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Affordable indulgence for the value-driven shopper

BY Antoinette Alexander

BOSTON — The search for value continues, but it doesn’t always mean cheap. It means “make my life better.” And when it comes to the $45 billion beauty market, the opportunities are aplenty. That was a key message from Sunday morning’s Insight Session “Putting the Polish on Your Value-Oriented Shopper.”

To help retailers and suppliers see how this trend is playing out within the dollar store segment, presenters Larry Levin, EVP of IRI, and Jessica Kalinger, Coty Beauty’s director of consumer marketing and shopper insights, shared how they collectively identified value-driven consumers to understand their shopping preferences
and behavior.

It is no secret that today’s consumers remain cautious and that their shopping behaviors have been altered to reflect a “new normal.” What this means for shoppers — especially beauty shoppers — is that value is extremely important. In fact, as Levin pointed out, today’s wealthiest shoppers love deals, those economically concerned shoppers want accessible indulgence and new innovation, and beauty shoppers are trading down from premium brands.

“It is chic for people to drive a Mercedes in front of a dollar store. Dollar stores delivered 4% growth, significant growth in beauty because people saw the value,” Levin said.

Added Kalinger: “This growth trajectory has been going on for the past three to four years. So a couple of years ago, my team noticed this trend and took a step back and investigated what within beauty was causing these dynamics.”

Coty found that year-over-year it was the same three segments really growing the category within the dollar store channel:

  • Hair care, mainly shampoo and hair coloring, is the leader bringing in two-thirds of the total dollar growth within the last year;
  • Nail enjoyed 3.8% growth, representing $4.2 million — thanks, in part, to increased points of distribution; and 
  • Color cosmetics grew 2.7%, representing about $6.4 million. 

Other points included: innovation sparks excitement, so innovation must remain strong; connect with your savviest shoppers and know your segmentation; and don’t forget about
the millennials. 

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Innovating to fulfill unmet customer needs

BY Michael Johnsen

BOSTON — There’s no other aspect in business that would tolerate an 85% failure rate. So why should it be tolerated in new product development? That’s one of the key questions addressed by Taddy Hall, SVP of the Nielsen Innovation Practice and leader of the Breakthrough Innovation Project, at the NACDS Insight Session titled “Breakthrough Innovation: From 85% Misses to 85% Hits” on Sunday. 

“We believe that [innovation] is somewhere between magic and art, and it’s [in] this unknowable, unpredictable realm — it’s simply not true,” Hall said. Flopping the innovation success rates so that 85% of new launches are hits is definitely achievable, across industries and across categories, Hall added. 

Another fallacy associated with innovation is that in order to aspire to higher rates of return, you need to embrace higher levels of risk. “There is no relationship between risk and return,” Hall said, suggesting that a routinely well-vetted innovation pipeline represents the ideal — low risk and high return. 

The truth is, if you produce a solution that resolves a previously unmet customer need or fulfills an unmet aspiration, as defined by the customer (not the marketer), the product launch has a high chance of succeeding. “If you can embrace and operationalize the definition of innovation, that emerges from consumer’s actual behavior, the implications can be transformational,” Hall said. 

Winners in innovation do a few things right, Hall said. “One [is] you can see the insight brought to life in the creative execution. Second is the in-store activation; it’s hugely important. With many brands, the in-store activation and the package design are the [leading sources] of awareness and obviously critical in driving trial,” he said. “Finally, what we found from these winners is that 40% of all trial occurs in the first 100 days. So make sure you are on top of launches because there are inevitable surprises in launches.”

“Breakthrough innovation is not random,” Hall said. “There’s a very disciplined process by which these breakthrough winners are generated. Much better innovation outcomes are absolutely a choice.”

There are three criteria with which Nielsen identifies breakthrough innovators. The product needs to be distinct; the product needs to be relevant with at least $50 million in year-one revenue; and the product needs to have endurance by maintaining at least 90% of its sales volume through year two. 

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Forum: Millennials hold influence

BY Michael Johnsen

BOSTON — It’s all about unveiling opportunity, absorbing those insights that can really transform a business and then putting those insights into action. That’s what Dan Mack, managing director of the Mack Elevation Forum, asked attendees to do at Friday’s exclusive, one-day summit co-hosted by Mack Elevation Forum and Drug Store News at the Seaport World Trade Center. 

Modeled after the cutting-edge TedX conference series, the joint Mack Elevation/DSN summit brought together eight critical thought leaders from both inside and outside of the industry, to challenge attendees and their companies to think beyond their brands to achieve breakthrough results. “I’m a big believer that business can be transformational,” Mack said. “The companies and the brands that inspire me, … they’re much bigger than
their products.”

One recurring theme throughout the day’s sessions revolved around the importance of capturing the millennial shopper.

“[Millennials] want businesses to be engaged and do not trust businesses that are not engaged in the world in some way to make it better,” said Seth Rogin, chief revenue officer at Mashable. “Sixty-three percent of millennials are giving money to charity; we’ve certainly seen it this week on how many have poured ice over their heads. They’re the biggest generation any of us will see in our entire lives, and … our brands that stand for something, also can do well while doing good at the same time.”

In addition to Rogin, the speaker lineup included:

  • Chris Skyers, VP health and beauty at Wakefern Food Corp./ShopRite, talked about the opportunity inherent in creating custom programs with smaller retailers. Manufacturers can get actionable results fast; 
  • Brett Goffin, industry head of retail at Google, discussed the buzz behind omnichannel retailing and why mobile is the platform to own; 
  • Vic Curtis, SVP pharmacy at Costco, reviewed the rationale behind disciplined SKU rationalization; 
  • Craig Hashi, head of OTC and pharma for Twitter, broke down how healthcare marketers can create social media marketing opportunities in real time without complaints from the compliance department; 
  • Moe Alkemade, GVP/GMM convenience for Walgreens, explained how brands and private label can not only co-exist, but also succeed together; 
  • Larry Levin, EVP and practice leader at IRI, outlined the reasons new launches fail and how manufacturers and retail partners can ensure a better success rate; and
  • Jason Reiser, chief merchant for Family Dollar, identified the distinct opportunity within today’s value channel.

For more photos from the summit, click here.

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