COLD COMFORT 2002-10-28

DAN ALAIMO

As winter approaches, retailers expect higher-quality skin care products to gain in sales.

For many, the upscale products helped offset a quiet year in 2001 for hand creams and body lotions that resulted from a mild winter. And the new lines of enhanced skin care products -- including moisturizers, cleansers, enriched lotions, skin-firming lotions and much more -- are expected to drive sales for many supermarkets, whether north, south or somewhere in between.

"More and more SKUs [stockkeeping units] of premium products are coming in," said Michael DeJulio, health and beauty care senior category manager, Price Chopper Supermarkets, Schenectady, N.Y. DeJulio, like others polled for this report, were interviewed during the recent Health and Beauty Care Conference of the General Merchandise Distributors Council, Colorado Springs, Colo.

"People aren't afraid to spend more dollars on HBC products to solve problems they might have with their skin," he said.

But in the end, success in winter skin care sales ultimately comes down to the weather.

"Last year, we had a very mild winter, so we really didn't see a sales increase in skin lotions or creams," said Lawrence Mills, marketing and purchasing director, nonfoods, Laurel Grocery Co., London, Ky. "Hopefully this year we'll have a little rougher winter and we'll see lotions pick up in sales."

For supermarkets, the hand cream and body lotion segment of the skin care category declined slightly, 1.6%, for the 52 weeks ended Sept. 7, according to ACNielsen Strategic Planner from ACNielsen, Schaumburg, Ill. This contrasts to a 5.2% gain the previous year. Meanwhile, drug stores gained 6% in this segment for the past year, vs. 8.1% in the previous year. Wal-Mart, which ACNielsen tracks separately in its ACNielsen Wal-Mart Channel Service, gained 12% in the past year. Industry observers pointed out that Wal-Mart opened many new stores in that period. Comparable numbers for Wal-Mart were not available for the previous year.

The research company's monthly indexing shows a sharp uptick in the sales of these products during the winter months, particularly December and January, although the winter of 2000-2001 was much stronger than 2001-2002. In December 2000, the sales in the hand cream category were almost double what they would be in an average month, but in December 2001, hand cream sales declined to about one-and-a-half times the average month. These numbers were derived from a combination of the ACNielsen Strategic Planner and the Wal-Mart Channel Service.

Therapeutic hand and body products are showing increased sales during the winter months, said Barb Neudecker, corporate category manager, wholesale health and beauty care, Supervalu, Minneapolis. "Hand and body is definitely the category that sees the most impact in the winter months, more so than face and acne," she said.

Supervalu has changed its planograms so that the therapeutic products start the sections. "In the past, it has always been the everyday SKUs like Vaseline and Jergens. But now we are leading off our sections with therapeutic to be that first stop for the consumer and also the highest gross profit for the retailer," she said.

Larger sizes from the manufacturers also are helping drive the winter business, especially when the retailer advertises them as a temporary price reduction, she said. For example, on Vaseline Intensive Care, "instead of a 325 ml bottle, we will offer a 423 ml bottle, which allows us to promote the extra value. When we do values like that, our business increases anywhere from 15% to 20%," she said. The sales are need-based, as consumers use more of these products in the cooler months. "All of those sales are driven around the key season, which is the winter," Neudecker said.

"We are mostly in the South, but we do get quite a spike on skin care in January and February," said Dan Spears, HBC/nonfood merchandiser, Ingles Markets, Asheville, N.C. "The increases that we have seen have been in the firming lotions and some of the improved lotions that the companies are coming out with, like Nivea and Jergens. Both of them are focusing on lotions that offer a little more than a basic skin lotion," he said.

"With regard to skin care, we are not looking for a low-end product," said Bob Schwartz, executive vice president, Gristede's Foods, New York. "We are looking for high end with a tremendous amount of perceived value, a product that does what it says it does." Competition comes not just from other supermarkets, drug stores and mass merchandisers. "Our customers are buying skin care products at the stores in the malls; they are buying them at Bath and Body Works," Schwartz said.

"As the population gets older, we are seeing a definite growth in skin care, especially among women, and I think it will continue," said Charles Yahn, vice president, nonfoods, Associated Wholesalers, York, Pa. People are taking better care of their skin, he noted. Moisturizers, wrinkle products and other items appealing to the older demographic continue to grow, he said.

"In the summer, it is sunscreens. Over the winter, it is more the maintenance products, moisturizing and the like," Yahn said.

"Everything seems to be moving upscale," said Helen Woy, health and beauty care buyer, Merchants Distributors, Hickory, N.C. She cited the example of extensions of the Aveeno line. When retailers have the space for large skin care sections, they do well with those products, she said. "People are looking for things that help them relax when they find some downtime, anything that makes you feel good and smell good," Woy said.

But upscale products aren't flying off the shelves in every market. "We are in a lower-income area and we are still selling the Jergens," said a nonfood executive with a Texas retailer, who asked to not be identified. "As far as the high-end products, I see that some consumers are moving up, but it's just that our customers aren't," he said.

In Southern California, winter skin care is not much of an issue and the acceptance of high-end products depends on income levels and store sizes, said Larry Ishii, general manager, GM/HBC, Unified Western Grocers, Commerce, Calif. The more expensive products do well in some upscale neighborhoods, "but in the ethnic and lower-to-middle income neighborhoods, it is not necessarily the case. Store size affects that. Many of our retailers have conventional-sized stores, and they don't have the space to add a lot of items," Ishii said.