New hair care makes waves: two-in-ones add volume to shampoo sales

Discount Store News, Jan 7, 1991 by Richard C. Halverson

Many discounters are reworking their hair care planograms, "but some aren't," he said.

Shelf space for new two-in-ones will come at the expense of slower moving brands that lack TV support. Some lines will be eliminated entirely, he predicted, while space for line extensions of other slow movers or ones that haven't joined the move toward reformulation, will be cut back.

By the end of 1991, two-in-ones, including Pert Plus and Vidal Sassoon, could capture 15% to 20% of the market, Martin predicted.

Vendors either are shifting to a higher price for two-in-one formulations, compared to conventional shampoos and conditioners, or cutting the size, Martin said.

Margins for two-in-ones fall in the same 20% to 25% range as those for separate shampoos and conditioners.

Where vendors on the lower end, such as Helene Curtis, cut the size of Suave two-in-one but maintain the price, penny profit, or the difference between acquisition cost and retail price, remains the same for two-in-ones as for separate products, Martin said.

On the premium end, however, when price goes up and size remains constant, retailers will make a higher penny profit on two-in-ones, he said.

Retail market share has drifted over the past two years toward both the premium, more than $2, and the budget, less than $1, ends of the business at the expense of products priced in between.

Premium products account for the largest share, 39.3%, Boston Distributors calculated, with budget products taking the next largest, 30.8%.

As a mature category, shampoo is growing at a rate that's a little better than the population increase. Retail dollar value grew 2% in 1990 at $1.44 billion, Boston Distributor estimates.

With only about 35% of men and 75% of women using conditioners, that category had more room to grow last year: 5% to $793 million, for a total of $2.23 billion for the two lines.

Shampoo sales will increase by 3% in 1991 to $1.47 billion, with conditioners increasing by 2% to $809 million.

Emphasizing the relative flatness of the market, the shampoo and conditioner market totaled $2.1 billion in 1988, concluded a 1989 market study by Packaged Facts, which is based New York.

With expected growth of 3.6% a year, shampoo and conditioners will represent a $2.5 billion market by 1993, the ` market study concluded.

An A.C. Nielsen study shows that mass merchants accounted for 22.2% of the shampoo market last year, and 21.5% of conditioner sales. Supermarkets took the lion's share of shampoos, 49%, and conditioners, 43%. Drug chains accounted for the balance, 27.9% of shampoos and 35.4% of conditioners.

Including styling gels, hair coloring, home wave and mousse, the total hair care market came to $4.23 billion in 1989, Nielsen estimated. Mass merchants took a 21% share of the total pie.

Nielsen, in its 1990 review of mass merchandiser trends, determined that retailers devoted an average of 58.2 linear feet to displays of creme rinses and conditioners and 82.3 linear feet to shampoos, for a total of 130.5 linear feet.