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Growth for name brands translates to growth for private label in most categories
Not to fear, however, Mintel still predicts the color cosmetics market will continue to grow an additional 5.9 percent in 2011, reaching $2.8 billion for the year, and forecasts the overall cosmetics category to grow steadily in the next three to five years ($3.5 billion by 2016). More growth means more room for private label lines to create their own unique niches in the market and put a fresh face on new private label products.
“Private label cosmetics definitely have a great opportunity to gain market share in the current economy,” says Holly Hughes, marketing specialist for Cleveland-based DayGlo Color Corp. “Consumers are experimenting with less expensive store brands and as long as the reputation for those brands is one of quality and value, private labels may well be able to gain the edge on national brands.”
First, private label lines should continue to focus on best sellers. Data from Chicago-based SymphonyIRI Group for the 52 weeks ending Aug. 7, 2011 show that eye makeup experienced the strongest growth, up 6.5 percent, with mascara up 6.9 percent, with private labels showing strong gains in both segments. Mintel’s report suggests that when it comes to eye makeup, shoppers are “eager to experiment with new concepts in branded and private label items.” New innovations in mascara, and, for younger shoppers, products like glitter shadows and liners are what’s driving the category. Some private label lines, including Victoria’s Secret, Walmart’s Hard Candy, ALDI, Costco and Sephora, capitalized on the mascara trend with products offering various lash-enhancing properties. DayGlo Color Corp recently launched DermaGlo pigments, a fluorescent line of cosmetic pigment using only FDA-approved dyes and polymers, to give cosmetic manufacturers an industrial-grade fluorescent palette in a consumer-friendly format.
Sales of lip products were up 6.3 percent, according to SymphonyIRI data, with growth for private label lip color coming from products retailing for $10 or less, such as Walmart’s Hard Candy ($6), ALDI’s Lacura brand ($3.99) and H&M for less than $5.
The one blemish for private label is in the area of facial cosmetics, with sales down almost 30 percent. Mintel’s research suggests that when it comes to the sensitive issue of face makeup, women are more likely to stick with their time-tested brand rather than make a switch and risk potential problems such as skin irritation, caking, or a poor color match. Further, shoppers have more concerns over private label facial cosmetic ingredients than they do other private label formulations such as eye or lip color.
To entice new consumers, manufacturers should capitalize on the growing popularity of natural and eco-friendly formulations. “Today’s consumer is looking for healthier options inside and out,” says Barbara Panagos, president of Brush Up with Barbara/Mineral Mine, Floral Park, N.Y. Its mineral makeup is formulated with natural minerals, freeze-dried vitamins A and E, apple and horseradish extract and oatmeal, and multi-tasks, providing protection from UVA and UVB rays.
Silvia Winner, general manager sales & marketing for Germany’s Premium Cosmetics GmbH says, “Generally speaking, there is an overall trend towards organic cosmetics. Here in Germany especially, in the field of store brands, there is a dynamic trend towards organics.” Most German store brands, she says, are certified organic with the European BDIH or NaTrue symbol, and thus the consumer perceives private label cosmetics to be more trustworthy and reliable. Germany’s leader in the segment is the organic-certified Alverde brand, topping the German natural cosmetic market in sales volume, pace and innovation.
The right packaging is essential to correctly position store brands if they’re going to compete with their name-brand counterparts. According to Mintel, a significant number of products with multiple purposes were brought to market in 2011, adding value by saving the consumer from needing to buy two or three products to do one job. Winner agrees, “For me, multi-purpose products, especially in the field of color cosmetics, are a big topic. For example, palettes with various eye shadows, blushes, lip colors or concealers, lip stains/lip balm combinations are the right thing for today’s women on the go.”
Hughes emphasizes the use of color to help brands build recognition with consumers. “Private label brands that make judicious use of color to create individual and highly-visible products can maximize their shelf impact and simultaneously stand out from the growing competition in the retail environment,” Hughes says.
Some experts feel private labels need to make better use of social media and viral marketing to increase awareness and build brand loyalty for their lines.
“Quality private label cosmetics should reap benefits despite the current economic climate, providing they match the quality of mainstream cosmetic brands. Smart, low-cost marketing is still critical, though, in order to create brand loyalty and make devotion for a brand viral,” says Nathalie Gaveau, CEO and founder of U.K.-based Shopcade, a social e-commerce start up on which Facebook users shop from friends’ user-curated stores. Gaveau holds that with 1 billion consumers using social media, the opportunity for retail is huge but unrealized.
“The average consumer tends towards recommendations from their friends three times more than statements from brands – so it’s time for brands to put the consumer first and invest massively into social networks in order to let their consumers promote their products on their behalf,” she says.
Winner agrees that a “persistent and ‘down to earth’ social media strategy opens the way to a direct consumer approach, giving concrete, highly valid and first-hand information to the retailers.”
Gaveau reminds retailers to market their brands on more than just price. “Some own-brand cosmetics are now firmly installed as quality products and retailers must avoid marketing them as low-cost cosmetics. Own-brand cosmetics must be marketed as the best cosmetics for your skin, at the best price for you. Again, it will be about using social media to sing the praises of a product.”
Eye on the national brands
"Our customers continue to tell us they need guidance to decide with beauty products to use and how to use them to get the look that they want," said Kevin Hochman, marketing director for Olay, Secret and Venus.
The application lets consumers manage their product selections via a Beauty Bag, where products from consultation results, searches and articles can be stored easily for later access by dragging the product image into the Beauty Bag.