Drug chains No. 1 in hair care sales

Drug Store News,  May 1, 1995  by Lisa I. Fried

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Drug stores are still king of the hill in terms of hair care sales. While it was not a strong year for drug stores in hair care sales, they maintained the largest share--35 percent of sales. But biting at their heels were food and mass merchants, with 33 percent and 32 percent shares, respectively.

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As more and more consumers flocked to mass merchants, drug stores experienced sales declines in shampoos. And women's interest in softer, more natural styles limited total retail sales of hair spray and styling aids. The only hair care categories that grew in drug stores were conditioners and hair color.

Product lines have proliferated to the point that consumers and retailers are getting confused. As a result, some retailers and manufacturers are eliminating slower moving items. Procter & Gamble, for example, slashed its Vidal Sas-son line from 47 to 25 SKUs in March.

Looking to deliver more value to the customer, the company also increased the size of the bottles in its Vidal Sasson and Pantene Pro-V styling line without passing along a higher retail price. As a result, sales of both lines have since grown, according to the company.

Others are redesigning packaging to more clearly communicate the benefits of a particular product. For example, Redmond Products has added more product information to the front of its Aussie Hair Care bottles and replaced the text-heavy backs with graphics showing the effects of a product on the hair. "We are making the choice simpler and drawing more attention to the line," said Muggs Lerberg, director of education for Redmond Products.

For the 52 weeks ending Jan. 1, 1995, total sales of shampoo grew 3.8 percent to $1.6 billion.

Retailers continue to struggle with profit margins in the category. "The very low-end [99 cents and $1] is not selling [well], and some retailers are shrinking the number of products that aren't moving," said Lerberg.

Hair products with a professional cachet are increasingly popular with drug store buyers as they typically deliver a 35 percent to 40 percent margin.

Professional product margins

"The squeeze is on for profits, and drug stores are looking for more professional products," said James McMillan, vice president of sales for John Frieda Professional Hair Care. And, as professional products become more popular, their margins are shrinking at mass merchants, said Jerry Zlotnick, buyer at Medic Discount, based in Cleveland. "We are finding that we have to be more sharply priced."

Higher-priced niche products, such as Advanced Research's Thicker Fuller Hair Line and John Frieda's Frizz Ease, allowed retailers to continue to make solid margins.

Getting into condition

In the conditioner category, sales in drug stores grew 0.1 percent to $275 million. Drug stores maintained a 33.1 percent share of all retail sales, beating out mass merchants. Across all mass outlets--food, drug and mass merchants--sales of conditioner grew 6.4 percent to $829.2 million. Leave-in conditioners and other repair-oriented products performed particularly well as more women sought to treat the damage that blow drying, perms, hair color and the sun wreaked on their hair.

"The conditioning treatment category is flying," said Steve Estrin, sales manager, General Therapeutics, which markets the Queen Helene line.

"As a result of perms, coloring and bleaching, women are going back to basics." General Therapeutics was so pleased with response to its one year-old Queen Helene Cholesterol Hot Oil Treatment, it recently launched Placenta Hot Oil Treatment.

Two-year-old Neutrogena Heat Safe has also performed so well that the company added a version for fine/thin hair last spring.

A shift toward softer, more natural hair took its toll on sales of hair spray, styling gel and mousse. Hair spray sales declined 12 percent in drug stores to $226 million and 6.5 percent across all classes of trade to $722.3 million.

"Overall, the styling category has been in a trough for the past several years," said Carol Hamilton, senior vice president of marketing for L'Oreal's Hair Care Division. "Aerosol sprays and spritzes have fallen as they have been associated with providing a harder hold. Consumers are looking for products that control the hair without stickiness or stiffness."

"Our natural gel has been growing for some time because it's a softer style product," added Redmond Products' Lerberg, who predicts a surge in sales of curl products this year.

Inexpensive gels sold in large tubs continued to perform well. Sales of Queen Helene's styling aids actually grew 30 percent last year, according to the company. "Trade promotions of larger, cheap gels have been attracting consumers away from advertised, higher price point brands," said L'Oreal's Hamilton. "This takes the consumer out of the market for a year due to the immense quantity and size of these products."

Hair color was the brightest spot in drug stores last year. The category grew 7.1 percent in drug stores, which continued to be the dominant distribution channel, with a 51.8 percent share. L'Oreal expects total hair color sales to grow another 9 percent to 10 percent in drug stores this year.