The pros and cons of a pro/commodity mix

Drug Store News, March 28, 1994 by Barbara White

Following the example of Wal-Mart, drug retailers have reexamines the wisdom of breakin out salon-inspired and professional hair care products in a separate section in hair care. Some have combined the sets; others oppose consoliation and are leaving their sets separate.

For those favoring consolidation, one motivation is the desire to buy product directly from manufacturers rather than from a distributor.

Most quasi-professional, salon-inspired lines once sold through distributors are now direct. Redmond's Aussie started the trend a few years ago, Alberto-Culver's TRESemme was brought direct-to-retail over one year ago, and smaller lines are beginning to do the same.

"Wal-Mart has never liked dealing with distributors," said Advanced Research Labs' vice president of research and development Jim Parr. "If a retailer has to deal with a distributor, he knows he is not getting the best price."

There are other advantages. Byu selling directly to chains, Parr said, a manufacturing can offer the retailer more services, such as the television and print advertising campaign Advanced Research Labs plans for this year.

Said a spokesperson at Alberto-Culver: "One problem we faced was pricing of the TRESemme line that was all over the board. Distributors were also making between 5 and 30 percent on lines. Now that we have that margin back, we can put that money into advertising the line."

Diverted goods scarce

As more lines, such as Infusium and Focus, go direclt to retailers, distributors are left with fewer lines to represent. Said Parr: "Out of the four main distributors, only one is really surviving. They really don't have enough products to sell."

As distributors fall out of the game, retailers have fewer reasons to keep a separate pro hair care set serviced by a distributor.

It's also more difficult today to secure diverted true salon goods. Technologucal advances in coding have increased the level of difficulty by allowing manufacturers to trace goods more easily.

"True salon products, such as Sebastian, Nexxus and Aveeda, are too hard to come by for many retailers," said one manufacturing of professional hair care products. "With their in-and-out availability, the merchandise often winds up harming the retailer rather than being an asset to the mix. Customers are often frustrated when they get to the drug store, only to find that merchandise they've previously purchased there is no longer on the shelf."

Lack of consistency a factor

Some retailers say that the difficulty in obtaining diverted goods is another strong argument to combine sections. Others strongly believe just the opposite is true.

One chain that has been affected is Eagleville, Pa-based I Got It At Gary's. "Better bar coding has difinitely put a crimp in the availability of lines," said buyer Susan Swartz.

She said it's been difficult to maintain a consistent supply of true salon goods--and that's one reason she is aginst bringing professional hair care goods into the commodity hair care planogram. "It's difficult to maintain a consistent supply of any one product, and in a planogra, you can't swap sizes based on availability," she said.

"It's hard to planogram salon products in," agreed Jerry Biarsky, buyer at Manhattan-based Pharm-house. "That's why I keep a pro hair set. I'd rather have a hole on that shelf than in commodity."

Gary's Swartz added that the department is also too important to the chain's corporate mission of providing the greatest amount of choices. She believes that incorporating the two sections together would undermine the pro set.

Some manufacturers agree with her. "We feel that professional, salon-inspired lines should be grouped in a special section," said one manufacturer. "We feel that there are enough premium-priced lines with specific performance characteristics that they should stand alone. To mix all products together would cause them to lose their identity."

Said Steve Mistretta, director of trade marketing for Clairol: "It's a mistake to move away from two sets. The consumer who specifically shops for these products will think the chain no longer carries the merchandise of it's mixed in."

One big hair care department

Still, some chains are combining their pro hair and commodity sets. New Orleans-based K&B and Troy, Mich.-based Arbor are just two examples.

"Pro hair products are now being brought in-line at Arbor," spokesperson Frederisk Marx. "It's the company's point of view to position itself as the category killer, and the best impact in the presentation of the category is achieved by grouping the largest number of SKUs in the department together."

Marx said the approach has helped rather than hurt the department. Productivity, he says, is high.

Other chains are still on the fence. Tucaloosa, Ala.-based Harco is still debating. "We are still in the talking stage," said buyer Charles Monk, who said he's heard good arguments from both sides. "There are plenty of salon-like lines in commodity hair care now such as Salon Selectives and Pantene ProV." The positionig hasn't hurt them, he reasons, so why would it harm other salon-inspired lines?