mottusbeauty.com

In an earlier blog, we mentioned that Maybelline, Garnier and Olay were offering $10 more of their products for those who spend $25 at CVS.  At Maybelline, that would entail a purchase of three to four items.  Consumers are buying close to their needs and are less likely to have multiple-unit transaction.

There are retail analysts and economists who are comparing this economic distress to the mid-seventies or early eighties.  That may be true overall, but it has nothing to do with the realities of the beauty business either now or back then.

For instance, Maybelline was then owned by Schering-Plough and was sold in discounters and drug chains on spinners in aisles.  A spinner was a revolving rack that carried beauty products.  Maybelline, CoverGirl and Sally Hansen were then budget-priced lines versus franchise manufacturers such as Revlon, Max Factor and Almay.

Now, everyone is priced at the high end or in the franchise space.  Consumers have little choice to buy lower-priced products and are, for that reason, buying less or not at all.  If the bleak scenario plays out, as suggested by Howard Davidowitz and Mike Ullman, beauty manufacturers will be forced to alter their strategies dramatically.

According to Mottus & Associates’ recent prestige study, the trading down phenomena in beauty did not materialize as many expected.  The primary reason has been that consumers are finding few bargains or “properly priced” products in the chain drug or overall mass environment.  If that continues, the overall beauty segment may find more difficulties in 2008 than previously expected.