In a segment dominated by such descriptions as "luminous," "lustrous," "long-wearing" and "colour riche," presentation means everything. That may be why supermarket retailers surveyed by SN are taking vastly different approaches to improve their lipstick sales. To reduce shrinkage and boost profits, some have expanded departments and increased advertising, while others have attempted to reduce the

In a segment dominated by such descriptions as "luminous," "lustrous," "long-wearing" and "colour riche," presentation means everything. That may be why supermarket retailers surveyed by SN are taking vastly different approaches to improve their lipstick sales. To reduce shrinkage and boost profits, some have expanded departments and increased advertising, while others have attempted to reduce the number of items carried and have focused instead on the top sellers.

Ray's Food Place, Brookings, Ore., recently expanded its entire cosmetics department, allocating more space to in-line sections and adding endcap displays.

"What we are doing is expanding the stockkeeping units and offering more variety, but fewer brands. We are cutting back from three brands to two," said Dan Van Zant, buyer-supervisor for health and beauty care and general merchandise.

For the year ended March 11, 1995, lipstick sales at supermarkets totaled $63 million, an 8% increase over the year before, according to Nielsen North America, Schaumburg, Ill. "Margins are excellent in lipsticks," said Van Zant. "They're a lot higher than most HBC items."

But with competition growing from other classes of trade, he said, "we are going to be reducing our retails in an effort to increase our sales. We feel price is a factor, so we will be cutting retails between 5% and 10%."

Kim Botkin, HBC buyer and merchandiser at Gerland's Food Fair, Houston, said increased vendor support could improve his cosmetics department.

"It is a hard category to merchandise," said Botkin. "If we did resets more often I think our sales could increase. But the vendors won't come in and do our resets because our sections are too small." Gerland's averages 8-foot cosmetic sections.

Another difficulty is deciding what types of items to merchandise. In a category driven by fashion and color trends, product selection can change annually, making it difficult for retailers to know which items to carry when space is limited.

"Cover Girl may have 60 shades of lipstick, and in our stores we have room for 20. I don't necessarily know which 20 are the best and neither do the girls who would be responsible for maintaining the section," said Botkin.

Theft is one of the biggest hurdles, though. To combat shrinkage, some retailers are downsizing and relocating their lipstick sections.

"There are good margins in cosmetics. But the pilferage factor is quite substantial," said Dave Lynam, HBC buyer at Harding's Friendly Markets, Plainwell, Mich.

"We have been concerned about pilferage. So we are being more careful about that and trying to get better locations in stores," he said.

"We are refixturing in some departments, and sizing down some departments. But we also added a line of Wet 'n' Wild makeup," Lynam added. "If anything, we probably decreased the space for lipsticks. We got rid of duplications between brands."

Karen Swanda, HBC buyer at Coborn's, St. Cloud, Minn., said her cosmetics department has tripled in size this year due to a store remodel.

"We just picked up a lot of cosmetics space. We had a very small cosmetics area," she said. Now, "the biggest section is Cover Girl, with about 16 feet, and Revlon gets about the same. The rest of the players get from 4 to 10 linear feet."

The chain recently beefed up cosmetics advertising. It ran a $3 coupon off the purchase of $5 or more of Revlon products, said Swanda.

"We usually just run brand-oriented ads; it would be too confusing otherwise," said Swanda. "We discount about 10% off manufacturer suggested retail prices. That is not new; we have always done that.

"Lipstick sales are real good. Since we remodeled, they picked up. It could be because we carry a lot of the low-end, 99-cent lipstick."

A buyer at a leading West Coast retailer, which operates conventional-sized stores, said his sales have been stable, but the biggest concern right now is shrink.

"Pilferage seems to be a bigger issue, maybe because of the economy. So, we don't carry as much bulk as we have at other times," said the buyer, who asked not to be named.

While the company views its departments as a convenience section for shoppers, and doesn't compete head-on with other retailers, it frequently offers good deals.

"Our main sales drivers are half-price sales," said the buyer. However, "because we offer convenience, we don't see ourselves competing with drug stores or mass merchandisers," the buyer added.

Laura Wassell, HBC merchandiser for the Supervalu division in Fort Wayne, Ind., which supplies some 400 stores, including corporately owned units, contends that lipstick sales are on the rise.

"It is growing because a lot of food stores, especially the larger format stores, are going toward the fuller and more complete departments," said Wassell.

"It is a No. 1 attraction as far as impulse sales go. So I do think lipstick sales among the food industry are growing, but not in the conventional stores -- more in the large, combo-type stores."

To help draw attention to the section and encourage trying different lipsticks among consumers, vendors periodically offer trial sizes of merchandise, or feature color-coordinated special-value packs that include nail polish, lipstick and eye shadow, said Wassell.

"There might also be some displays from companies that offer trial sizes," she said. Stocking the numerous cosmetic items can be challenging, said Wassell.

She noted the lipstick colors change yearly, along with the prices, and "being a grocery wholesaler, we are limited to how many SKUs we carry in cosmetics. They take up a lot of space."

She added, "There is always something new in colors and tones, in all of the different shades. And things are heading now toward neutral, natural and softer shades. It is a fashion-oriented department. It is all just trendy."

Meanwhile, some value-added lipstick items have found a small but growing market for themselves, according to some retailers.

"At this point, the new items with sunscreen and vitamin E, et cetera, are just a niche item," said Renee Ruetten, category manager of HBC at Roundy's, Pewaukee, Wis. Overall, she said, "lipstick sales fall kind of in the middle of the entire cosmetics department. It is not the biggest segment, but it is not the smallest either."

In the past, space allocated for lipsticks has remained the same, but in about six to eight months, the company plans to review the category, "and it may change."

Lynam of Harding's said lipstick is the biggest segment within the cosmetics department.

"Basically, you have your lipstick, nail polish, and powder and liquid makeup that are the biggest profit producers," he said.

Lynam added that the company rarely advertises cosmetics. "Maybe we'll offer just a blanket coupon on cosmetic items, generally worth about 50 cents," he said.

Meanwhile, Ray's Food Place, which has just expanded its departments, will increase advertising to about one ad per month, said Van Zant.

"We are getting on an aggressive promotional program. In the past we hadn't done that. We would just place them out there and hope that they would sell," he said.

Ray's is expecting to double its exposure to cosmetics, according to Van Zant.