Category Review: Skin Care

Plenty of Skin in the Game

June 15, 2012
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Consumers are finding their comfort level with private label skin care products.

Scrub off any doubts you harbor as to whether American consumers will shun ritzy brand names and instead, buy private label skin care products. In its March 18 report, Skin Care in the U.S., SymphonyIRI Group notes that in each category of skin care it tracked, private label sales increased from the previous year—in some cases by double digits—while overall sales for these products retreated or remained stagnant.

Total U.S. skin care sales at FDMx (supermarkets, drugstores and mass merchandisers, excluding Walmart) totaled almost $2.3 billion, up a modest 2.6 percent from the year prior, according to the report. Total private label skin care sales though, jumped 19.2 percent to $168 million. Even among product types where national brands sales declined, private label skin care product sales rose, often sharply.

These private label sales included acne treatments, body anti-aging products, depilatories, facial anti-aging products, facial cleansers, facial moisturizers and fade/bleach products.

Sales of private label fade/bleach products (also marketed as ‘brightening’ creams) rose 50 percent from the year before, while overall sales of these products dropped 6.5 percent. Sales of private label facial cleaners rose 22.9 percent, while the total product sales in this area rose just less than 7 percent. And although private label sales for anti-aging body products rose 15.83 percent, total sales fell 15 percent.

Mintel International Group Ltd.’s Facial Skincare report from April 2011 notes that although total U.S. FDMx skin care sales haven’t returned to pre-recession peaks, “it is also clear that private label is capturing a larger share of the market, and thus national brands will need to continue to establish the efficacy of their products and how they are superior values in order to capitalize on the growth that is expected to occur from 2011-15.”

In other words, as the economy continues to improve and consumers gain more disposable income, will they return to buying high-end national skin care brands? Not if they’re happy with their private label products.

Smart private label manufacturers and retailers look at skin care products in a slightly different way than, for example, coffee or diapers. Skin care is the furthest thing from a commodity product. It’s about results—and often, only subjectively perceived results.

Women, and now increasingly, men are willing to spend a lot of money trying different brands, formulas, combinations, and multi-step regimens all in an attempt to achieve fresher, younger-looking skin. Aging Baby Boomers focus on trying to eradicate the signs and stresses of years of sunbathing and resulting skin damage. Younger—and hopefully long-term—consumers also buy anti-aging skin care and are responding to its being marketed as preventative care.

SHOW ME RESULTS

The old idea that only a few national or international skin care lines sold exclusively in tony department stores could deliver satisfactory results is gone.

Today’s savvier consumers compare ingredients listed on skin care product labels and search online chat boards to review and rate products. Skin care products generally are not impulse purchases, but in many cases, can be hefty investments in dollars (a skin care regimen can include three or four separate products bought as a set) and in the time it takes to gauge if the product actually works for them.

This all means that private label makers and retailers win if they do diligent consumer research and know how to market what their particular customer seeks in skin care.

KEEP IT NATURAL

Retailers are stepping up their private brands with higher quality and unique offerings. “Programs focused on benefits, as opposed to value knock offs, are making headway,” says Steve Berry, president of Auburn Hills, Mich.-based Greenblendz, a maker of among other items, private label skin care. All of the company’s products are made, whenever possible, with plant-based, naturally derived and sustainable ingredients.

Berry is adamant that relying on low prices to compete against national brands won’t work in the long run. What works is quality.

Greenblendz notes on its website that even the term “private label” may need to go.

“The time has come when private label needs to evolve to private brand to compete. Soliciting low priced bids on National Brand Equivalents (NBE) does nothing to advance a brand, if anything it permanently associates the product with low quality, which can be purchased at any location down the street.”

Greenblendz’ niche is natural skin care, and Berry says that consumers who search the internet and read blogs increasingly are more aware of the chemicals in many skin care products and are moving towards organic or natural claims.

He says Greenblendz sees an upsurge of interest in natural baby skin care products such as massage oils, body washes, diaper cream and moisturizers. It also is finding success marketing to consumers who struggle to find products for babies born with allergies and skin sensitivities.

LIGHTEN UP

Bleaching, fading and brightening creams all promise to do the same thing: even out skin tone, fade dark spots and provide a fresher look. While these products are marketed in other countries specifically as skin lighteners, in the U.S., it’s their promise of more youthful, even-toned skin that drives sales.

Most often used to help fade sunspots on older skin and acne scars on younger faces, these brighteners and their new prevalence as a “must have” skin care product have recently been featured in national women’s magazines and in the New York Times.

With the aging Baby Boomer population searching for more and more anti-aging products, private label companies may find making and selling these products a particularly bright spot. Mintel says it “expects that demand for anti-aging skin care products will remain strong from 2011-2015.”

However, it cautions, “sales growth could slow, as this age group is more likely than younger consumers to become lapsed users.”

LOCATION, LOCATION, LOCATION

Mass merchandisers such as Target and online retailers such as Amazon.com (which lists almost 60,000 facial skin care items), compete hard with drugstores, which once completely dominated the field as the central locale to purchase skin care products. One drugstore has found success with its private label skin care brand.

Mintel reports that private label skin care products such as those sold by Deerfield, Ill.-based Walgreens Co. “may pose a greater competitive threat to national brands operating within the channel in the future, and thus should probably be monitored by marketers at leading companies such as Procter & Gamble, L’Oreal, and Johnson & Johnson.”

Walgreens’ website lists its most popular store brand as Alpha Hydroxy Face Cream, an anti-aging product.

One locale where even small private label companies can compete on a fairly level playing field as national brands is online and through social media.

“National brands are still engaging through these newer technologies, and this leaves room to play on the same level without the large investment, ” Berry says.

Indeed, recent visits to the biggest national brand skin care websites revealed languishing blogs with entries as much as a year old, and other marketing labeled “new” that is anything but.

In today’s media-saturated world, promoting a blog or Twitter account and then not updating it renders it useless. Here, private label suppliers and stores can catch up and utilize these outlets quickly and inexpensively.

Mintel agrees. Its report notes, “while television ads can drive sales, marketers may want to consider viral campaigns to drive growth.”

And, of course, much of the online chatter comes from personal recommendations and trials. Mintel reported that 49 percent of respondents it surveyed said they relied on retail displays to learn about facial care while 40 percent said they consulted with friends and family.

Private label skin care manufacturers may take Mintel’s advice and “consider partnering with retailers to develop more end caps and other relatively large displays at retail where consumers can learn about—and perhaps even sample—the products.”

 

Eye On The National Brands

The top national brands as measured by FDMx sales are Procter & Gamble’s Olay, with singer songwriter Carrie Underwood as its new spokesperson. Olay aggressively courts both the aging population and younger consumers, who are focused on preventative care with its tagline “Achieve Younger Looking Skin at Any Age.” Its Pro-X 4-step regimen includes products that cleanse, moisturize, target the delicate eye-area and treat the skin with a tightening serum. Its Age Defying series three-step regimen treats early signs of aging, which it defines as “the look of fine lines” on the skin’s surface. Olay’s website offers customer reviews on anti-aging products, including criticism and complaints about less than stellar results. An Olay employee responds and offers a phone number and the opportunity for a one-on-one consultation.

The Estee Lauder Co.’s eponymous brand includes the “even Skintone Illuminator,” its brightener targets skin types across racial and ethnic lines and promises to reduce redness, blotchiness, discoloration, acne marks, sun and dark spots.

“Now, all skintones can have fresh, radiant skin that looks incredibly clear, more even-toned and luminous—fast” according to its ad.

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