In a world that demands customization at every turn, it’s no surprise that retail differentiation emerged as the prevailing theme among attendees of the 80th Annual Meeting of the National Association of Chain Drug Stores, held Saturday, April 20, through Wednesday, April 24, at The Breakers Hotel in Palm Beach. That, and of course the never-ending conversation about nails, their sales growth viability, and whether the category has the legs to continue with double-digits gains over the next several years, or if its success will begin to taper off.
“Prior to now, retailers, never knew beyond the transaction what the consumer was doing. But now they know. It’s about what the consumer is buying—and what else they’re buying. And, the manufacturer is paying for that type of customized data,” said Wendy Liebmann, founder and Chief Executive Officer of WSL Strategic Retail.
Among the more than 2,200 individuals attending NACDS Annual were beauty’s top brass, seen walking from beauty company to beauty company poolside at The Breakers, where tables topped with bright yellow umbrellas served as office space. Seen at the show: Walgreens’ Shannon Curtin, divisional VP and GMM for beauty, personal care and seasonal; CVS Caremark’s Alex Perez-Tenessa, VP, retail merchandising-beauty/personal care, and Walmart’s newly named VP beauty and personal care, Jody Pinson. Top executives across all categories from food (HEB, Wegman’s), drug (CVS, Walgreens, Rite Aid), mass (Walmart, Target) and mid-tier chains (Ulta) also descended upon Palm Beach’s historic property, which at times saw attendees seek shelter from the frequent thundershowers. And, it quickly became clear that many chains are defining themselves by their particular strength: CVS, healthcare; Rite Aid, value and Walgreens, loyalty.
To that end, and because they want to please their retail partners, beauty manufacturers are customizing their offerings.
“One size does not fit all,” agreed E.l.f.’s Shawn Haynes. “We’re focused on bringing the right brand into the right stores, not the right brand into the right chain.”
Physicians Formula’s Chief Executive Officer, Ingrid Jackel, added that retailers are out to offer something different from their competitor down the street.
“Each retailer wants to have a special version of you,” she said.
Even bath category manufacturers said they can help retailers be different than the store next door by customizing flavor assortments based on a store’s region.
“We have 16 scents but not all 16 are in all retailers. We’re able to segment scent by ethnicity preference and we can easily target store clusters with a fragrance strategy,” said Chris McClain, President of Advanced Beauty Labs, maker of BodyCology and Dr. Teals.
While retailer differentiation was top of mind for nearly all NACDS Annual attendees—beauty or not—good spirits abound as sales of color cosmetics for the first quarter ended March 30 were up 5.4%, or $73.6 million, to $1.38 billion. And even though sales of face and eye products comprise nearly 70% of overall color sales, talk of the nail category dominated, which contributed 12% to 14% of sales, or about $324.1 million for the quarter.
Parties hosted by the some of the top beauty companies attending NACDS Annual also contributed to the positive mood. Revlon kicked off NACDS Annual with a cocktail party that featured not only their key marketing and sales executives (Julia Goldin, John Collier and Paul Murphy, to name a few) but celebrity brand ambassador Olivia Wilde, who modestly told the crowd, “Any time I walk into one of your stores and see my face it is really beyond comprehensible.” L’Oreal’s party Saturday evening featured a Las Vegas/rat pack theme, complete with Sammy Davis Jr. and Marilyn Monroe impersonators, along with slot machines and blackjack and crap tables. Nicole Scherzinger, Procter & Gamble’s newly-named celebrity face for Herbal Essences, entertained the invite-only crowd Sunday evening with several song and dance numbers. And, for a select few, Fergie was on hand at Markwins’ suite in The Breakers, where she chatted with retailers about everything from her Center Stage makeup line to how she’s feeling (she’s more than four months pregnant.)
Depending on the manufacturer, opinions differed on whether nail sales would continue their upward trajectory for very long. But, there were some nail facts no one could dispute, especially those specific to the value segment:
– The nail value tier is up 17.5% in FDM
– Markwins’ reinvigoration of the Wet ‘n Wild value brand over the past two years (with the help of celebrity ambassador Fergie) put value nail back on the map. Markwins has experienced 30+ months of double-digit growth, according to Bill George of Markwins.
– Value is incremental to the product offering. “It’s impulsive and gives consumers confidence to spend and buy more than one item,” said E.l.f.’s Shawn Haynes.
– Currently, Sally Hansen claims 31% of nail market share; Nicole 13%; 13% other; Essie 12%; Revlon 10%; Sinful 7%; and Maybelline 2% -According to Pacific World, makers of mass-market Sensationail Gel Polish Starter Kit, “nail is driving cosmetics and gel is helping to drive nail.” Gel sales comprise about 8% of polish sales but for 2013, sales of gel polish will near $70 million, about 10% to 12% of total nail sales.
– Red Carpet Manicure said gel manicures make up 55% of manicures in U.S. salons.
And of course, beauty companies brought new product plans to Annual. Among the notable launches were:
– Sinful’s SinfulShine Hi-Shine Gel Polish, which enters Walgreens May 1. The company, which operates as a subsidiary of Revlon, is about to be renamed Global Value Brands to serve as an umbrella for both Sinful and Pure Ice.
– MBA’s Harvey Alstodt attended NACDS touting a newwater- based nail line, WaterWorks, which is formulated to last 6 to 7 days when applied with a proper base and top coat. MBA is also launching three-item nail kits under the Dr. Marvey brand, which ship in June, along with several skin care devices targeting skin discoloration and fine lines, under the Tanda brand.
– Conair is bringing its knowledge of appliances to skin care with a sonic skin care tool, True Glow, which is rechargeable, waterproof and generates 300 oscillations per second. It will sell for $99.99. The sentiment is that Clarisonic’s success in prestige devices and with mass retailers building space around Olay’s exfoliator brush, the masses are ready for skin care tools. In hair tools, Conair is coming out with Curl Secret, for $99.99, which sucks in sections of hair, curls it with heat, then releases it into cascading layers. They’re also launching a blowdry kit with a blowdryer and Velcro curlers, much like DryBar’s version on QVC, for $40.
– NYX is being tested in about 100 Target stores, said sources, and has been seeing a compounded annual growth rate of 50% for the past three years. Its professional heritage is appealing to mass buyers because of its rich color payoff and attainable price points of between $4 and $16. The brand is rolling out to Target Canada’s 120+ new stores, where it has two feet of space, in addition to its distribution in Ulta, Harmon and Ricky’s.
Overall, Chris Krese, NACDS spokesman, said the number of participating chains and suppliers, by individuals and companies, exceeded last year’s levels. Up next for NACDS, the Alexandria, VA-based trade association?
“It’s really important to point out that the momentum coming out of the NACDS Annual Meeting – and heading into the NACDS Total Store Expo [in August in Las Vegas] – is powerful and exciting. It will be great to get the total industry together again to build on the progress that companies achieved during the Annual Meeting – just as the process was designed. We are really enthusiastic about the tremendous engagement of NACDS member companies in these programs, chains and suppliers alike, and we appreciate the opportunity to serve the industry in this way.”