MAKING A SPLASH 2001

MARK HAMSTRA

As a consumer, Debra Weinswig seeks out Essence of Beauty products from drug chain CVS. As a retail stock analyst for Bear Stearns, New York, she sees the value of such brands for retailers in terms of improving customer loyalty and making the stores into shopping destinations.

"Combined with a loyalty card program, that's really the best way to entrench your customers with your stores," she said. "It's also a way to differentiate yourself from a Wal-Mart or any of the other warehouse clubs or discounters, and it helps you continue to be top of mind with your customers."

CVS, Woonsocket, R.I., rolled out its Essence of Beauty bath and body line in April 2000 and extended the brand into hair care. It is conducting a limited test with color cosmetics under the exclusive brand. Rite Aid, Camp Hill, Pa., in April of this year rolled out three exclusive bath and body lines: Pure Spring, Elsewhere and Soaked in Tickles. Eckerd, Largo, Fla., and Phar-Mor, Youngstown, Ohio, which is undergoing bankruptcy reorganization, late last year unveiled their own entries in the cosmetics and bath categories, respectively.

"I haven't seen food retailers come out yet in quite the same way that drug stores have, but I think we'll probably see something sooner rather than later," said Weinswig.

Although supermarkets have been aggressive in rolling out other private-label products, they have not moved as aggressively into the beauty care business with exclusive or controlled brands that would offer a more upscale alternative.

Safeway, Pleasanton, Calif., for example, offers health and beauty care products under its Safeway label, but not under the more exclusive Safeway Select brand, according to Debra Lambert, spokeswoman, Safeway.

Wegmans, Rochester, N.Y., this year began offering an upscale bath care line called Lady Primrose's, which is not exclusive to Wegmans but does provide a more upscale alternative to mass brands.

At Ukrop's, Richmond, Va., one of the other supermarket leaders in the health and beauty care category, HBC category manager Delores Chewning said the chain is too small to consider creating an exclusive bath care line.

"We only have 27 stores," she said. "The larger ones, like Publix or Schnucks might be able to do that."

Vicki Williams, president, Signature Sales and Marketing, Toronto, said she thinks supermarkets could have success with exclusive, upscale beauty care lines if they adhere to some of the tenets that have been successful at drug chains.

"If they go with a good quality program, not too many [items], nice packaging, and take the same approach that is as good as or better than any product out there, they'll do great with it," she said.

Williams recently helped launch a new skin care line for a network of independent drug stores in Canada under the IDA and Guardian banners. The Fix Therapy line features more than 60 stockeeping units, including five different scents, and with maximum price points of $9.99 Canadian (about $6.50 U.S.).

"There was a huge need for a bath and body line exclusively for the IGA and Guardian stores," said Sue McCabe, vice president, merchandising, Drug Trading Co., Markham, Ontario, which runs marketing and private-label programs for the IGA/Guardian network.

She said the company invested a lot of effort into making the packaging unique to help distinguish the products.

"This is uniquely positioned," she said. "This is a bath and body shop offer, and it's very different [from private-label offerings]."

The entire Fix Therapy line fits in a 2-foot-wide display 54 inches high. McCabe said more bath care products and accessories could be added in the spring of 2002. Retailers' margins on the products are in the 45% to 50% range, she said, and new accessories could deliver even higher profits.

"The opportunities are endless in terms of adding additional SKUs, massagers, bar soap, hair care products and, some day, cosmetics," McCabe said.

The Fix Therapy line is expected to help IDA/Guardian compete with Shoppers Drug Mart, Toronto, which has offered its Rialto line of bath-and-body products for years.

In the United States, discount stores have begun embracing exclusive or controlled lines of cosmetics as well. Target offers Sonia Kashuk, and Wal-Mart offers Rimmel and No Boundaries.

Brian Sharoff, president, Private Label Manufacturers Association, Chicago, said supermarkets face some challenges in the category.

"The tendency is that these are not destination items in the supermarket," he said. "It's a function of size. Supermarkets are not unlimited in their capacity. If you are going to add categories in a supermarket, then you've got to delete certain categories, and that's a very tough choice for a supermarket operator to make."

Williams said she thinks the trend that drug stores started will soon spread, however.

"I think it was easier for them to start with bath and body, and they've all pretty much done that now," she said. I think now we'll start to see more kids' lines and more color cosmetics. I have no doubt food chains will be looking at those things as well."