Selling to Moms: Tell Them They Really Need It

Though the economy and consumer optimism are beginning to lift, lessons learned by consumers during this recession will not soon be forgotten, according to an Allen & Gerritsen audience intelligence survey of moms.

In the recession, moms are making decisions about what is really necessary.

“During the holiday season and into 2010, retailers should emphasize the quality and durability of their products rather than just outward style or ‘cool’ factor,” said Andrew Graff, chief executive of the Watertown, MA advertising agency. “The more meaningful and long-lasting they can make their product seem, the more moms are apt to buy.”

The recession has prompted moms to step back and take a long, hard look at purchasing decisions. This revised criteria boils down to whether or not a product or service is a necessary part of their lives.

The survey, which included 456 moms, also explored generational aspects of spending, finding that Boomer (54%) and Generation X (45%) moms are more willing to completely eliminate things they feel are unnecessary than their Generation Y (37%) counterparts.

“The survey reveals fundamental differences in generational mindset,” said Catherine Sheehan, audience intelligence planner at Allen & Gerritsen. “We see a sharp generational divide between a willingness to sacrifice and go without, versus a determination to find a balance that lets you hang on to the things you love doing, even if it’s in a modified form.”

For example, Gen Y moms are much less likely to pay to color their hair than the average mom (26% vs. 38% of moms overall), but they feel it’s still worth the money to be pampered at the spa (25% of Gen Y moms vs. 22% of moms overall). Approximately 18% of Xer moms say they have not scaled back their spending at all on coloring their hair at a salon (vs. 17% of moms overall who have not cut back their spending on hair coloring). Furthermore, Boomers aren’t willing to give up getting their hair colored at the salon. According to Allen & Gerritsen, 41% say getting their hair colored is a necessary part of their lives.

More info: www.a-g.com

Cosmeceuticals Market To Rise

While sales of general cosmetics slog along, the cosmeceuticals market is expected to increase 7.7% to more than $4 billion in 2011, according to industry research firm IBISWorld. Now accounting for $3.5 billion in revenue, cosmeceuticals have become a prospective growth area for businesses operating in the mature cosmetics industry.

“The development of new product categories like cosmeceuticals and dermocosmetics has grown considerably in the last five years, driven by America’s obsession with anti-aging and wellness,” said Toon van Beeck, senior analyst with IBISWorld. “Companies are taking the opportunity to manufacture more of these high-margin products which typically generate profits greater than the industry average of 10%.”

As a result of the burgeoning growth and demand for cosmeceuticals, retailers from department stores to big box stores have looked to shelve products like anti-wrinkle creams, bleaching agents and medicated lotions. According to IBIS World, the existence of these niche products means that small retailers like SkinCeuticals, Her Walk and Dermelect Cosmeceuticals can enter and successfully operate in an environment that is exhibiting strong growth and observes less competitive pressures.

Additionally, cosmeceuticals command a premium price because consumers perceive the ingredients as being expensive and uniquely manufactured, with R&D accounting for the majority of costs. However, R&D only represents about 2% of the industry’s cost structure, while the selling, general and administrative costs (mostly marketing) represent 21%.

“Because the profit margins are higher on cosmeceuticals, companies have more money to spend on marketing,” added Mr. van Beeck. “Businesses must continually convince buyers of the product’s benefits and break through competitive clutter to increase their sales.”

By 2011, IBISWorld predicts the industry will rise beyond $4 billion, and will continue to grow at near double-digit rates for quite some time. Growth will continue to revolve around the perceived health advantages of cosmeceuticals in addition to the traditional cosmetic benefits.

“Manufacturers and retailers will continue to fuel demand for cosmeceuticals by developing and marketing a steady stream of new products,” said van Beeck. “New products in the pipeline present solid opportunities to bolster bottom lines and build customer loyalty, re-inventing the mature cosmetics industry.”

More info: www.ibisworld.com

Wealthy Consumers Laud Le Mer and La Prairie

Results are in on the Luxury Institute’s “Best of the Best” survey of luxury brands in skin care and makeup. Based on the U.S. 2010 Luxury Brand Status Index (LBSI) survey—which identifies the top brands that deliver true luxury based solely on the unbiased ratings of wealthy American consumers—the institute asks high net-worth consumers to rate luxury brands by category across four equally weighted components: consistently superior quality, uniqueness and exclusivity, making the customer feel special across the entire experience and being consumed by people who are admired and respected.

La Prairie skin care ranks high with luxury consumers.

The “best of the best” in the premium skin care category (LBSI score out of 10) were La Mer (7.58), La Prairie (7.25) and Perricone MD (7.23). In the premium makeup category, La Prairie ranked first with 7.69, followed by La Mer (7.59) and Dolce & Gabbana (7.47).

“In today’s new luxury landscape, wealthy consumers will pay skin care and makeup brand premiums only for what they define as genuine luxury,” said Milton Pedraza, chief executive of the Luxury Institute. “Skin care and makeup brands must be able to deliver the highest quality products in order to reassure consumers that they’re purchasing value for the associated price. In the current economy, buyers are unforgiving of luxury brands that are not living up to the standard of their brand name.”

The proprietary LBSI survey is a national sample of 652 wealthy American female consumers with an average weighted household income of $403,000 and an average household net worth of $2.2 million was surveyed online. The survey data have been weighted with respect to gender, age and income to match the Federal Reserve’s latest Survey of Consumer Finances.

More info: www.LuxuryInstitute.com

Flu Fears Spike Sales of Sanitizers, Soaps at Office Stores

Spiral notebook, check. Hand sanitizer, check. During back-to-school shopping, sales of hand sanitizers and soaps soared at office supply stores.

Like most of 2009, back-to-school sales followed a downward trend, but according to the NPD Group, hand sanitizers and soaps proved to be must-have items at office supply stores.

While sales of school and office supplies at the office super stores declined 3% during the seven-week back-to-school period (July 26–Sept. 12), flu fears (and student supply lists) helped propel sales of hand sanitizer and hand soaps in that retail sector.Although the volumes are small, sales of hand sanitizer rose 2916% and hand soap sales spiked 513% in office supply stores, according to NPD.

More info: www.npdgroup.com