Quality, packaging and promotion drive private label programs

Drug Store News, Nov 17, 1997 by Peter Malbin

Attractive merchandising and constant promotion is vital to the success of private-label beauty care, according to experts.

"The drug retailers who have been successful [with private-label skin and bath] are the ones that corporately get behind the line," said Valerie Stricker, vice president of sales for CBI Laboratories, which manufactures private label for Eckerd and American Drug Stores, among others. "They promote it. They advertise it. They take pride in it."

"Drug stores develop brand loyalty through their private-label program," said Colleen Booth, national account manager for CBI. "The consumer has to come back to them to buy that brand. At first, what draws them is the unique packaging and design."

"It has to pop off the shelf," said Stricker. "Drug stores need shelf-talkers and marketing collateral to educate the consumer. There's not someone to do that in a drug store like there is in department stores and specialty stores. The packaging becomes important. It has to have a high-quality look and a nice design," Stricker said.

High-quality private-label skin and bath programs attract shoppers in search of value and help distinguish drug stores from the competition.

"Customers can only buy your brand at your store. It creates loyalty to your store among your customer base," noted Mary West, a private-label buyer for Snyder.

"It's a better-educated consumer that shops for private label, a consumer that is willing to try the alternative for the added value it offers them," said Jon Rudden, vice president of merchandising for Happy Harry's.

"Our intent is always to save consumers 20 percent to 50 percent on branded equivalent," Rudden added.

While private label is less expensive for consumers, it offers higher margins for retailers.

"Generally, the margin is more than 50 percent for private-label skin and bath and 28 percent to 35 percent on non-private-label skin and bath items," Rudden said.

Competing for quality, sales

The quality of the private-label offering has increased significantly in the bath category, said James Wilmsen, general manager of the bath and body care division of Schroeder & Tremayne, which provides private-label accessory products for Drug Emporium, such as bath brushes, synthetic sponges, mesh and loofahs.

"Historically, retailers would position private label as the low-cost generic alternative. Now, their private label is positioned as value and quality," he said.

"The quality of private label has risen to a point where the distinction between private label and controlled label has become blurred. Suppliers have become more sophisticated in understanding the consumer's expectations," said Wilmsen.

While the quality is improving, both dollar and unit sales of private label bath and skin care items slipped in the drug channel during the last year, according to Information Resources Inc. statistics.

For the 52 weeks ended Sept. 14, 1997, private-label bath holds a 19% percent dollar share and a 16 percent unit share in the drug channel. But, private label's dollar sales are down 20 percent, while unit sales for private label bath fell 6 percent at drug.

While drug is down in private-label bath sales, it is also down 16 percent in branded bath items. In fact, the entire bath category "private label and brands] was down 7.8 percent in dollars, reflecting the fact that money is being spent on bath items at other retail outlets.

"Everybody is very aware of Bath & Body Works," said CBI's Stricker. "They're [Bath & Body Works] the biggest success story in the bath category right now and have been for a while. Every class of trade is trying to emulate their success."

Competition is also fierce in the skin care category. Private label ranked seventh in the $821-million hand and body lotion category for all three classes of trade for the 52-week period ended Sept. 14, 1997.

In the $482-million facial moisturizers category, private label ranked eighth in all three classes for the 52 week period ended Sept. 28.

While sales are lower in the drug trade as a whole, several major chains have made a strong commitment to private-label skin and bath.

Chain drug's commitment to private label

"CVS wanted something that they had control over that their competitors don't have," said Paul Dembow, vice president of Arizona Natural Resources. The company makes CVS's controlled label for skin and bath, Down To Earth.

There are about 40 SKUs in the value-priced line, including foam baths, bath and shower gels, bath grains, bar soaps and accessories, with a range in price from 99 cents to $4.99.

"CVS's studies show there is a significant awareness of the brand name, and it has attracted a completely different customer, a much lower-income customer," Dembow said.

"CVS does not skimp on quality. There might be some small differences between CVS brands and the branded item, but it represents huge value to the customer," Dembow added.

CBI recently revamped Eckerd's private-label program, called Spa Classics, with new packaging, new colors and made it more contemporary.