TYPE CASTING

Larry Littman

These days retailers need to assume the role of a casting director in order to manage the star-studded lineup of high-ticket new formulations flooding the $2.7 billion shampoo/conditioner market, noted industry observers.

The growth spectrum favors the "professional" hair care segment with introductions like Proctor & Gamble's Physique high-tech styling line, positioned at an average $7 retail as a salon-product alternative. But many other well established brands have been restaged or given added value as well. Revamped packaging and formulas convey propositions from natural and vitamin enriched to antistress and daily protection from adverse environmental conditions.

Leading shampoo/conditioner brands are also being merchandised akin to a skin care regime. Extended lines have become a system of products to solve various hair care problems. For example, P&G's extension to its Pantene Pro V line called Essentials is tagged with the phrase "skin care thinking for your hair." Suggested retail is $10. It's not surprising, therefore, that a popular brand such as Clairol's Herbal Essences has been spun off from hair care into body washes and now into a facial care line.

Helene Curtis, a Unilever company, also has extended its ThermaSilk line with what it refers to as a "salon-inspired" treatment for split ends. The ThermaSilk Warming Split End Repair Treatment will be available this month with a suggested retail price of $5.49. The company is also introducing ThermaSilk Daily Clarifying Conditioner, designed to complement its Daily Clarifying shampoo introduced last year. Suggested retail price for the conditioner is $3.49. The push is to trade up.

"Customers are buying the more expensive, better quality items," said Al Lewis, vice president/category management, Imperial Distributors, Auburn, Mass. "Manufacturers are forcing it in that direction and with the good economy and more disposable income, consumers are willing to spend more for a shampoo."

"Everyone is trying to build their margins," said Ted Taft, vice president, Meridian Consulting, Westport, Conn. "Trading up is only one strategy."

Taft noted that premium priced products account for only 5% of the business. "The guys who are doing the best job offer a balanced portfolio including value, middle-priced brands and the premium lines," he said.

"The big challenge for supermarkets continues to be getting the right assortment of products to meet the needs of all of their customers," said Paul Crnkovich, partner, Cannondale Associates, a consulting firm, Wilton, Conn.

Macey's, Sandy, Utah, added a professional section to meet shopper demand. Yet, as Ralph Blanchard, nonfood supervisor, pointed out, retailers "can't survive on the higher-priced items alone. Customers also are buying several different shampoos and conditioners for the family. They will purchase the higher-priced items for themselves, for example, and the low-end products for the kids."

With the onslaught of new formulations, the big challenge continues to be managing the category so that it can accommodate the flow of new products as well as the older items that are selling well within the given shelf space.

The concentration at Clemens Markets, Kulpsville, Pa., is to midpriced and higher-priced shampoos, according to Larry Schimpf, merchandising manager, health and beauty care, nonfoods and specialty foods. To make room for new items, the retailer has reduced the number of varieties in the line, and has pulled out some of the slower moving flavors," he added.

Genuardi's Family Markets, Norristown, Pa., looks at both the national and Philadelphia market data in evaluating its self set, said Mike Santangelo, category manager, nonfoods. "We marry the reports to see which way the market is moving."

The retailer maintains about a 20-foot shampoo/conditioner section, said Santangelo. "We want to introduce the good new launches, so the big challenge is knowing what are the marginal items to knock off to bring in the new products," he said.

If there is a major product launch, food stores want to introduce it to their customers as soon as possible. "One of the challenges is getting the new items right away," noted Macey's Blanchard. "There are times when consumers come in with coupons they have clipped from national magazine ads timed to a new product introduction and we haven't been shipped the product yet."

Among the products that retailers cite as selling well in their stores are Pantene Pro V, the top selling national brand, according to Chicago's Information Resources. Clairol's Herbal Essences comes in as No. 2. Both Suave, No. 5 on IRI's top 10 selling brand list and ThermaSilk, rated No. 6, were given high performance reports by retailers interviewed by SN.

Consultants agree that food stores should focus on designing HBC aisles to attract customers who visit supermarkets regularly to purchase food products. "Mass merchandisers are the major competitor to supermarkets for these products and are doing better," said Cannondale's Crnkovich.

For the 52 weeks ending Jan. 30, 2000, mass merchandisers racked up the largest dollar and unit growth in the $1.7 billion shampoo category, according to IRI. Capturing 43% of the dollar volume, mass discounters' sales rose 8.2% to $750 million, and units rose 5.9% to 301 million units. Meanwhile, supermarkets had total sales of $662 million, representing a 38% dollar market share. Dollars within the food channel rose 1.7%, and units declined 3%. Drugstores generated $326 million in shampoo sales with no real growth. Dollars were flat at .9% and units fell nearly 4%.

"But food stores are beginning to retrench. There is an effort to create HBC sections designed to recapture a good chunk of that business," said Crnkovich.

Tom Perry, category manager, HBC at A&P's Montvale, N.J. corporate headquarters, said "our sales are good but we have to be more aggressive and more competitive with the mass merchandisers. "When I talk to suppliers now I ask more questions about mass merchandisers' price lines," Perry said. "I can't step backward. I have to be more aggressive going forward."

The big plus for supermarkets is high traffic. "And shampoos and conditioners are high penetration products," said Meridian's Taft.

"Everybody uses shampoos and conditioners. The problem is that because there are so many hair care products, shoppers have a hard time finding the ones they want. The key is shopability -- with the right signage and shelving. Shampoos and conditioners can serve as a magnet to attract shoppers to the HBC sections."

Premium Hike

The trend in the hair care aisle is toward higher prices paid for professional-type products. This is good news for retailers, who are watching their margins climb with rising retails.

Avg. Price Increase/Decrease Per Equal Units (ounce basis)

'97 '98 '99 '00

Shampoos 1.9% 3.4% 2.8% 1.4%

Creme Rinses/

Conditioners 2.7% 4.4% 4% -1.2%

Source: ACNielsen, Schamburg, Ill. For 52 week periods ending February.