Hair Care

Drug Store News, July 20, 1998

Understanding the components of hair care is crucial to the proper merchandising of this core department. Daily Hair Care, a $3.5 billion category throughout food, drug and mass stores in the U.S., is comprised of the shampoo, conditioner, hair spray and styling product subcategories.

Unilever Home & Personal Care (HPC)-USA is uniquely qualified to provide information on Daily Hair Care because of the depth and breadth of its product selection as a result of the merger of Helene Curtis and two other Unilever Companies. Helene Curtis, historically a leader and innovator within the Hair Care and Anti-Perspirant/Deodorant categories, has combined with Chesebrough -Ponds and Lever Brothers to create a powerful organization in Unilever HPC-USA. The establishment of Unilever HPC-USA allows each business unit to leverage thc best practices of the three organizations. Additionally, Unilever HPCUSA is committed to providing retailers with more enhanced consumer understanding across a wide range of categories- an area of category management that is continuing to increase in importance. Unilever is one of the leading manufacturers in worldwide hair care, enabling Unilever HPC-USA to leverage knowledge of global product and consumer trends,

Unilever HPC-USA can, and has, helped retailers better understand how consumers shop Daily Hair Care. A consumer first decides which hair care products to purchase based on the daily functional needs of cleansing, conditioning, styling and holding hair, resulting in the shampoo, conditioner, styling products and hair spray subcategories. Within the shampoo and conditioner subcategories, the next decision a consumer will make is based on price. The pricing segments are value, mid, premium and ultra premium. Additionally, consumers will make decisions based on special needs such as baby and medicated shampoos or treatment conditioners.

Within the hair spray subeategory, consumers will decide between aerosol and non-aerosol products. From there, the decision is made again based on price-value, mid or premium. In styling products, consumers decide on a form such as gel, mousse or spritz and then on the pricing segment.

Generally, a consumer will consider a brand-set based on everyday pricing and brand perception. The cornerstone pricing segment is premium, which includes brands that arc currently driving overall category growth.

Despite the growth of premium brands, retailers still need to offer consumer choices across all pricing segments. Although there are opportunities to trade consumers up to more premium priced brands, Unilever HPC-USA research determines that most consumers are very committed to a pricing tier and are often unwilling to consider purchasing outside of their current segment.

Although Daily Hair Care products address functional needs of cleansing, conditioning, holding and styling, consumers are also very emotional when considering their purchases in this category, since the look and feel of hair has an impact on the consumer's self-esteem. Almost everyone has experienced or observed the angst associated with 'bad hair days.' Because of the functional and emotional duality, the Daily Hair Care category can be challenging to manage especially when determining the appropriate number and mix of items for drug stores to carry.

That's exacerbated by the plethora of sku's needed to meet a wide variety of consumer needs. Brand shares are very fragmented and, as a result, it takes 20 brands to comprise 75% of sales. That has made efficient assortment critical to Daily Hair Care. There needs to be a good selection of products; however, the key to optimal efficiency is managing product duplication. Unilever HPC-USA has utilized RichMix, Cannondale Associates' efficient assortment tool, for the Hair Care and AP/DEG categories. RichMix automates the normally tedious task of conducting an efficient assortment analysis. RichMix incorporates the Daily Hair Care consumer decision hierarchy into the model so that assortment decisions are made at the segment level. One key competitive advantage of the RichMix tool is a "transfer of demand" formula that is built into the model. This proprietary formula calculates the level of cannibalized volume that new items will steal from existing sku's, yielding a better estimate of a skus true incrementali ty.

In terms of category performance, Daily Hair Care grew 6% in dollars, while unit sales were flat for the 52 week period ending March 14, 1998, according to ACNielsen data. The growth in dollar sales is impressive, considering the category has an 87% household penetration. Category growth is driven by new product introductions and existing brand enhancements that are designed to address evolving consumer needs. The success of brands, such as Clairol Herbal Essences, Finesse. L'Oreal Kids and Pantene Pro-V, all posting double-digit gains, is a testament to this trend.

For 1998, Unilever HPC-USA expects its new brand, ThermaSilk, to further energize the hair care category. ThermaSilk contains protein formulas that are activated when heat is applied. ThermaSilk fills the void in the market for a full-line hair care brand that addresses the damage caused by styling products such as blow dryers or curling irons. ThermaSilk's unique formula actually improves the condition of the hair through heat styling.