Drug chains renew commitment to ethnic consumer

Drug Store News, Feb 18, 2002 by Rob Eder

The good news is that there is nowhere to go but up for the African-American hair care business in chain drug stores.

According to various supplier and distributor sources, mass retail--food, drug and mass outlets combined--only generates about $2 to $4 of every $10 spent on ethnic HBA products. The rest, they say, goes to the beauty and barber stores and salons.

African-American hair care products generated $176.6 million in food, drug and mass, down 5.8 percent, for the 52 weeks ended Nov. 11, according to Information Resources Inc. The drug channel accounted for almost 58 percent of all dollars spent in the category among the three classes of trade. However, the downtrend in sales was slightly more pronounced among drug stores--down more than 7 percent, according to the IRI data.

Every African-American hair care category was down last year in drug, with shampoo the lone exception, worth just $2 million in drug stores--and only growing at 2.2 percent.

Yet there is good reason to believe this will change. Many of the drug chains, by and large, have recommitted themselves to serving the ethnic consumer. For one thing, ethnic neighborhoods are chronically under served from a mass retail perspective, which actually could go a long way toward explaining mass retail's disproportionately small share of the market. The beauty stores and salons have much better penetration in these neighborhoods. "Drug has a tremendous opportunity because [the chains are moving] in the communities where [the ethnic consumer] lives," explained Kevin Maxberry, director of sales for drug and food at Wella Personal Care/Johnson Products.

But the beauty stores also tend to have wider assortments and generally are in step with the most current product trends. "The beauty stores don't have to wait a full year to make a change to the planogram," TWT Distributing director of marketing Daniel Owens told Drug Store News last fall. "Trends in this business don't develop overnight--they happen much faster than that."

And this is an area in which the chains are looking to improve, either on their own through micro-merchandising, or with the help of the distributor, who has recommitted to understanding the local markets of its retail partners and growing the total category rather than just the brands they represent. "The census has opened a lot of eyes as to how large [the population] is." Maxberry noted. "It is not a little niche anymore. America is becoming more brown and Asian, and it's time to really do business with these customers. ... Ethnic consumers would be extremely loyal if they were embraced."

Certainly the big national chains have invested in creating the systems necessary to drive their micro-merchandising initiatives--Walgreens with Basic Department Management and CVS with Assisted Inventory Management--and embrace the ethnic consumer in the communities where they shop. And the results are reflected in the stores. In New York City, Walgreens' outer borough (outside of Manhattan) stores in ethnic neighborhoods (such as the one pictured above, in the Bush-wick section of Brooklyn) carve out significant space for African-American hair care.

But for smaller regional chains, there is still a significant support role for the distributor in terms of helping the retailer more fully engage the ethnic consumer. "It is a very difficult process to try to think about micro-marketing from the stores' perspective ... even for a small chain," said Happy Harry's vice president of merchandising Jon Rudden. "I think there is a significant opportunity for distributors, wholesalers and/or rack jobbers ... to help us address some of these issues."

And as the chains move closer to the ability to put the right product in the right store, there is another reason to believe that 2002 will provide a lift for the ethnic personal care business in drug. African-American hair care products represent about 81 percent of the total category, and according to suppliers in the business, hair care is ripe for a big year. Fashion dictates, and this year a wide range of looks will lead to a bump in several segments of hair care, Soft Sheen/Carson president Candace Matthews noted. "Many opportunities exist because of the numerous styling choices of today's consumers, from relaxed hair to natural styles, from afros to the bald look," she said.

Michael Powell, president of Colomer USA, noted that ethnic hair color should be another hot pocket of the business. "We see hair color as the strongest individual segment," he said. "It's fashion driven, and it almost goes beyond hair style--it's a fashion statement [in itself]."

Although natural looks have been more popular in the past couple of years, Powell expects a rebirth in relaxers--even though the business never really atrophied, he explained. "Actually 57 percent of women still relax their hair," he said. "So the category never really went away."

Supplier buzz ...

Johnson Products has planned two major launches for spring 2002: Gentle Treatment semi-permanent hair color and Gentle Treatment maintenance. The hair color line includes 10 new shades; the maintenance line includes nine products for four different hair segments, including relaxed, color treated, damaged and gray hair. Both roll out in May. In the fall, the company will unveil a new kids line, Us Kids' by UltraSheen, with seven SKUs, including shampoo, conditioner, moisturizer and a curl release balm for temporary straightening without a relaxer ...