ORLANDO, Fla. -- Add a little to the top, please -- the top line of the hair care category, that is.
Expanding a trend that has been building over the past couple of years, supermarkets are watching for the upscaling of hair care products to go up another notch early next year when professional salon products, such as the Nexxus line from Alberto-Culver Co., Melrose Park, Ill., are expected to hit store shelves. Other manufacturers, including Procter & Gamble, Cincinnati, also are readying more high-end lines, retailer and wholesaler health and beauty care executives told SN during the recent HBC Marketing Conference of GMDC, Colorado Springs, Colo.
"The Nexxus offering might generate more to come, because there are other large consumer companies that own other premium professional brands," said Bill Martin, category manager, HBC, Valu Merchandisers Co., Kansas City, Kan. "My hope would be that this would be the breakthrough for professional hair care to come of age and become a mass brand."
All retailers and wholesalers would benefit from selling the higher-ring lines, expected to be backed by large advertising campaigns, Martin said. "From an activity-based costing standpoint, it would be very profitable for all of us to sell $8, $9, $10 bottles instead of fighting over a 69-cent bottle of a value brand," he said.
Big Y Foods, Springfield, Mass., already dedicates about 12 feet to professional products in its hair care aisle, and the new introductions will be a welcome addition, said Jan Winn, director of HBC and GM. "That category is working out real well for us," she said, especially among the chain's more upscale customers.
"Nexxus is going to be an absolute home run, because Alberto-Culver will treat it like a brand, promote it and really take care of it, so that is really exciting news," Winn said.
"I'm seeing the professional hair care coming to the grocery stores," said Susan Spring, HBC/GM buyer, W. Lee Flowers & Co., Lake City, S.C. Spring had several presentations of these products during the GMDC conference. "Every major hair care line is revamping. Several major companies are coming out with completely new lines."
Dan Spears, director, HBC/GM, Ingles Markets, Asheville, N.C., took a cautious stance. "Everybody is looking at ways to get their dollar sales up in the shampoo category. It has not been a growing category for us, but we'll see how 2006 does. It may be a different year."
Numbers from the Strategic Planner of ACNielsen, Schaumburg, Ill., confirm the higher price points for hair care products, and indicate that supermarkets as a group may be reversing a long sales decline. Reflecting a trend that has been reported among most HBC categories, volume and unit percentages for "total hair care" were still in negative territory for U.S. food stores doing $2 million and over in sales, excluding supercenters. However, the dollar volume decline was less than it has been in the previous two years, and lower than the decline for unit volume.
For the 52 weeks ending Sept. 10, 2005, ACNielsen reported that hair care was a $1.65 billion category in supermarkets, down 1.1% from the same period a year ago. However, that decline is less than the 5.1% drop reported in 2004 and the 3.4% fall-off in 2003. Meanwhile, unit volume declined 3.4% for the 2005 period, indicating that individual items were selling for higher prices.
The drug store channel saw a slight rise -- 2.5% -- in dollar volume for the year ending Sept. 10, while units rose 1.7%. ACNielsen's tracking of food, drug and mass merchandisers, which includes supermarkets, drug stores and other retailers, but not Wal-Mart Stores, showed a dollar volume increase of 0.8% and a unit volume decrease of 1.1%.
"There's a definite shift in hair care to the upscale," said Charles Yahn, vice president, merchandising, Associated Wholesalers Inc., York, Pa. "You'll see more and more of that."
The activity of new-item introductions in itself will create some growth, he said. "Overall hair care is a new-item market, and that's what is driving it. Innovations, new products; other than that, it's a pretty mature category," he said.
"People don't mind spending $7 or $8 for hair care products at this point," said Mike Dejulio, director, HBC, Price Chopper Supermarkets, Schenectady, N.Y.
Price Chopper has an expansive selection of hair care products in its stores, he noted. "We stay on the cutting edge of technology to make sure that we have what the customers want," and the premium products are moving the category forward now, he said.
To complete the hair care system offerings, Price Chopper also carries electrics like hair curlers and dryers. "You want to make sure they have the products available within our stores so they don't have a reason to go to another retail outlet," Dejulio said.
Besides salon lines, there is considerable new-product activity in the category.
"January-February tends to be when the new items hit the market, and we're expecting a fairly large set of entries this year," said Wayne Bryant, director, HBC, American Sales Co., a division of Ahold USA based in Lancaster, N.Y. "Last February, we saw a tremendous number of SKUs come to market, and we think there will be quite a few more again this year."
While many products are not necessarily new, manufacturers are getting more creative in their line extensions and packaging, Bryant said. "We are seeing new package styles, graphics and colors that we hadn't seen before. Suppliers are starting to understand that consumers need to be able to look at an item and know what it is going to do for them."
Income level is no barrier to sales of upscale hair products, noted Bob Candelora, senior vice president, Market Performance Group, Colonia, N.J. Until recently, Candelora was with Pathmark. "I've seen empirical data that shows that the No. 1 shampoo in suburban areas is also the No. 1 shampoo in urban areas. Everyone wants to take good care of their hair," he said.
In natural and organic supermarkets like Wild Oats Markets, Boulder, Colo., the hair category also is important, with consumers gravitating to natural hair colors, as well as other products, said Kathi Danaher, category manager, personal care products. "The quality of the natural and organic hair care market in general has really increased. Our sales are double-digit comps over last year in hair care products."
Like other categories, Imperial Distributors, Auburn, Maine, has seen the stockkeeping units in hair care turn over by 33% in the last nine months, said Al Jones, senior vice president, procurement and marketing. "That's big changes, and if you don't keep up with it, you very quickly find that you fall behind the trends and fall behind the sales."
"This is one of those categories where you have to refresh your assortment at least twice a year," said a nonfood executive with a major Southeast chain. "Make sure you have all the new items; make sure you have all the destination items."
All this new-item activity in the overall category creates a challenge for the private-label part of the business. Because of the popularity of products under $1, like VO5 and Suave, value-priced private label is not viable, noted Curtis Maki, vice president, program management, HBC/GM/Rx, for the private-label cooperative Topco Associates, Skokie, Ill. As a result, companies with private-label programs go after national-brand equivalents, but only after they have established a track record.
