JERSEY CITY, N.J. -- Fireworks accompanied the claim that Procter & Gamble's new Physique will "redefine the hair care category" for mass-market retailers.
Amidst the explosive fanfare, during the Physique launch earlier this month at the Liberty Science Center here, food retailers and industry analysts raised questions about P&G's merchandising strategy for the line and about the viability of the super-premium-priced brand within price-competitive retail channels.
Among the questions are: Is there enough space to shelve 24 stockkeeping units of hair care geared to achieving individual hair styles? What effect will merchandising Physique together as a styling regimen and apart from the in-line department have on the category, including P&G's top-selling Pantene Pro-V line? Will supermarket shoppers be willing to spend $7 to $10 for shampoo and other items in the line?
"We haven't made a decision whether to take it on yet," said Jim McCarty, health and beauty care buyer at Brookshire Grocery Co., Tyler, Texas. "I don't know about it for supermarkets."
Paul Crnkovich, a partner at the Chicago-based market consulting firm Cannondale & Associates, said he believes that the strength of mass-merchandisers' HBC departments and the drug channels' focus on hair care have left supermarkets the least prepared for the debut of Physique. "I don't think the supermarket is going to be the destination for the $8-bottle shampoo buyer," he said. "Drug and mass will probably have the most success primarily because drug has had a more traditional focus on hair care and they tend to have higher-priced items."
Despite concerns, some are optimistic about the launch. "P&G will spend a lot of money," said Dave Roske, senior HBC buyer at Fairway Foods, Minneapolis. "We'll have to go with it, and see what happens," he stated.
But none is more optimistic about Physique than the Cincinnati-based packaged-goods giant.
"I've been with P&G 20 years and I've introduced some interesting brands, not the least of which is Liquid Tide," Bob Spicer, the company's hair care customer business-development manager for North America, told SN. "And I would put the excitement level equal to or better than Liquid Tide."
Recognizing the breadth of the product line, the company is giving retailers unlimited options regarding selection. "We designed this line for food, drug and mass," said Spicer. "They can choose the merchandising program that meets their needs or any merchandising combination thereof -- their choice; it's very flexible.
"We realize that different stores have different sizes," he added. It's the first time, according to Spicer, that P&G recommends different assortments to fit some retailers' smaller configuration. "We'll still give a retailer enough of a regimen to sell to the consumer."
The regimen concept, set off in what P&G refers to as "StyleZones," is one aspect that should make the line appealing to retailers, said Spicer, and compel them to merchandise the full line together, rather than splitting shampoos/conditioners and styling aids. "If retailers merchandise it together with point-of-sale education -- there's a lot more dollars-per-transaction going through the register," he said. "It would be a benefit to retailers to merchandise it in a regimen scheme [and] to communicate [the regimen aspect] to consumers."
Added Roske, "It is kind of unique for a manufacturer to tell you that it is willing to ship part of a new line. Bigger stores will carry the 24 SKUs. Smaller stores can use a scaled-down number of SKUs."
Ideally, for stores with enough space, P&G has designed a number of merchandising components, including:
A shelf display that frames the products with an informational shelf spinner attached.
Special floor displays.
In-store signage in the hair care department or in different parts of the store to advertise Physique.
Counter units in outlets that have a separate HBC counter.
Either way, "sales space has always been a problem but retailers always seem to find room for a new item if it is a good product and if there is demand created for it," said Terry Born, HBC buyer at Fairway Foods.
Another unusual aspect of the Physique program is the educational component. Augmenting the educational material offered on the shelf will be "Style Techs," according to Jane Wildman, general manager for the line. "We will have trained demonstrators scheduled in food, drug and mass stores to help the consumer find the product that is right for their style," she said. "We are trying to augment the education we are putting on-shelf, off the shelf."
Added Spicer, "They are being scheduled as we speak. These technicians are highly trained in understanding hair styling and understanding how the Physique products work for consumers. This isn't your typical cheese-lady demonstration. They are experts helping to consult with mass-outlet consumers."
With a reported $110 million advertising budget, P&G is out to create demand. Sources have also said that annual sales are expected to reach $200 million. P&G officials would neither confirm nor deny any figures.
"Physique did very well in test market. We learned there that consumers really liked the product. Based on that, we expect this to be one of our core hair care brands," said P&G's spokeswoman Tracey Long.
All things considered, the hair care category seems already to be populated with more SKUs than retailers can handle, it was said. P&G "has flooded the market with additional Pantene sizes and line extensions to counter the success of Thermasilk [Unilever]," said Crnkovich. "They're trying to create a Pantene section and now they're saying 'we've got 24 new SKUs that deserve to be shelved together.' As a retailer, I would ask P&G, 'what are you calling out of your over-proliferated Pantene line to make room for this?' "
P&G countered this notion, saying that for years it has been working with the industry on efficient assortment principles. Said Spicer, retailers "should have some system in place to evaluate new and existing SKUs to make the decision what goes on the shelf and what is merchandised."
Although P&G has created a different retailing approach for Physique, whether it becomes a new segment within hair care is up for debate. "We're not creating a different category as much as we are creating a different shopping experience in the food, drug and mass outlets," explained Spicer. "In the test market, most of our consumers felt that they could purchase this in a salon. If a consumer really perceives hair care as beauty and prestige, they will look at food, drug and mass outlets differently as a destination shopping experience."
"What P&G is trying to do is get some of that salon business," said Roske. Crnkovich agreed. "They've said they're creating a new category; what they've done is create a new brand within the salon segment," he said. "They've created a new high-priced brand, not a new category."
And what about price? Will shoppers on a grocery budget shy away from the high price points? Some retailers, along with P&G, think a $7 to $10 price tag will not deter beauty seekers in the grocery aisles. "We believe the grocery shopper is willing to spend the right amount to get the style they want," said Wildman. "Seven dollars isn't that great if consumers get the style they want. A key difference with Physique is that the product actually works."
Kim Burns, HBC buyer at Farm Fresh, Norfolk, Va., does not think the price points are out of range for the food channel, saying, "Pantene does really well." However, priced at about $3.69, Pantene sells for considerably less than Physique.