Skin care in grocery; a post GFC winner

Topics: Category Strategy, FMCG

Skin care was one of the better-performing non-food categories in grocery in 2011. What’s driving the growth? The team from ShopAbility discuss, for Retail World Magazine.

It appears that the face of health and beauty is changing. Skin care value was up 6.5 percent last year, and volume up 18 per cent. Given that related categories like Personal Care grew at 2.3, and Sun Care actually declined, it’s an interesting result. What’s going on?

 

The first thing we look to is NPD and line extensions. Was there much of it? Not really. Simple introduced the new Kind to Skin range of wipes and moisturisers in February, Garnier followed with Miracle Skin Perfector daily moisturiser in August, and Innoxa with SOS Skin Tissue Oil in November. Compared to the amount of NPD in 2011 for cosmetics, which were therefore unsurprisingly up 18+ per cent in both value and volume by year’s end; skin care seems to have performed despite itself.

 

Is it about media spend?  That’s possibly part of it. According to Nielsen, advertisers spent $88M on skin care, up 5 per cent on the previous year, with share of main media spend going to the usual suspects including L’Oreal and Unilever. But advertising alone doesn’t explain the volume change of 18 per cent. People are buying more skin care in grocery.

 

 

CHANNEL SHIFT IN HEALTH AND BEAUTY

 

It would appear that some things have changed long-term in shopper behaviour in health and beauty categories, post GFC. One of them is channel choice.

 

Where some shoppers previously looked to specialty (such as salons), and pharmacy for skin care, and also for cosmetics, those shoppers are now prepared to consider supermarkets for these purchases.

 

Why? It comes down to value – value not being price alone, but total value proposition. Which leads to our next point.

 

 

VALUE BEYOND PRICE ALONE – WHAT SKIN CARE BRANDS ARE OFFERING

 

 

Recently, at the 2012 Path to Purchase Summit, Jon Bird of Ideaworks discussed the concept of ‘The New Value Equation’, involving 8 ‘paths to value’ that brands can take:

  1. Basic Buys
  2. Proven Performer
  3. Creative Solutions
  4. Expert Advice
  5. Built to Last
  6. Affordable Chic
  7. Small Indulgences
  8. Everyday Heroes

 

While each of these deserves their own explanation, we’ll explore just the ones we’re seeing in skin care that are helping to drive growth in a retail landscape where shoppers increasingly seek greater value (in a holistic sense, not price alone).

 

Looking at the subcategory brand shares, in Facial Cleansers we have Neutrogena highest at 15% brand share. Why? According to Jon Bird, a ‘Proven Performer’ is loved and trusted for many years, offers authenticity and integrity – a guarantee for shoppers. Neutrogena offers all that, and also taps into another trend: the desire for simplicity, honesty and not to be blinded by science or unbelievable claims.

 

Moving to Facial Moisturisers; we have another Proven Performer at #1: Olay. At #2 we have L’Oreal Dermo Expertise. Products in this category that are ‘salon style’, with a focus on scientific claims and skin technology, but are sold in grocery, can be considered ‘Affordable Chic’. Like Target offering designer clothes in limited edition runs at everyday prices, these brands offer a more premium product, at a lower price point. There’s an abundance of this value proposition in hair care, too. At a macro level, the desire for the most scientifically advanced product for the price is at the other end of the spectrum to the trend towards simplicity and authenticity – and smart suppliers are catering to both shopper orientations with different brands.

 

In Facial Treatments, we have Clearasil at #1. They offer ‘Expert Advice’ in the business of acne. Expert Advisor brands guide shoppers through something tricky, and we all know spots are no fun. Clearasil have a… bm tish…. clear and narrow focus on what they do best as experts.

 

When it comes to Body Lotions and Hand and Nail Care, there are a range of players doing well, some of which could be considered ‘Small Indulgences’. Like Bio-Oil and Du’it. They offer affordable ways to treat oneself – in this instance to a quasi day spa at home.

 

So, in terms of what drove growth in Skin Care in 2011, it really came down to:

Having a value proposition beyond price alone

Post-GFC channel shift in the category (back to point 1 – the value proposition creates permission to shift)

Media investment (again, back to point 1 – communicating the value proposition).

 

It will be interesting to see what 2012 has in store. The Category has potential for double-digit value growth (not just volume) on the back of some clever NPD playing to macro consumer trends. We’ll have to wait and see if that happens!