Chains seek better hair care margins

Drug Store News, April 25, 1994 by Barbara White

Those in favor of keeping the sets in place say that a lack of merchandise makes it all the more difficult to absorb the pro lines into a commodity hair care planogram.

These retailers and manufacturers felt that the separation of commodity and pro hair care allowed pro hair care products to have a higher profile.

Whatever their position on where to merchandise the products, retailers agreed that pro hair care was a profitable sub-segment. Margins were holding at 35 to 40 percent, and customers were not balking at paying as much as $8.99 for a specialty products such as Frizz Ease.

Retailers also did well with generic pro hair care product lines, such as Russ Kalvin, Mr. Charles and European Mystique.

Color explodes

Color in general was an exploding segment of the hair care category. As baby boomers aged and grayed, and improved technology brought superior products to the at-home market, hair color experienced a renaissance.

In drug stores, the segment grew 10.9 percent in dollar sales to reach $450 million, compared to 1992 sales if $406 million.

Other mass channels also did well. Food/drug combos had 13.6 percent growth in hair coloring, and mass merchants had a significant 30.2 percent growth.

L'Oreal's Castings product, a tone-on-tone colorant that lasts six weeks, proved to be one of the most successful products of the year.

Clairol also brought three new products to the market: Brights, a shampoo-in highlighting product; Glints, a color enhancer; and Lasting Color, a long-lasting semipermanent hair color. All products pulled higher than average margins for retailers.

New merchandising techniques in the form of better educational point-of-sale materials also helped the category. L'Oreal's Color Intelligence System and Clairol's Color Choice System made consumers feel more comfortable in the hair color aisle.

The shelf systems, aimed at making product choices simpler for the consumer, incorporated hair swatches and better product definitions on packaging and shelving signage.

Not only was women's hair color getting a lift, but new products by Clairol (Men's Choice) and improved products by Combe (Just for Men hair and beard and mustache color) brought new life to the men's coloring segment.

Conditioners gained

Intensive and leave-in conditioners also grew as a segment. What had been a languishing sub-category perked up as new formulations brought convenience and effectiveness to the conditioner segment.

Conditioner dollar sales were flat at drug chains, but grew at mass merchants by 24.7 percent and at food/drug combos by 3.6 percent.

But, in sheer dollar volume, the food channel outpaced everyone in dollar sales in the conditioner segment at $282 million, compared to drug store dollar sales of $274 million and mass dollar sales of $223 million.

Food topped everyone in unit sales as well with 135 million units, compared to drug at 107 million units and mass merchants at 122 million.

There were bright spots, however. Of the $274 million drug chains generated in conditioner sales, leave-in conditioners accounted for $7 million in 1993, a increase of 42 percent over the previous year.