News Opinion From The Old World

Will Hair Color at Home Flourish in a Recession?

By Colin Hession, Consultant | March 3, 2009

It’s an ill wind that blows nobody any good, and so it’s probably worth considering those areas of our industry, cosmetics and toiletries, may actually benefit from financially hard times. Sociologists have been telling us that when recession strikes, consumers tend to cut back on away-from-home activities, preferring to save money by doing things in their own homes.
So, for example, we should apparently look for restaurant spending to decline in favor of entertaining and eating at home. Further, expect ready meals to decline, in favor of consumers going back to the good old habit of buying all  meal ingredients themselves and actually cooking from scratch. Thus, ignoring for a moment those of us who do this anyway, one might suppose that such a back-to-basics trend will have a negative effect on restaurants’ sales, with a corresponding lift in basic groceries.
For our industry, of course, the main away-from-home activity is the hairdressing salon. One might suppose that in times of recession, overall visits to the salon are likely to decline. But against this, one has to weigh the traditional piece of folklore that states when times are hard, one of the last things to go is what consumers consider as a “little treat for me.” Hence Estée Lauder’s famous lipstick axiom, which says that there is an inverse relationship between lipstick sales and economic conditions—not entirely proven by the facts, but interesting nonetheless! So before cutting down on overall visits to the hairdresser, it seems likely that ladies will be reviewing their expenditure once they get there. A good cut and shampoo may be one thing, but opting for a full-color service is expensive and it is here that we think economies are likely to be made.
Ironically, of course, it is color services where salon owners really make their money. For example, they buy their hair coloring products from professional wholesalers in toothpaste tube-type packaging, not the elaborate, expensive cartons available in drug stores. They then charge a substantial markup for the coloring service, often 10 to 15 times the cost of the product itself.
So rather than spending $70 to get her hair colored in the salon, a woman will make a very substantial saving by buying a retail hair coloring product for $9.99 in a drugstore and doing the job herself. We think that 2009 will see sales of home hair coloring products on the increase, with a commensurate fall in salon revenues. Strategic implications? Increased in-store activity in retail home hair colorants between the majors, L’Oréal and P&G, perhaps more room for budget-priced private label colorants (which the consumer has hesitated to trust hitherto) and more diversion of lower-priced professional coloring tubes from the likes of Sally Beauty. Interestingly, in Europe there are already considerable differences by country, in terms of the proportion of hair coloring carried out at home as opposed to in the salon, with the UK leading at home and Italy in the salon.

Private Label in Prestige

Recession has certainly been putting pressure on prestige retailers on both sides of the Atlantic. In continental Europe, the main players are the big perfumery chains, which tend to outstrip department stores by some way. Leaders among these perfumery chains are German-owned Douglas and Chinese-owned (Watsons) Marionnaud, followed by Sephora, which is owned by French luxury goods manufacturer, LVMH.
More margin headroom for private-label manufacturers.
So it is interesting to watch how these prestige retailers are emulating the mass chains in terms of putting in their own private label lines. While hard numbers are difficult to come by, trade estimates put the penetration of private label in French prestige outlets at 5% of all skin care and makeup. Certainly, Sephora has been leading the way, with an estimated figure of 15% for its own private label sales.
Marionnaud in France recently jumped on the Bio bandwagon and introduced it own face care brand called Bio by Marionnaud. It is surely a mark of the company’s confidence in its own labels that Marionnaud is able to put on such an apparently leading edge line, because the jury is still out, in Europe anyway, as to whether bio is going to last the course in these difficult economic times, or whether it will turn out to be just another fad. Either way, this move toward more prestige own labels ought to provide private-label manufacturers with more margin headroom.

Caviar & Gold

Some of our U.S. readers may not know that German giant Henkel, owner of Dial, has a very successful upper mass skin care brand in Europe which gives Olay, L’Oréal and Nivea a very good run for their money. The Henkel brand is called Diadermine, and like its major rivals, it has a special line extension targeted at 50+ consumers, Age Excellium. Last year Henkel had a big success with the introduction of some variants claiming to include caviar—yes, caviar—and so now it’s introduced some more special variants, this time with Gold pigments to create a “burst of colour” to the skin. Makes other brands, such as Italian Deborah’s Age Savers with Mediterranean blueberries, look positively penny pinching!
Yes, folks, its got caviar!
Mind you, we do know of one brand of facial skin care which has positive consumer-based proof that its locally produced ingredients actually work. Finnish brand, Lumene, which is available in CVS, contains cloudberries which are only available in Finland, and evidence suggests that they do work…which is probably why they invariably come first in any impartial consumer tests.

More Gizmos

We have written before about so-called high-tech skin care devices (see Happi March 2007), and wondered whether they are indeed high-tech or just marketing gizmos. Either way, they won’t go away, although it remains to be seen the extent to which they will catch on with consumers.
One of the latest that we have noticed has been launched in Europe by Israeli company Ultragen, under the TriPollar brand, with the enigmatic name of STOP. The hand-held device apparently works by emitting four low-power radio frequency beams into the dermis much like a laser lens focuses its light. The manufacturer claims that heating the deep dermal layer from within “stimulates dermal activity to tighten collagen fibers and increase new collagen production.” Ultragen claims that this, in turn, makes skin tighter and more supple, with a significant reduction in the appearance of fine lines and wrinkles.
High-tech device or another gizmo?
Strategic implications? Keep an eye on this whole area of electrical gadgets for skin care. We have no opinion on STOP, since we are not a technical consultancy, but sooner or later someone is going to come up with the real deal, license it to one of the skin care majors, and then we will see it on every gondola end…remember when they said that electrical toothbrushes would never catch on?

Price Comparisons

International price comparisons are becoming more difficult by the day, as currency exchange rates fluctuate wildly. We did try recently to make some comparisons between the UK, Germany, France and U.S. by using website pricing from the UK’s Boots, Germany’s Schlecker, France’s Carrefour and CVS in the U.S., together with currency exchange rates at the end of January 2009.
We took some fairly standard items, available in all four countries, converted the consumer prices into U.S. dollars and then calculated a cost per ’00 ml. But conclusions were hard to draw, and by the time the analysis might have been in print, exchange rates probably would have changed radically yet again. So we would merely draw the following broad conclusions:
    • With a relatively strong dollar, and weak British pound, suddenly the UK is no longer the most expensive place to buy toiletries.
    • France seems to have taken over that position, although the U.S. is not far behind.
    • We used small sizes in the U.S. for comparison purposes, but in reality American consumers tend to buy larger sizes and hence get better value than their European cousins.
About the Author

Colin Hession is managing director of Colin Hession Consulting, a specialist consultancy that focuses exclusively on personal care in Europe, in terms of commercial and marketing development.
Tel: 44-1202-710377; Fax: 44-1202-710399. E-mail: Website: