.

The section will change three times a year—spring, summer and holiday—to reveal the latest in fashion trends.

Some of the new collections that will be found exclusively at Target include the Goody’s Precious Metals collection, available July through October. Specific products in the modern metallics line include a Noble Metal headband, Shimmering Nights barrette and Metallic Flair headband. Also available July through October is the Paisleydelic collection that combines vintage paisley and trendy colors for a retro-chic look.

When asked what retailers can do to help drive sales of hair accessories, Sara Hinkle, brand manager for Goody, was quick to note education.

“You only have a few seconds when someone is staring at the wall and making their decision so anything that can be done to help educate in a quick [way],” Hinkle said. “Anytime you have any kind of new technology and can do a touch and feel type [display].”

For example at Meijer, the beauty company highlighted its StayPut line via a POP that enabled shoppers to feel the tread of the products.

Additional new hair accessories hitting retail include the Vidal Sassoon brand Flex-I-Bands. Flex-I-Bands are adjustable and sure-to-fit for a great, comfortable fit.

Flex-I-Bands are available in earth tones of brown and black in the following styles: Oval Link Flex-I-Band, Wavy Scroll Flex-I-Band and Heart Scroll Flex-I-Band.

There’s also the Hair Poufs by Vidal Sassoon that serve as a hidden base to hold lifted hair in place and maintain height and volume in the crown.

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BEAUTY CARE

NPD introduces BeautyTrends panel in Spain

BY Antoinette Alexander

MADRID, Spain The NPD Group, a market research company, announced on Friday the launch of its BeautyTrends panel in Spain to measure the prestige beauty market through retail sell-through data.

NPD BeautyTrends and IRI InfoScan have also teamed up to offer a comprehensive measurement of the Spanish beauty market—prestige beauty by NPD and the beauty mass market by IRI.

The prestige market in Spain is one of the largest selective world markets with more than 2,500 selective doors, according to NPD, and is one of the top beauty markets for the majority of prestige manufacturers.

The first data delivery is slated for early 2009 with two years of historical data. The data will provide a snapshot of the trends in Spain’s prestige beauty market.

The new service will track fragrance, make-up and skin care sales from the category to the EAN/SKU level. Data will be collected weekly from flagship selective chains and independent doors.

The service will complement NPD’s existing BeautyTrends services in the United States, France, Italy and China.

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Revlon posts 2Q sales increase

BY Antoinette Alexander

NEW YORK Revlon announced on Thursday a 6 percent boost in preliminary second-quarter sales in the United States due largely to new product launches.

Preliminary sales for the second quarter in the United States totaled $215 million, up 6 percent compared with $204.2 million in the year-ago period.

Total net sales during the quarter rose 8 percent to about $375 million compared with sales of $349.2 million. Excluding the favorable impact of foreign currency fluctuations, total net sales in the quarter rose about 6 percent versus the year-ago period.

Operating income was about $60 million in the quarter versus $16.9 million in the year-ago period. Net income totaled roughly $20 million, or 4 cents per share, compared with a net loss of $11.3 million, or 2 cents per share, in the year-ago period.

Revlon noted that its Revlon brand maintained an approximate 13 percent dollar share during the quarter, in line with its quarterly performance since the fourth quarter of 2006.

In the United States, Revlon brand mass retail share in June 2008 was 14 percent, up 0.5 points compared with June 2007 and up 1.5 points compared with May 2008. As of June 2008, product launches in the first half were substantially in full distribution. Two products from this launch, Revlon Custom Creations foundation and Revlon ColorStay Mineral foundation continue to be ranked in the ACNielsen top 10 new products (by retail dollar sales) in the latest available data, according to the beauty company.

Almay continued to maintain an approximate 6 percent dollar share during the second quarter, in line with its quarterly performance since the fourth quarter of 2006. The growth was driven primarily by Almay TLC Foundation and Almay Smart Shade Blush and Bronzer, which were launched in the first half of 2008 and second half of 2007, respectively.

“We have demonstrated continued progress in the first half of the year and are realizing the benefits of executing our strategy. We believe that our focus on the key drivers, including: innovation, high-quality, consumer-preferred new products; effective, integrated brand communication; competitive levels of advertising and promotion; and superb execution with our retail partners should continue to generate sustainable, profitable sales growth and positive free cash flow,” stated David Kennedy, Revlon president and chief executive officer.

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