Supermarket hair care shows signs of age as the recession, channel competition and niche marketing take their toll
Hair care products have long been a staple of any supermarket's health and beauty care section. What started with simple displays of shampoos and conditioners has grown over the years to encompass holding sprays and gels, men's and women's coloring, pomades, rinses and serums. Today, the category is complex and diverse, catering to multiple price points and sensibilities.
“We currently include shampoos, conditioners, gels and sprays in our hair care category and are moving to incorporate styling SKUs,” said Kenneth Todd, beauty care category manager at Food Lion, Salisbury, N.C., adding that the 1,150-store chain carries roughly 400 hair care SKUs, with products being rotated out or added on a regular basis.
“We also carry a selection of natural and organic products,” he continued. “Based on consumer demand, we may introduce additional selections in the future.”
Likewise, the displays at Marsh Supermarkets, Indianapolis, are extensive, arranged by usage and brand. The arrangement presents shoppers with multiple choices that extend beyond immediate shampoo/conditioning needs to more specialized products, according to Don Rix, vice president of general merchandising/HBC merchandising.
“A typical 20-foot set includes 525 SKUs, and in certain locations another 120 items in the salon/professional level, in an adjacent 4-foot section,” he said. “Hair coloring is in a separate 4-foot or 8-foot section depending on store, along with hair accessories nearby as a companion sale category.”
Yet for all the activity, hair care remains a multibillion-dollar category in search of the Next Big Thing. To date, there's been nothing to jumpstart sales, like energy drinks did in the beverage aisle or probiotic yogurt in the dairy case.
“There's always new ‘technology’ within hair care and they're always pushing it at different levels, but it's hard to explain to the consumer exactly what that technology is, if they're not familiar with the concept,” said Tracy Culver, category manager, health & beauty and GM, at B&R Stores, a Lincoln, Neb.-based independent where hair care displays range from 12 feet to 32 feet, depending on location and customer demographics.
Many retail strategies focus on highlighting the most appealing product attributes whenever possible. But with the current recession in full play, it's no surprise that enthusiasm for new product launches and premium product extensions is significantly dampened. These days, the emphasis is on brands that deliver value at a competitive price. Food Lion has registered changes in purchasing priorities at many levels.
“In this economic environment, we've noticed a mix of consumer behavior,” said Todd. “Some are using less expensive options, such as private brands, while others are remaining loyal to their favorite brands.”
At B&R, having multiple tiers has helped all 18 units cope with bargain-hunting shoppers. Within sets, shoppers are finding products that range from professional salon, super-premium and premium to value and economy. Culver noted that this kind of size and depth is a benefit during the recession, because it allows consumers to trade up or down within their primary store.
“We are seeing consumers trading down from a previous purchase benefit — for instance, from a salon product to a super-premium product,” she said.
Complementing the strength of the selection are competitive pricing and promotion, which have helped the chain hold onto consumers instead of losing them to the drug or mass channels, which are prime HBC competitors.
“We've increased health and beauty care ad specials overall, which hair care is a part of,” said Marty Jarvis, B&R's director of marketing.
Price and promotion have become even more critical in the past few years, a period when drug stores reorganized and updated their beauty and personal care sections, and launched concepts that unify categories under one umbrella, such as CVS' Beauty 360 section.
According to Information Resources Inc., dollar share points for hair care items increased in the drug channel, as well as the supercenter channel, but fell in supermarkets and club.
Comparing the first half of 2009 to 2008, dollar share in drug increased 1.7 points for shampoo and 0.6 for conditioner; in supermarkets, the numbers fell 0.1 and 0.6, respectively.
Similarly, supercenters saw an increase of 0.3 for shampoo and 0.4 for conditioners; the club channel registered drops of 0.5 for shampoo and 0.1 for conditioner.
“Drug retailers' pursuit of share continues to raise the bar on beauty and personal care performance,” a recent Times & Trends report from IRI stated. “At the manufacturer level, product lines such as Tresemme hair care and L'Oreal skin care are doing exceptionally well in an environment where consumers seek low-cost but effective beauty care options.”
Like many conventional supermarkets, Marsh feels competitive pressure not only from alternate channels, but other chains — primarily Kroger Co., headquartered in Cincinnati. The 104-store Marsh chain maintains its price edge with aggressive promotions and feature-leading prices.
“With tough economic concerns in Indiana, and higher-than-national unemployment, the hair care category has struggled, as has most HBC with erosion to mass and less purchase intent by shoppers,” said Rix.
Marsh approaches the entire HBC category, including hair care, as a convenience to core shoppers. Price has been playing a bigger role of late. Many shoppers continue to buy only on sale — 10 for $10, features, consumer packs and the like, notes Rix.
“Most shoppers buy hair care at Marsh from a price [on sale], then convenience, then brands,” he said.
If cost is the overriding factor in choosing products, one might think that private-label sales would be through the roof. While that might be the case in some food categories, that's not so in hair care. Here, retailers say the many economy brands on the shelf dilute the impact private label has on a shopper's sense of value.
“Everyone is saying how private label has become such a strong suit,” said Culver. “But in hair care there's such a large variety and expansive tiering available to consumers that we're not seeing private label stand out as much in this area.”
B&R does offer a limited number of products under the Best Choice brand, which the retailer pulls from its wholesaler, Kansas City, Kan.-based Associated Wholesale Grocers and its HBC subsidiary, Valu Merchandisers.
Other retailers interviewed by SN report stronger performance of own-brand products in the hair care category.
“Food Lion has a few private-brand products in this category that are comparable or better than national-brand products, and sales have increased in all private-brand areas, including hair care,” said Todd. The chain's products are marketed under the Healthy Accents name.
Marsh's Top Care line — sourced from Topco Associates, Skokie, Ill. — is also seeing an uptick in sales, according to Rix.
“Marsh carries eight SKUs in the Top Care brand as a private label, NBE [national-brand equivalent] to Pert, Head & Shoulders, T-Gel, Rogaine and Johnson's baby shampoo,” he said.
The watchword for retailers as the recession bottoms out is “opportunity.” Category experts and retailers themselves acknowledge that the category's sub-sets and size can be a hindrance or a help, depending on how consumers view it. Even with the basics, however, there is room for growth, and this potential is keeping the principal manufacturers investing heavily in advertising and marketing, and retailers constantly reevaluating their selection.
“We're making sure we have the correct product lines, the correct values,” said B&R's Culver.