Mass Beauty Survives Christmas

It has been well documented that this past holiday season was one of the worst in more than 15 years.

Buying for a weak season also paid off for most major chains where there was less-than-normal residual merchandise.

“We were pretty cautious with our Christmas buying this year, so we had pretty good sell-throughs,” said one buyer.

But retailers knew the fragrance business would need the nudge from price slashing. Men’s cologne sales for the 52-week period ended Nov. 29 were off a dramatic 10.3 percent to $132 million from $147 million, according to ACNielsen food, drug and mass data, which excludes Wal-Mart. Women’s scents were down 1 percent from $465.4 million in 2007 for the same 52-week period versus $441.7 million in 2008. The ongoing soft trend in fragrances helped convince buyers of the need to reduce prices early.

It seemed to have paid off, at least for Coty Beauty. Mary van Praag, senior vice president of sales at Coty Inc., said, “Coty Beauty Fragrance had a very strong volume increase the week prior to Christmas. While overall fragrance sell-through was down slightly versus the prior year, which is not surprising given current economic conditions, there were [retailers] that were clear winners with unit volume ahead of the prior year. The winners were those that got out early and had strong brand presence and price point distinction. Our key top-selling gift set brands were Celine Dion, Tim McGraw, Adidas and Playboy. In addition, we had strong sell-through in our Value Sprays and Omni Coffrets.”

At least one manufacturer, Burt’s Bees, saw no reason for special promotional plans for Christmas outside of its usual holiday gift set offerings, such as those at Whole Foods.

Mike Indursky, chief marketing and strategic officer of Burt’s Bees, likens the natural care company’s strategy to certain luxury car brands.

“You don’t hear about Toyota or BMW asking for [money from the government],” Indursky said. “You can survive any economic storm if you have these things. It’s the brands that don’t have these things that have to overpromote.”

He added that sales of Burt’s Bees are exceeding last year’s and that, if the company’s strategy to not promote is affecting sales at all, “I can’t detect that.”

Still, low price points were winners. Children’s cosmetics priced at less than $2, along with inexpensive hair accessories for stocking stuffers, were a hit at some stores. Reasonably priced implements were also popular at mass. “Customers responded to ad price reductions. They did not buy at full retail,” a merchant for a large chain explained.

Shawn Haynes, senior vice president of marketing of global brand development at Markwins International, said consumers waited as long as possible to spend in the hope that retailers would offer heavy discounts. “Our items which offered great value saw very strong sales, especially those priced under $10. Specifically, from The Color Workshop, our color collections performed best, outpacing our nail and shimmer sets. In Wet ‘n’ Wild, we experienced tremendous increases the week of Christmas as consumers stocked up on beauty must-haves and stocking stuffers.”

Research from WSL Strategic Retail validated those findings, stating that the drive for sharp pricing created channel shifting. In the firm’s surveys on How America Shops Everyday, the company found that 36 percent of consumers said they’ve changed where they buy. Supermarkets’ revenues were down, while mass merchants’ were up. However, there was another layer: those trading out of mass to an even better value at dollar stores. The study showed one in five people are altering the stores where they buy beauty and personal care.

More from "Shaking Off the Holiday Blues":
Prestige Market Still Reeling >>

Europeans Regroup >>

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