From The Fall 2002 Issue of Natural Grocery Buyer

Cleaning Up With the Personal Care Category

Vicky Uhland

Beeswax lip balm. Sea kelp and aloe shampoo. Blackthorn body oil. Apricot homeopathic toothpaste.

These are definitely not your mother's Noxzema.

Don't let the herbal names and fruity ingredients fool you. These popular natural personal care products may sound as if they belong in a different universe from Suave shampoo and Jergens lotion, but the rules behind building a natural personal care set in a supermarket are not that unusual or difficult to learn once a few key factors are established.

"It's kind of an art more than a science," says Jonathan Prince, senior sales manager with Jason Natural Cosmetics in Culver City, Calif. "You can't just take the best-selling items from a health store and put them in a supermarket because there's a lot of weird items, like pine nut butter, that [traditional shoppers] don't understand."

So why go to the trouble in the first place? Because Americans are spending more than ever on personal care—an average of $563 per household in 2000, according to American Demographics magazine. And the natural category is a growing part of the overall personal care segment, increasing to 7.6 percent in 2001, from 6.3 percent in 2000, according to Nutrition Business Journal.

In the nation's natural products supermarkets, personal care products accounted for $212 million in 2001 sales, up 15.5 percent from the previous year, according to SPINS, a San Francisco-based market research firm that tracks the health and wellness industry. And yet, according to a survey of more than 2,000 American consumer households conducted in 1999-2001 by the Natural Marketing Institute, only 14 percent of all consumers shop for healthy and natural products in naturals supermarkets, while a whopping 73 percent choose a traditional grocery store. NMI also reports that almost a quarter of all consumers are likely to shop for natural personal care items.

Appearance Counts
The first factor to consider when establishing a natural personal care category is what the set will look like. The NMI survey concluded that 40 percent of traditional grocery shoppers prefer that their natural products be in a separate section, adjacent to traditional products. Another 36 percent vote for a separate section away from the traditional section, and 24 percent want natural products mixed in with mainstream products.

At Wegmans Food Markets, a small grocery chain in New York, Pennsylvania and New Jersey, its Nature's Marketplace store-within-a-store caters to natural products' shoppers. Nature's Marketplace is set apart by a large sunflower mural and aisles lined with wood trellises wrapped in silk ivy. Metal shelves are faced with wood caps for a more natural look.

Although the Nature's Marketplace look may be too elaborate for a small natural personal care set, it's important that the natural set be differentiated from the traditional product shelves. "Green shelf overlays that go around the perimeter and highlight the section" are a good option, says Paddy Spence, CEO of SPINS. Signs should also be differentiated, commonly with italic or more flowing typefaces. Spence says signs should contain educational information such as "no artificial colors," "no preservatives" or "not tested on animals."

Once the look of the set is established, the focus shifts to developing the right product mix. This is where a trip to a nearby natural foods store can both help and hinder you.

Scouting the naturals stores will help you determine what's selling in your area and also will acquaint you with hot-selling smaller or regional brands not carried by the large distributors. But be aware that all the brands you see in a natural foods store won't be available in supermarket and mass merchandise channels.

Out of the five best-selling natural personal care companies in natural and specialty retail, as compiled in 2000 by Nutrition Business Journal, only two frequently appear in supermarkets.

It's Made From What?
The No. 1 seller, Chatsworth, Calif.-based Levlad Inc., maker of Nature's Gate products, only does about 5 percent of its business in supermarkets, says Mary Anders, vice president of branded products. Part of this is because many of Nature's Gate products use ingredients that may not be familiar to the average supermarket shopper, so only some of Levlad's SKUs are appropriate for the channel.

"With the consumer that's out in the mainstream market, they may only gravitate to an herb they're familiar with, like chamomile or aloe vera," Anders says. "In mass merchandise, the ability to educate is pretty slim. There's a real large learning curve. It's difficult to explain what awapuhi is."

The No. 2 seller, Tampa, Fla.-based Aubrey Organics, doesn't sell in supermarkets at all. "We've just not done it yet. I don't know if it's something we'll ever do," says Sheree Edwards, sales administrator.

No. 3, Tom's of Maine, is widely available in supermarkets, but No. 4, Burt's Bees, tends to be only in small specialty chains such as Wegmans. Roxanne Quimby, founder and president of Raleigh, N.C.-based Burt's Bees, says that although she's pleased her company is gaining more supermarket accounts, "We like working with natural products buyers better. They understand our culture better. Sometimes [supermarket buyers] don't have that lifestyle commitment to the natural foods brands. There's not as close of a bond."

Burt's Bees, like many natural products manufacturers, doesn't market through a distributor or broker, which can sometimes be a disadvantage. Some smaller-scale manufacturers that aren't backed by a distributor's money don't have the marketing budget to help a store with promotions or cooperative advertising.

Distributors and brokers can also be of use in establishing a natural personal care set because many of them have designed sets of their own based on market research figures. Large manufacturers design sets as well. Nature's Gate is "hoping to come up with a comprehensive guide within the next couple of months that we can present directly to retailers," Anders says, explaining how a 4-foot, 8-foot or 12-foot set should be designed and stocked. Jason's Prince has designed sets for stores such as John's Market in Portola Valley, Calif.

Statistics To Consider
Of course, distributors and manufacturers have their own agendas when designing sets. If you want to do your own, here are some factors to consider:

• Hair today, gone tomorrow. Sales figures differ slightly in natural personal care vs. traditional personal care. According to American Demographics, in 2000 the top-selling personal care products in drugstores and supermarkets were cosmetics, perfume and bath preparation, followed by hair care products, oral hygiene products and deodorants, feminine hygiene and miscellaneous personal care.
  
  Yet, according to NBJ, during that same time period the top-selling natural personal care item in naturals outlets was skin care, followed by hair products, bath/toilet soap, oral hygiene, fragrances, cosmetics, deodorants and bath items. (If the bath, fragrance and cosmetic items were combined, as they are in the American Demographics survey, they would be the No. 3 seller.) Rounding out the NBJ survey is a tie between baby care and shaving items, followed by feminine hygiene and nail care.
  
  All rankings stayed the same in 2001, though shaving products moved up to eighth place and baby care dropped to 10th.
  
  
• Brand, schmand. In supermarket natural personal care sets, because space is limited and mainstream consumers often aren't familiar with natural product brands, it's key to merchandise products by segment rather than brand, SPINS' Spence says.
  
  In an 8-foot natural personal care supermarket set designed by Prince, the top shelf is devoted to oral hygiene products. A mini shelf is filled with soaps. The third shelf is stocked with skin care, shaving products and sunscreen. The fourth shelf holds deodorant and skin care items, including essential oils and balms. The fifth holds lotions, the sixth is devoted to shampoo, the seventh has shampoo and liquid soap, the eighth holds bath products.
  
  
• The price is right. Most manufacturers and analysts agree: $10 is the maximum price for any product you want to sell in a traditional grocery channel. "The higher-end facial skin care is probably not going to sell in a supermarket. That means no cosmeceuticals," says SPIN's Spence. Not only that, but pricey brands, such as Dr. Hauschka Skin Care, tend to get stolen.
  
  "You can't take a $25 jar of stuff and put it in a self-serve environment," says Burt's Bees' Quimby. "People don't want to buy Clinique at a grocery store. They want the ambience of a department store, more personal attention."
  
  
• Keep it simple. "You need to simplify because most [natural products] brands are pretty much unknown," says Quimby.

  A national broker who asked not to be identified added, "Each manufacturer has their own niche, what they're known for. If you stay within that core niche, you'll be safe."

  Quimby recommends a grocer pick five brands per segment to "let consumers get their feet wet. With too many brands, too many SKUs, the consumer kind of shuts down, [thinking], 'It's too confusing to me; I'm just going to go back to my Jergens.' "

  Vicky Uhland is a Denver-based freelance writer who can be reached at vuhland@mindspring.com.