List price change vs. retailer margin
The economy continues to be the single largest influencer in the growth of the health, beauty and wellness industry. The annual inflation rate has averaged just more than 2% during the past five years. More than ever, consumers are focused on living well with less and are making every effort to save money. Manufacturers are struggling to manage the ever-increasing cost of goods sold, and retailers are under tremendous pressure to increase profits in a very competitive environment.
A recent study of list price changes over the past five years found that most HBW categories (19-of-34) saw average annual increases above the 2% inflation rate, although six categories actually experienced a decrease in list price. While the average annual percent change ranged from a high of +5.24% for foot preparations to a low of -2.64% for sun care, the HBW industry average increase in list price was 1.82%.
The lowest average annual list price increase during the past five years occurred in 2010 (+0.86%) as the U.S. economy struggled to recover from the recession that began two years earlier. Ironically, the most significant single-year increases occurred in 2008 (+2.62%) just as the recession began and was driven by home health care/sickroom (+27.14%), cosmetic makeup (+7.84%), home remedies (+5.75%) and toothpaste (+5.41%). The study further revealed that the categories with more competitors were not as likely to take price increases as high as those in less crowded categories. Examples include external analgesics (+1.04%), internal analgesics (-0.13%), internal cough-cold (+1.44%), vitamins (+0.62%) and weight control/nutritional foods (+1.14%).
Despite the economy, several categories were able to take double-digit list price increases at various times during the past five years; although in most cases, the increases were followed by decreases. In 2008, for instance, the home health care/sickroom category saw a 27.14% increase. That was followed by four consecutive years of average list price reductions. Similarly, the home remedies category showed an average increase of 16.5% in list prices in 2011 followed by a 1.45% decrease in 2012. By contrast, the laxatives/diarrheals and foot preparations categories saw double-digit increases of 13.2% and 11.11% in 2008 and 2011, respectively, and experienced list price increases in each of the following years as well. The family planning and weight control/nutritional foods categories have each shown average list price increases of 13.31% and 11.53%, respectively, during the past 12 months.
Interestingly, there were several categories that showed increases and decreases in list price during a given 12-month period that resulted in no net change (0.00%), including laxatives/diarrheals in 2008, toothpaste in 2009, cosmetic/makeup in 2010 and 2011, internal analgesics in 2010 and 2011, bath products in 2010, denture products in 2011, men’s and women’s toiletries in 2011 and 2012, and sun care in 2012.
Hair care, oral care, internal cough-cold and vitamins, the highest-volume categories across all classes of trade, had average list prices of $6.31, $4.57, $6.26 and $7.14, respectively. The categories with the highest average list prices were home health care/sickroom, home remedies, laxatives/diarrheals and baby products at $15.05, $13.54, $8.26 and $7.59, respectively. On the other hand, the categories with the lowest average list prices were deodorant, cosmetics/makeup, bath products and hair styling at $2.96, $3.17, $3.34 and $3.48, respectively.
At the same time manufacturers are looking to increase list prices, retailers are looking to maximize their margin across all channels. In general, drug retailers have been able to consistently generate the highest retailer margin. For example, the average retailer margin for the vitamin category in the drug channel is +41.7% compared to +37.9% in food and +34.5% in mass. This pattern holds true across all categories. The categories generating the highest retailer margin across food, drug and mass were foot preparations, family planning, home health care/sickroom and first aid. Conversely, the categories generating the lowest retailer margin across all channels were toothpaste, baby products, shaving products and home remedies.
The study also attempted to determine if categories with higher average list prices resulted in higher retailer margin. This was not the case as retailer margin varied greatly regardless of the average category list price in all channels.
As manufacturers attempt to increase list price and retailers seek to maximize gross profit margins, both must be cognizant of the consumer in this still struggling economy. Those manufacturers considering a price increase in 2013 will want to carefully consider the historical list price trends for the competitive brands and products in their categories, the average retailer margin they might expect in each channel and the impact the new everyday retail price will have on consumer purchasing behavior.
To view the study in its entirety — including the list price versus retailer margin analysis for the food and mass channels — visit CompetitivePromotion.com and click on the “News” section.
Glen Davis is president and CEO of Competitive Promotion Report. CPR is a leading provider of competitive intelligence, analytics and insights. For more information, email Davis at [email protected], or call 770-565-0735 x106.
Boomer women want more relatable brands
Older women are not yearning for the beauty of their teens and 20s, but their views on beauty do change as they grow older. Marked by a confidence that is beautiful in and of itself, older women do aspire to look their best at their age, and they desire more information and product ads that they can both relate to and believe, according to a recent study on female baby boomers.
The “BOOMbox Baby Boomer Beauty Survey” examined female baby boomers (now ages 48 to 65 years) and their views on beauty. BOOMbox Network, culling respondents from its own network of baby boomer bloggers and influencers, conducted the online study in September. The goal: to find out how women older than 45 years really feel about beauty at their age and the advertising/marketing that targets them.
With the boomer consumer market valued at $3 billion yearly spend and 85% of this spent by women — according to BOOMbox Network, which specializes in reaching baby boomers through social media — it is clear that baby boomer women are important players in beauty. The question that marketers must ask themselves: “Are we effectively connecting with this consumer?”
Despite what many may believe, older women said they are not really longing for the beauty of their youth; in fact, most women said they feel/felt most beautiful between their 30s and 50s — not in their teens or 20s. Out of 100%, only 4% of respondents said they felt most beautiful in their teens, and only 7% felt most beautiful in their 20s.
“I still feel beautiful in my 50s, but in a different way. I feel sexy, but in a different way,” one respondent said. “Physically, it was the 30s; psychologically and spiritually, it’s now,” another survey respondent said.
While inner beauty, confidence, exercise, a healthy diet and being around loved ones and close girlfriends are important triggers that help make baby boomer women feel beautiful, according to the survey, there’s no doubt that older women want to look their best and are turning to beauty products to help battle their trouble areas. The beauty problems that bother boomer women the most: yellowing teeth (74%), hair color (68%) and skin texture (64%).
However, it’s especially important to note that many baby boomer women want better information when it comes to products. According to the survey, 44% of boomer women want to improve their looks, and 38% say they want help and information — now more than ever — to know how to look better.
“Whitening toothpastes and anti-aging products make me crazy. There are a million gazillion out there, and I have no idea what to pick. Even when I think I know the brand I want, then they have too many choices, and the options do not explain to me which ones I need. Just tell me, ‘if I want to work on X, then use Y,’” one survey participant said.
But more information doesn’t simply mean developing an ad campaign featuring beautiful, young models dabbing anti- aging cream on their wrinkle-free skin. In fact, that is likely a sure-fire way to lose her interest in your product.
“The vehemence of the opinions expressed by our baby boomer respondents begs to be noted,” the survey stated. “Credibility and relatability of advertisements for beauty and grooming products are at very low levels and hinder the connection with the midlife female consumer.”
When asked how they feel about the advertising by beauty and grooming brands, only 1% agreed strongly with the statement, “I can relate to most of their advertising.” Sixty-two percent strongly disagreed with the statement, “I aspire to look like the models in their ads.”
When asked about their likes and dislikes about beauty and grooming product advertising, 86% of respondents said they like the use of real people, and 87% said they like the use of people their own age.
“In our opinion, the baby boomer females, by their sheer volume, will demand a new order for the democratization of beauty,” BOOMbox Network stated. “Let’s see if the beauty brands are listening.”
Bettie Page brings retro style to Boston
BOSTON — Bettie Page has come to Boston. Tatyana Designs, a Las Vegas-based retailer specializing in contemporary designs inspired by the iconic Bettie Page, opened in late October its Boston boutique — marking its tenth U.S. location. Nestled at 32 Newbury St., in the heart of the shopping jewel of Boston, the store’s neighbors include Burberry, Chanel and Cartier.
The merchandise offered through the boutiques, e-commerce and wholesale divisions is a mix of apparel, jewelry, accessories and gifts. Bettie Page collections target the 18- to 35-year-old fashion-conscious female customer who is attracted to the unique retro look.
The company stated that it is “aggressively” pursuing a growth strategy and plans to open additional East Coast locations, including a flagship New York City store on Bowery Street.
For more photos, click here.