FACE OFF

LAURA KLEPACKI

The next wave in facial moisturizers is hitting grocery store shelves.

Last year alone, over 180 new face care products were introduced into the mass market, according to Women's Wear Daily, a sister publication of SN.

This spring, new lines and line extensions again began to swell the advanced facial skin care category offering retailers both an opportunity for profitability and a space dilemma.

"I've seen a lot of new items in facial come out. And it means creating an entirely new planogram. There are a multitude of lines and each line has five, six, seven or more new items being presented," said a buyer for a midsize Midwestern chain, who declined to be identified.

"You are talking Neutrogena, Oil of Olay, Pond's, etc. and a new line called Biore," he said. "With that many manufacturers at the same time, for me, it is a lot."

Driving the category is an aging baby-boomer population clamoring for products that offer more than superficial performance. New introductions are often moving beyond the fabulously successful alpha hydroxy acids to beta hydroxy, which claims to perform better than the AHAs, and formulations that combine the various ingredients including complex vitamins and sun protection.

But according to some industry observers, supermarkets are underperforming in this segment with an 18.6% share of the market compared to drug with a 46.1% share and mass with a 35.3% share.

Sales of facial moisturizers for food, drug and mass merchandisers, was $474.7 million for the 52 weeks ended May 25, up 1.8%, reported Information Resources Inc., Chicago. Of that, supermarkets had $88.1 million in sales, up 2.9%; mass merchants had $167.6 million in sales, up 2.5%; and drug stores had the bulk of movement with $219 million in sales, down 0.8%.

Jim Morano, senior vice president for Keystone, a Montvale, N.J.-based broker, which handles several facial skin care lines, said overall the category is underdeveloped in supermarkets and presents great profit potential to those retailers.

He suggested that even if total skin care space wasn't expanded, delisting some value priced, lower-tier items to make room for the higher margin technologically advanced products could increase profitability in the section.

Morano said that supermarkets usually do an excellent job with promotions on some of the advanced skin care items, but everyday pricing sometimes is not competitive with drug and mass merchants.

Although every market is different, in a review of prices in the Stroudsburg, Pa., area, SN found that in Wal-Mart a 1.7-ounce jar of L'Oreal Plenitude Wrinkle Defense Cream sold for $11.57, a 3-ounce bottle of Pond's Age Defying Lotion was $9.97, and a 0.5-ounce Alpha-Hydrox eye gel was $8.42. The same products in a nearby CVS, were $12.75 for the Plenitude, $11.99 for the Pond's, and $8.49 for the Alpha-Hydrox. Meanwhile, a local Shop Rite didn't carry the Alpha-Hydrox eye gel, but competitively retailed the Plenitude for $11.49 and Pond's at $9.99.

Morano said an increased use of point-of-purchase materials by supermarket retailers could also help sales. "Education is key," he said.

David Roske, health and beauty care buyer for Holiday Cos., Bloomington, Minn., also believes more consumer education is needed to grow the category.

Right now, he said, the company only devotes a limited space for the upper-tier facial items. "We have tried a few, but they haven't done well," said Roske. "I really don't know why."

However, he noted, "When we advertise it, sales pick up."

Sonny Ellis, director of HBC for Associated Grocers, Baton Rouge, La., feels his department is underperforming and hopes to jump-start the section by increasing the number of stockkeeping units.

"We are finding it is really not growing. And I don't know where the sales are going -- maybe customers are buying these in mass merchants or drug stores," Ellis said.

"We are going to introduce some new items to try to increase sales in that department," said Ellis. "We are probably going to take on maybe 15 or 20 new items to try to implement in our planogram to see if we can't get some added sales," said Ellis. "We are moving up a little bit in price, we usually try to stay within the medium price range, but we are looking to put in some more expensive items."

To make room, some items will have to be deleted, and that is being evaluated now, said Ellis. "But we will put a few items in and test the waters to see what will work."

New items will, at least, include some Pond's SKUs, said Ellis. The others have yet to be selected.

Tom Tobin, vice president of HBC, for Rainbow Foods, Hopkins, Minn., also said he is working on a plan to increase the company's HBC selection, and will be adding new facial skin care items in the near future.

Meanwhile, Gerland's Food Fair, Houston, has discontinued the higher-priced skin care items it once carried, said Kim Botkin, HBC buyer. "We didn't really have good luck with it." Although the chain still carries some items in the Nivea Visage line, he said.

Botkin said the higher-priced items created a theft problem, which the average $2 or $3 bottle of skin lotion does not. "Nobody will steal Vaseline Intensive Care, but a $10 bottle of Nivea Visage, they will."

Botkin said if the stores had cosmetics counters, the product lines would probably be viable.

Remarking on Oil of Olay's new "Age Defying" series and Almay's "Time-Off Revitalizer Daily Solution" both with beta hydroxy, the HBC buyer for a leading Northeastern chain said the new influx could be the second wave in the section, and expects them to do well.

"But the beauty categories are always evolving," he said. "What's new is what's hot."

While a continuing issue, especially for smaller chains, will be how many and which of the new items should be taken on to be competitive in the category, there are numerous retailers, especially those with larger HBC sections, that have done extremely well with the higher-priced lines of advanced skin care products.

"I see a lot of potential in these products. It hits a different customer level and a different price point, and it is something we are going to develop," said the buyer from the midsize Midwestern chain. "I can't imagine it won't do well."

But, he said, with supermarkets a distant third for sales in the category, maintaining competitive price points is paramount, said the buyer. "You have to be sharp on price, even when not on a sale price.