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Mass beauty firms now see the ethnic color cosmetics market as a burgeoning opportunity, not the niche proposition the category was relegated to more than a decade ago.
In the past, when marketers talked about the ethnic beauty business, the conversation centered on ethnic hair care, which accounts for the lion’s share of sales.
After all, African-Americans, who make up approximately 13 percent of the U.S. population, account for 30 percent of all hair care spending.
But in the din of the chatter, ethnic cosmetics has emerged as a robust business in its own right.
According to Procter & Gamble, ethnic cosmetics is a $1.5 billion market, with mass retail accounting for roughly 50 percent of the business, forcing chain stores and beauty manufacturers to sit up and take notice.
And they have responded in earnest. Earlier this year, Cover Girl introduced its Queen collection, a range of color cosmetics for African-American women designed to leverage the draw of Cover Girl spokesmodel Queen Latifah, and L’Oréal Paris opted for the multicultural approach with HIP, a line of high-pigment makeup fronted by Beyoncé Knowles. Meanwhile, Iman Cosmetics continues to gain ground since entering the mass market in 2004, and is now distributed in 1,000 doors.
Prior to their arrivals, a number of cosmetics lines tailored toward ethnicity — including Dark and Lovely cosmetics, Maybelline’s Shades of You and Revlon Polished Ambers and ColorStyle — had fallen out of favor with mass retailers following the failed attempts to court African-American shoppers.
But a dearth of information about who was shopping their doors proved to be the Achilles’ heel of retailers’ attempts at custom-merchandising.
The advent of elaborate point-of-sale tracking technology and more precise demographic data — drilled down in some cases by zip code — spawned a more sophisticated approach, called micro merchandising, which has given retailers a keen sense of who is walking through their doors.
The advancements couldn’t have come at a better time.
A shift in U.S. demographics, marked by the hyper-growth of non-Caucasian consumers, has made pigeonholing shoppers by neighborhood and store location a pointless exercise.
Plus, knowing which customers are in what stores has the potential to reap significant rewards, considering that African-American consumers spend approximately 25 percent more of their disposable income on personal care items than the general U.S. population, according to Euromonitor, a market research firm.
Retailers still take a targeted approach to ethnic merchandising, and manufacturers in the category are well aware their distribution will be capped at a certain number of doors.
Of the 40,000 mass market retail doors, industry experts estimate that approximately 35 to 50 percent are designated, to some extent, as ethnic stores, or those heavily trafficked by Hispanic and African-American shoppers.
Nevertheless, mass retailers’ propensity for micro-merchandising is helping to widen the ethnic beauty market.
“Retailers, more quickly than the general market brands, realized that approach wasn’t working for them,” said Desiree Reid, senior vice president of marketing and creative for Iman Cosmetics, referring to merchants’ reliance on big beauty firms to cater to an African-American shopper.
Iman Cosmetics made a bid to enter the mass market in 2004 at a time when retailers were ready to embrace the ethnic cosmetics line, she added. “It wasn’t a hard sell-in. When we approached mass retailers, it was a lot different than it would have been if we had tried to go in five years before,” said Reid.
Retailers’ efforts to tailor their mix by store are not lost on manufacturers of ethnic beauty products, who report that merchants are better equipped to do just that.
For instance, CVS uses its loyalty card, ExtraCare, to code items in a shopper’s basket by ethnicity, said an executive of an ethnic beauty firm. The manufacturer noted that if the customer bought a hair relaxer, all items in the basket would be assigned to an African-America shopper.
Walgreens groups its stores by a litany of characteristics, including family size and location to a business or school, and then tailors its mix accordingly, said a Walgreens spokeswoman. She noted that when a store opens, the merchandise is primarily determined by neighborhood demographics, but that the mix will evolve based on point-of-sale data and feedback from the store’s staff. Walgreens sells ethnic beauty lines, including Milani, Cover Girl’s Queen collection and Iman Cosmetics, in a select number of stores, and has found that general market brands, such as Olay and L’Oréal Paris, also perform extremely well in its ethnic doors, said the spokeswoman.
For its part, Wal-Mart takes a “store of the customer” approach, tailoring the merchandise to a particular clientele, noted a Wal-Mart spokesman. He added that Wal-Mart carries ethnic beauty lines, such as Iman Cosmetics, in select doors and this fall will add Ambi, a skin care line for African-American women.
Retailers know what’s in a shopper’s basket, and therefore can no longer overlook the buying power of Hispanic and African-American consumers.
“From our perspective, the market is broadening in terms of the selection that’s being offered to ethnic consumers and the breadth of distribution,” said Kat Peeler, senior vice president of marketing at SoftSheen Carson, a division of L’Oréal SA and the ethnic hair care category’s largest player. SoftSheen’s brand portfolio includes Dark and Lovely and Optimum Care.
Peeler added, “Several years ago, there were very few retailers with an ethnic hair care set in every door, but as demographics change, we’re beginning to see ethnic sets in nearly all doors.”
The opportunity for growth may be stunted somewhat compared with general market lines — including Cover Girl, which is touted by Joy Bryant and Queen Latifah and Revlon, long trumpeted by Halle Berry — but ethnic manufacturers report retailers are more willing to embrace their brands than in years past.
Iman Cosmetics, with P&G as its distribution partner, has widened its reach to 1,000 doors, including Wal-Mart, Walgreens and Target. Reid acknowledged that three years ago, she estimated the brand’s distribution potential was 5,000 doors. Today, she estimates it’s close to 10,000 to 15,000 doors.
The premium-priced brand — prices range from $6.99 to $14.99 — will break a $1 million print ad campaign this fall, but primarily relies on in-store makeover events to win over shoppers. “Once you give her a makeover, she walks away a completely different person and she wants to take that new person with her,” said Reid, explaining the events’ success in fueling product sales.
Iman injected celebrity into a business that had long been neglected. Cover Girl followed suit with its Queen collection, which launched in January in select doors. To introduce the brand, Cover Girl partnered with the Tom Joyner morning show, a nationally syndicated radio program. The brand was written into the script of the show’s mini soap opera, “It’s Your World.”
“Cover Girl’s Queen collection dispelled the myth that you can’t sell cosmetics over the radio,” said Cheryl Hudgins Williams, associate director of global communications for Procter & Gamble Beauty. She added that the success of spots confirmed Cover Girl’s plans to run radio ads for Queen, which will feature Queen Latifah’s voice.
Cover Girl’s Queen collection has rolled out to 2,500 doors in 18 major cities and is slated to gain distribution in 1,600 additional doors next year, according Williams. She noted that the Cover Girl brand has broad appeal with African-American, Hispanic and Asian consumers.
Several lines positioned as “multicultural” have gained a foothold beyond retailers’ networks of ethnic doors. “Milani has turned the ethnic beauty category upside down,” declared Robert Wallner, national sales manager for Milani, referring to the brand’s cross-cultural approach to beauty.
Since launching in Walgreens in 2002, Milani has expanded its reach to 15,000 doors, including beauty supply stores, said Wallner.
“Milani quickly built the multicultural route,” said ethnic marketing consultant Roslyn Chapman of The Chapman Edge.
Milani’s success has captured the attention of the beauty establishment. For instance, by positioning its HIP brand as multicultural, L’Oréal Paris succeeded in nabbing full distribution for the new cosmetics brand.
HIP’s competitors noted that consumers found the brand confusing, given that it is trumpeted by Knowles and Scarlett Johansson, and anticipate that several retailers will trim the brand’s current 2-foot display space. Walgreens noted, however, that HIP and Milani have confirmed what the retailer already knew: that it has a multicultural consumer shopping its doors.
Experts say retailers’ selectivity in merchandising ethnic beauty lines is rooted in their zone marketing mentality.
“Zone marketing is appropriate for ethnic hair care, because drugstores compete directly with beauty supply stores,” said Chapman, adding that there’s more of an opportunity for ethnic cosmetics to gain wider distribution.
“We are never going to be in every Duane Reade, Wal-Mart or Target store,” acknowledged Reid of Iman Cosmetics. “We don’t need to be. We need to be where the customer is,” she said, adding that because Iman Cosmetics deals with tonality, rather than ethnicity, the brand has broader appeal among women of color. Iman Cosmetics, which is also sold in Ulta stores, is looking outside the mass market for growth and is sold at Harlem’s N Boutique, located at 114 West 116th Street.
Reid said as long as retailers continue to look at brands like Iman Cosmetics in terms of tonality rather than ethnicity they will be able to take advantage of a broader opportunity.
She noted, “As retailers such as Wal-Mart, Target and Walgreens move into more urban markets, more and more doors will become available for ethnic beauty products.”