When it comes to offering hair color for the growing numbers of graying Americans, supermarkets rank a distant third among the leading channels.
The grocery channel did just 17% of the $970 million in hair color sales reported by Information Resources Inc., Chicago, for the 52 weeks ended March 31, 1996. Drug, on the other hand, generated the majority of sales with a 47% share. Mass is gaining share quickly, however, with 35% of the business.
Preliminary research conducted by American Greetings' Research Council, Cleveland, for its latest project -- to be released at next year's Food Marketing Institute Show in May -- indicates that food stores have barely scratched the surface in getting a fair share of hair color sales.
The council, therefore, decided to target hair color as a segment to be tested as part of its overall 1997 project. Tests on hair color sets will be conducted in supermarkets to see if sales can be boosted through selection, pricing and promotion strategies.
"The council has selected hair color as one of the categories to be tested as part of this project because council members believe it offers supermarkets untapped potential, and is a substantially underdeveloped category.," said Sara Eames, a spokeswoman for American Greetings, Cleveland.
Retailers interviewed by SN agreed that hair color will grow with an aging population. This year the first baby boomers turned 50. According to demographic statistics, by the year 2000 those hitting 50 will increase at the rate of two million a year, representing approximately 44 million American women who could color their hair at home.
"The aging population, not just the baby boomers, are contributing to hair color sales," said Bill West, director of nonfood at Seaway Food Town, Maumee, Ohio. "The women's hair coloring market is showing definite growth. The shopper profile for these products is getting younger and the graying of the population is expanding the segment," said Mark Beyer, health and beauty care buyer for Copps Corp., Stevens Point, Wis.
Also, population shifts and pressure in the work force are causing people to perpetuate their youthful appearance, say retailers.
Andy McPheeters, nonfood buyer and merchandiser at Stanley Stores, Bay City, Texas, said, "As younger people move into the work force and corporate downsizing continues, people need to look as young and healthy as they can to compete for jobs." According to nonfood executives, a healthy portion of the 16% increase in the $168 million worth of hair color products sold at grocery stores last year was in men's color. "Men using hair color is one of the biggest reasons sales are increasing," said Gary Schloss, vice president of general merchandise at Carr Gottstein Foods, Anchorage, Alaska. "About 10% to 15% of our hair color mix is for men," he added.
"I was real surprised in conversations with brokers during new item presentations, when I started looking at men's color and saw the kind of movement we're getting," said McPheeters.
Hair color sales volume, which is rising 8% for the period ending this year, will be driven by new launches by market leaders Clairol and L'Oreal.
This month L'Oreal will begin shipping Belle Color 20-Minute ColorEase Gel from its Paris-based company, Laboratoires Garnier, to chains such as Pathmark, Kroger and A&P. The product, which will retail for under $6, is being positioned to a younger user and will be backed by $20 million in advertising. Next month Clairol begins shipping Hydrience, a water-based cream formula, containing sea proteins and minerals. Suggested retail is $7. Sources said Clairol will spend $30 million to advertise this new product. They also estimate that Belle Color and Hydrience could add over $50 million in sales to hair color at retail.
"Hair colorings are growing with a lot of new products coming out from Clairol and L'Oreal. We are picking them up. These two companies are competing with each other with products that offer a natural look that's safe for your hair," said Schloss.
In addition, Clairol will add Revitalizing Loving Care to its line, positioned for women who want longer lasting color.
"The trend is toward products that are easier to use with simpler applications. Water-based products, rather than those that are chemically based, are moving off the shelf," reported Kim Botkin, director of nonfood at Gerland's Food Fair, Houston. "What's happening is the new items coming out are creating excitement. While some colorings wash out during shampooing, some new ones maybe are longer-lasting," Beyer said. In a heavily assorted segment such as hair color, the obstacle for grocery retailers in doing more hair color business is finding the space.
To add the new items from Clairol and L'Oreal, Beyer would need to add more shelf space to his 32-foot hair color section, or take something out. "Suppliers have suggested that we increase our shelf space. We'll make that decision after we've had a chance to see the new items," he said.
Space restrictions preclude some retailers from even getting into hair color.
"Although we've looked at getting into hair color, we have not yet committed to the space that you would need to do a good job," said Randall King, nonfood buyer at Byrd Food Stores, Burlington, N.C.
Another factor is Wal-Mart and other deep discounters that have driven margins down with their promotional strategies.
Said Audie Waters, nonfood buyer at Autry Greer & Sons, Prichard, Ala., "Wal-Mart and Kmart sell hair coloring at prices lower than we can. Being 10 to 15 cents off is all right, but not $1 or more."
Hair color used to bring retailers 35% profit margins. This is not the case today because of mass merchandisers, said retailers.