Strategies emerge for ethnic beauty care

Drug Store News, April 7, 1997 by Liz Parks

The ethnic product category is in the process of change, driven not just by new launches and aggressive promotional programs from ethnic product manufacturers, but by a new marketing collaboration that is slowly evolving among the major participants in the category: retailers, distributors and manufactures.

In a sense, the change is a manifestation of the growing importance of category management to chain drug retailers. One chain drug merchandiser, who has overall responsibility for not just ethnic products but other regionally or geographically sensitive categories like fragrances and sun care, said his company is striving to develop category management partnerships with ethnic product manufacturers "to help us better understand and target the African-American shoppers. Where are they in relation to our stores? How frequently do they patronize our stores and what is it that we can do to attract and keep their patronage?"

Sources for two other large chains said they were also trying to develop similar consumer-based marketing programs to better service their customers, in the process targeting what each called neglected consumer segments such as African-Americans, Hispanics, Asians, teens and men and women in their retirement years.

For the first time, as far as Drug Store News can tell, chain drug retailers are developing category management strategies for ethnic products, a classic example of a geographically sensitive category, choosing leading ethnic product manufacturers such as Dallas-based Pro-Line, Savannah, Ga.-based Carson Products or Douglasville, Pa-based Ambi Products to be the captains of their new category management programs.

And manufacturers such as Pro-Line, Ambi, Carson, Chicago-based Alberto Culver, Chicago-based Soft Sheen and New York-based A.M. Cosmetics are investing in the research and marketing support programs necessary to effectively implement a category management approach to ethnic products.

According to one retailer source, the emphasis is not just to build sales in the ethnic beauty care categories, the traditional 4- to 16 foot department that drug chains have always maintained to supply specialized hair and skin care products to their African-American consumers, but also to find ways to make the entire store appealing to African-Americans, particularly in markets where African-Americans account for 50 percent or more of the population.

The first step of the process, and what several major drug chains are doing now, is to review their space allocations for ethnic hair, skin and cosmetic products. A source for one large chain said that retailers want to be sure to have "the right space allocations, the right brands and the right items in the right quantities in the right stores."

Chains are also looking at the logistics of the category, trying to determine where the ethnic products that constitute their core department should be warehoused, and how they can maximize their partnership with the ethnic product distributors who service the stores with products that are not warehoused.

Most of these new initiatives are being driven by the chain drug industry's growing awareness of the attractiveness of the African-American consumer.

According to the U.S Census Bureau, the non-Hispanic African-American population will increase 23 percent by the year 2015 to 39.5 million people. Between 2015 and 2050, that population will grow by 36 percent to 53.6 million people. In comparison, the U.S. population as a whole will grow 17 percent by 2015 and by 27 percent between 2015 and 2050.

In several major metropolitan areas where chain drug operators have large clusters of stores, the ratio of African-American to general market customers is high and growing.

Four of every ten residents in metro Memphis, for example, are African-American. Three in every ten residents in the New York metro market are African-American, and markets such as Washington, D.C., New Orleans, Baltimore, Atlanta and Richmond already have populations that are 25 percent African-American, according to Woods & Poole Economics.

And, although the median household income for African-American consumers is just $21,000 in 1994 dollars compared to $32,2000 for all U.S. households, African-American households spend significantly more on personal care services that the average U.S. household, 34 percent more, according to the Bureau of Labor Statistics.

"The African-American shopper is a very valuable consumer," said the ethnic products category manager for one large chain with stores in many ethnic neighborhood markets. "We do a significant business with that customer, but we could do better.

"Our challenge in the future is to determine how we can improve the marketing and merchandising of our stores to enhance our appeal to those consumers, particularly in the neighborhoods where they live."

RELATED ARTICLE: A look at African-American shopping habits

* Caucasian consumers make 171 mass market shopping trips per year and spend $20 on an average purchase. African American consumers make 170 mass market shopping trips per year and spend $18.70 on average purchase.