Category Reviews

A Matter of Performance

November 7, 2008
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Category Review: Hair care products have evolved tremendously in the past few decades - and for good reason.

Hair care products have evolved tremendously in the past few decades - and for good reason. Today, few women opt for a weekly salon visit to get their tresses washed, rolled and “done” - most of them now rely on a complex assortment of shampoos, conditioners, gels and sprays to perfect their styles in between haircuts. Even men now are much less likely to rely on only a simple shampoo wash to train their manes into place.
Consumers, therefore, have come to expect hair care products that are technologically sophisticated and customized for specific hair types. To compete in today’s growing sea of national brand hair care products, retailers must provide private label alternatives that meet or exceed consumers’ performance expectations.
“You can’t make an average product with average ingredients,” stresses Gregory Rubin, CEO of Calabasas, Calif.-based Garcoa Labs/Vitamin Classics. “The consumer will read right through that.”
But Rubin contends that many private label manufacturers are not able to make the leap to high-performing products. Some are set up to handle only one type of surfactant, for example, which might not be what consumers are seeking or might prove too harsh on hair. Consumers need to use a variety of shampoos on their hair, he adds, to prevent the protein buildup that results from using the same product day in and day out.
“It’s time to expand and grow private and controlled label,” Rubin says, “but it has to be done right.”
And data from Chicago-based Information Resources Inc. (IRI) do suggest significant private label growth opportunities for most of the key hair care subcategories. In fact, for the 52 weeks ending Aug. 10, 2008, private label accounted for less than a 4 percent dollar share in the hair spray/spritz, hair styling gel/mousse, shampoo and hair conditioner/crème rinse subcategories (in supermarkets, drug stores and mass market retailers, excluding Wal-Mart, club stores and c-stores).
The good news? Private label dollar sales experienced double-digit growth, percentage-wise, in all of these subcategories during the same timeframe, suggesting retailers are beginning to step up hair care product development.

A Hairy Situation

It’s one thing for private label buyers to identify hair care growth opportunities; it’s quite another thing for them to develop products that will meet consumer expectations - and hit the right price points. For that reason, retail buyers are encouraged to put their trust in manufacturers that are experts in hair care product technology.
“Formulations are getting more difficult and expensive to emulate, so we have learned the nuances of cutting-edge new ingredients, organics, natural and professional [items],” Rubin says. “We are now blending all of these technologies into making performing products for retailers. The difficulty to overcome is the cost of the raw materials, and the only way that can be offset is to use the ingredients in high volumes as we do.”
But Rubin puts less faith in high-volume manufacturers that produce a wide variety of non-food products.
“These high-volume facilities try to tie it all in together,” he says. “They make household products; they make mouthwashes, wet [and] dry [products] all in the same facilities, so they try to use a common base in all of their products. All they are doing is making a product the consumer will not really want to use long-term.”
On the other hand, some hair care products - hair gels, for example - really have become commodities, Rubin says, where consumers care little about which brand name is on the label. Here, private label can make impressive gains through packaging innovations that command consumers’ attention.
“The retailer should then price their [store] brand close to the largest national retail brand and carry only two varieties of gel and make the extra money,” Rubin stresses. “A second brand of gel hedging the first brand only means the private label needs to be cheaper, and you are giving away money you can put in your store’s profit. You don’t need a leading American brand, a Spanish brand for less and then a private label brand.”

Trends for Tresses

Within the overall trend toward performance-focused formulations are a number of sub-trends that are influencing the hair care products category - and therefore critical to private label programs. One such trend is that toward products with natural ingredients.
According to market research publisher Packaged Facts, a division of Rockville, Md.-based Market Research Group LLC, the natural and organic personal care market grew by more than $2 billion between 2002 and 2006, reaching $6.1 billion. Moreover, the company’s 2007 “Natural and Organic Personal Care Products in the U.S.” report projects sales in that market to reach nearly $10.2 billion by 2012.
Propelling the market’s phenomenal growth, the reports explains, are sales from aging baby boomers; growing retail dynamics, including a stronger natural/organic products infrastructure; crossover into mass and prestige markets; and direct sales via the Internet, catalogs and infomercials. The report predicts that these factors - along with public concern over the environment, sustainability, “fair trade” practices and more - will continue to drive growth through 2012.
Bob Metz, national sales manager for HABA-Davion Inc., Newark, N.J., also sees a push toward natural formulations.
“The influx of natural ingredient products, which first appeared in Europe, is having a great impact on the domestic brands here in the United States,” he says.
Another trend that goes hand in hand with performance is fragrance, Metz believes.
“The 80s witnessed the launch of products such as Vidal Sassoon, Jhirmack and Herbal Essences, which were fragrance- and performance-based products,” he says. “Today, the packaging gets the initial focus, then performance, then fragrance, but they all have to work together to generate sales.”
Speaking of packaging, it’s an increasingly important differentiator in the private label hair care arena. Whether opting for a PET, a post-consumer regrind or another packaging option, the retailer needs to give its store brand its own look that provides “great consumer stories” wherever possible, Rubin says.
“Create an image and a look, so when your customer is in the shower they will remember the product [the next time] they are in your store,” he adds. “Sustainability also is important. Are your suppliers working that for you?”
Finally, although sales of “professional-” and “salon-” type products remain strong, Metz says it does not appear that they are impacting sales of “consumer-driven” products as much as they have in the past.
For a snapshot of what else might be coming in the way of hair care trends, see the sidebar on this page.

Ready, Set, Sell

Ready, Set, Sell
If you build it, will they really come?
Forget the wait-and-see attitude - once you’ve developed your high-performance store brand hair care essentials, make sure to support them with the right merchandising and promotion programs.
Rubin suggests that retailers become brand-builders, advertising their products and getting the word out.
“You can’t put goods out by surveying the store personnel; you have to run your programs and force promotional activity at retail,” he says. “Twelve months of constant rotational promotion needs to be the game. Displays, PDQ, half pallets, end caps, sidekicks, trial sizes, bonus packs - do it all.”
If your current supplier can’t provide the support needed, Rubin adds, then partner with one that can.
“We invest in [a retailer’s] business to drive [its] business, and your supplier needs to have this flexibility,” he stresses. “Yes, this costs Garcoa, but at the end of the day, we add to your bottom line bank deposits.”
Forecasting also plays an important role in the sales equation, Rubin adds.
“Raw materials are going up and through the roof,” he says. “Supply your suppliers with annual forecasts so they can contract ingredients and packaging as much as possible. This will ensure on-time delivery and as cost-effective delivery as possible.” PLB

Sidebar: Hair Care's Crystal Ball

In its Global New Products Database, Mintel International Group LLC, Chicago, forecasts a number of global trends for the hair care segment, including, but not limited to:
•Continued strong interest in plant, flower and fruit ingredients within conditioners, as well as in fragrant plant and botanical ingredients within shampoos.
•Expanded use of plants and herbs - as well “more exotic ingredients” that deliver specific benefits - in hair-styling products.
•Continued interest in conditioner formulations that repair damaged hair and protect hair from the elements.
•Continued interest in shampoo formulations with benefits such as damage control, anti-dandruff and anti-hair loss, as well as fortification, vitamins and minerals.
•Growing interest in natural and/or organically sourced ingredients in hair-coloring and other hair care categories.
•The potential for hair-styling products designed for baby boomer needs.
•The potential for more specialization when it comes to shampoo and hair-coloring formulations for men.
•Green packaging advances such as recyclable containers and refills within much of the hair care category.

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