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Supers step up ethnic HBA efforts.

With the likes of Safeway, Kroger and Pathmark intensifying their efforts to capture more of the ethnic health and beauty aids market, can other supermarkets be far behind? Not likely, considering how competitive the supermarket business is. But it will take a lot of doing before supermarkets recapture the share of ethnic HBA sales they once held.

The share of unit sales of hair preperations held by food outlets declined to 28% in 1983 from a high of 48% in 1977, according to the findings of an A.C. Nielsen study. The study included food outlets (primarily supermarkets), mass merchandisers and drugstores.

The picture is not all sour, however. Sales of ethnic HBA in food outlets have been growing at a faster rate than all HBA items for several years. But when share of market--even in a growing market--shows signs of slipping away, sales downturns are probably close behind.

What's all the fuss about, anyway? Part of what's at stake is a profitable business, estimated at around $500 million in beauty and toiletry products oriented to the "ethnic" trade, and consisting primarily of products formulated to suit the haircare needs of the black portion of the American population. Just as important--perhaps even more so for supermarkets--is the role of ethnic HBA in attracting the black customer as a shopper for the entire store.

Tim Hopkins, Safeway's corporate vice president for non-foods, says the chain's divisions have been urged to beef up their ethnic HBA displays in selected stores as a way to "draw in new customers and to expand the purchases of people who have been giving us only part of their business." More complete ethnic sections, he says, "provide a more complete one-stop shopping trip for many customers."

Kroger has stepped up its ethnic program, including the expansion of shelf space and promotions, and use of black media. Pathmark, which has been buying ethnic HBA direct for several years, employs a full-time buyer for the products, and also makes use of black media.

Leonard Lieberman, president of Supermarkets General Corp., operator of Pathmark stores, says the chain's ethnic program "has been a successful thing for us," and accepted an award last year for the company's ethnic HBA efforts from the American Health & Beauty Aids Institute, an association of 17 black-owned manufacturing companies.

The nation's 27 million blacks, constituting about 12% of the population, are proportionately large purchasers of personal care products. They spend proportionately more of their incomes on food, and tend to be loyal customers. Total purchases of the black population are estimated at $150 billion annually.

Hispanics, a large and fast growing segment of the population, are also part of the ethnic HBA market. However, they tend to purchase general market or black-oriented products, according to merchandisers. Notable exceptions are found in localized situations where Hispanics are concentrated, such as Miami, New York City and the states adjacent to Mexico. In these areas, imported or locally made products in Spanish-language packages may attract a good following.

The decline in the supermarket's share of the black hair preparations market is attributed to a strong commitment to ethnic merchandising by the mass merchandisers and drugstores.

Master Distributors

Many observers link the rise in non-supermarket gains to the efforts of so-called "master distributors" who serve as buying/merchandising intermediaries stocking thousands of ethnic items. Their programs include full buying services (shipping ordered product to warehouses for redistribution to stores) and providing planograms and promotional goods. They also drop-ship to individual stores and provide rack service in some areas.

Among the largest of these firms, many of which also offer Hispanic HBA items, are Beauty Enterprises, Hartford, Conn.; Judith Lynn Sales, Bensenville, Ill.; and Ben Sheftall Distributing, Savannah, Ga.

The emergence of master distributors with sophisticated warehouse programs--a fairly new phenomenon--has shaken the ethnic HBA marketing field. While it has provided the tools for the advance of ethnic HBA in promotional discount stores and drug chains, its effects have also been substantial in the supermarket field.

Some observers believe that master distributors--directly or indirectly--represent the focal points for a supermarket resurgence in the ethnic product category.

The distributors' warehouse programs have penetrated chains and have been particularly successful among wholesaler non-foods divisions and service

merchandisers who formerly bought direct, but decided to switch on the basis of "joining 'em if you can't beat 'em."

Mass Merchandisers, a leading service merchandiser based in Harrison, Ark., is a case in point. About a year ago, it switched to a distributor's warehouse program.

"We lacked the necessary expertise and large scale operations," recalls Buyer Mike Greenhall. "Our volume wasn't there and we couldn't get the truckload allowances." Eric Bouler, manager of the company's New Orleans division, says sales have increased six-fold since the changeover. "Now that we have a better program with many more items," he adds, "we can do a better job with existing accounts and go after new accounts with more confidence."

Buyer Goodwin Bryan of May & Co., Atlanta, Ga., tripled sales with a new distributor program. "Not only are we getting product at lower cost," he says, "we're by-passing the time and effort spent in buying from individual manufacturers. We use our distributor's planograms--which we can adjust--and follow most of their product recommendations." Gary May, the company's president, says it was a hard decision to switch from direct buying, "but our present system is better for our customers as well as for us."

Some service merchandisers and wholesalers have switched distributors, so there appear to be variations in the quality of programs offered.

Service Improved

Buyer John Prengaman of Food Marketing Corp., Super Valu's Fort Wayne, Ind., division, says his switch in distributors provided, among other things, improved service levels to retailers. He says that manufacturer allowances are passed along, which opens up the previously neglected promotional area. "We had 20 stores on our ethnic program before. We hope to build up to 50 stores soon."

Some smaller specialty distributors also offer warehouse programs. Blankinship Distributors of Kansas City, Mo., ships to Fleming's General Merchandise Distributors' Topeka, Kan., division, which breaks the cases for delivery to its stores.

"We tried to buy direct ourselves," says the Topeka division's president, Richard Foster, "but there wasn't enough business to capture minimum shipments without ending up with an excess of fringe items. So we've reduced inventory, and Blankinship works with our buyer in keeping up with the market."

Standard Drug Supply Co., Detroit, also offers both store-level service and a warehouse program.

Not surprisingly, many long established non-foods suppliers look askance at the programs offered by "outsiders."

Buyer Pete Smith of Supermarket Merchandising, a division of Mandel-Kahn, Houston, says that some chains, "against their own best interest," feel compelled to buy directly from manufacturers or indirectly through warehouse programs--rather than accept service merchandisers. He believes some of the big ethnic distributors are weak in providing and coordinating promotions and advertising. He insists that "full service" is "essential" at store-level for success.

Do-It-Yourself Buying

Bob Weinstein, vice president and HBA manager for USCP-Wesco, Los Angeles, says his full-line company sees "no need" for a master distributor's program in his warehouse. "You can develop your own buying expertise--although it's not easy--and do a better job for your retailers than a company working long distance."

Jerry Davis, president of Paul's Sundries, Sun Valley, Calif., believes that "In the long run, drop-shipment programs will hurt everyone--manufacturers, consumers and retailers."

The defects, as he sees them, include keeping the planogram up to date at store-level; facing inventory management problems caused by accumulations of discontinued items; difficulties in fine-tuning the mix on a localized basis; and "the fact that store-level clerks invariably shuffle ethnic HBA to the bottom of the deck" when it comes to servicing the department.

He does concede that drop-shipment systems are "better than nothing" where good full-service programs are unavailable. His 16-year-old company, which specializes in ethnic items, provides full service to 900 stores, two-thirds of which are supermarkets.

John Burns, a non-foods buyer/merchandiser for Giant Food, Landover, MD., says that by buying direct from manufacturers, "We're staying right on top of everything that's happening." The company, most of whose 132 stores have pharmacies and large HBA sections, has ethnic HBA sections ranging up to 12 linear floor feet in 112 outlets.

At Tom Thumb in Dallas, GM Director Jack Sprabary reports that the company "splits the business" with a local ethnic HBA supplier for efficiency at the wholesale level. Some other retailers, wholesalers and service merchandisers use the large distributors to fill in slow-moving specialties and to cover outs.

Some ethnic HBA manufacturers also have qualms about master distributors. They see them as encroaching on their traditional face-to-face selling efforts with chain and wholesale buyers, thus diminishing their role if not their sales.

The following are representative comments:

--"It's tempting for a big distributor not to pass deals along-who's to know, if the customer shuts us out from interviews?"

--"How can a distributor sell our programs to customers as well as we can?"

--"The customer will not catch poor product selection if he has delegated the buying responsibility elsewhere and fails to interest himself in what's happening."

--"We can inspire action and creativity--but that's hard to do when there's an interface between you and the buyer."

On the other side of the fence are comments like these:

--"The big distributors do get the goods out there and definitely serve a function."

--"They perform a service. Most retailers, big or small, don't have the time or inclination to truly understand the category anyway."

-"Let's face it. Some of the full-line service merchandisers aren't all that good--or interested--in ethnic products. They have other fish to fry."

An executive for a large distributor presents his point of view: "We certainly don't discourage buyers from taking an interest in the category--on the contrary--and we do not oppose manufacturers' visits to our customers. Service is very important, but so is the product mix, and some distributors aren't all that swift in their product expertise. Store people can be efficient if there's management commitment. We pass along the deals and can cope with returned product."

Rocky Piccirillo, Beauty Enterprises' director of operations, says his company provides manufacturers with sales information which helps in determining salesmen's commissions, a concern when customers in a territory buy through a master distributor rather than direct. Ethnic HBA: Problems and Opportunities

Unremitting pressure on sales and profits demands closer attention to shoppers' needs. That's an axiom all too often disregarded concerning black customers.

It's true that in many stores the number of blacks is nil or negligible but, when they account for 10% or more of traffic, their influence on sales cannot be ignored. Providing a suitable selection of ethnic HBA becomes desirable, if not essential.

Merchandisers point out that it's not just a question of catering to the immediate neighborhood. Blacks, like other people, travel to work and often shop at a convenient supermarket on their way home. An estimated 20% of the black population now lives in the suburbs, so it's not just inner-city stores that attract black trade.

Fear of pilferage continues to be a stumbling block. Many merchandisers contend the concern is excessive, saying that in most stores, the shrink rate on ethnic HBA is not out of line with other products. They also point out that high percent margins more than compensate.

One manufacturer asks, rhetorically: "Are Pathmark, Safeway, Kroger and many other fine retailers stupid and negligent in expanding their ethnic beauty aids? Surely they have evaluated the pilferage question and found it a minor consideration."

Says Larry Ishii, GM director for Stater Bros., Colton, Calif.: "You can't merchandise for pilferage. You work at controlling it and you merlchandise for sales and profits." He adds that "we have to consider ethnic HBA's contribution as a customer draw." The company carries black-oriented HBA items in 12 of its 93 stores.

Of course, when pilferage is rampant, then ethnic HBA--like many other products--may have to be curtailed or displayed in ways that deter shrink. Dave Friedenberg, president of six Big D stores in Long Beach, Calif., says that when pilferage is a special problem, ethnic HBA is displayed near the manager's office or a similar up-front location. In most stores, however, the problem seldom reaches this dimension.

The size of ethnic HBA departments in supermarkets ranges from a few shelves, all the way up to 16 linear floor feet or more in large, high volume supers where black customers dominate the traffic. The usual location is adjacent to or within the HBA hair care section.

One experienced merchandiser says footage should follow this formula in good volume stores: 3 to 4 linear floor feet (six or seven shelves per foot) for up to 25% black traffic; 8 feet for 25% to 50%; 12 feet or more for heavier black concentration. He says, "A few shelves are better than nothing for stores where extra shelf space is impossible to obtain."

Some other merchandisers say such a small selection is not worth the trouble; that it will be constantly out of stock and will look unprofessional due to its lack of product depth and selection.

While it's fine to talk about shelf space for ethnic HBA, it's not easy to find. Many, if not most, conventional stores--particularly those in inner city locations--are severely cramped for space. (There is much less of a problem in superstores and combos.) Moreover, ethnic's home in HBA is already jam-packed with items crying for more elbowroom.

Here are some space-making suggestions offered by merchandisers:

* Stores with high percentages of black customers can pick up shelf space by cutting back on those national market brands and lines which black people buy sparingly. This includes shaving cream, certain brands of shampoo, permanents, hair coloring, hair spray and mousses.

* Endcaps have been pressed into service--either for permanent ethnic display or for cosmetics or hair accessories transferred from in-line HBA positions.

* Sometimes, space can be opened up by reducing or even eliminating HBA-adjacent or across-the-aisle general merchandise categories.

* Some grocery sections can be tightened up.

Merchandisers report that per-foot profit of ethnic HBA can easily match or exceed the overall HBA category's mark. Sales of $1,000 per week in an 8-foot section have been recorded. Moreover, topselling ethnic items in some stores exceed general market HBA best sellers in dollars and unit sales, says Ken Hennings, president of DSM, a Chicago specialty service merchandiser.

Attractive Margins

Besides sheer customer demand, the keys to ethnic HBA's high level of profit productivity are high unit prices and the gross profit percentage. A.C. Nielsen reports that ethnic hair care items in food outlets in 1983 carried an average retail of $3.11. The percentage margin is well above all HBA items, ranging from 32% to 40%, depending on the method of distribution, pricing, and degree of service.

Most supers are obtaining full retails, according to merchandisers, although more buyers are insisting on some discounting. This responds to increasing price competition. One supermarket chain buyer believes the weakness in her ethnic sales may be due to her full retails which, she admits, are no longer valid in the face of reduced prices of nearby chain drugstores and ethnic specialty stores.

Preventing stockouts is a major problem in ethnic HBA. A.C. Nielsen reports that out-of-stocks on ethnic hair care products are unusually high. Undoubtedly, this reflects such factors as insufficient shelf space, poor ordering or stocking procedures, and out-of-date planograms.

Poor clerk service is often to blame. "You get resistance from store people," says the corporate HBA merchandiser for a large chain. "They consider it a stepchild." The cure is management commitment to the principle that chronic store-caused stockouts--of any item--is anathema since it causes customer disappointment and loss of sales and profits.

Ethnic HBA is a volatile line. New item intros and changing sales rates for individual items are on a par with the dynamic goings-on in the general HBA department. Planograms should be updated at least twice a year and best sellers identified and given adequate facings.

another way to fight stockouts is to be alert to heavy consumer purchasing on the first of the month, merchandisers advise. They say stores should have extra inventory on hand at this time.

Advertising and promotion, once a wasteland for black-oriented HBA in supermarkets, has made some advances into greener pastures. Manufacturers and distributors are much more promotional minded than in the past and have acclimated themselves to supermarket practices. This includes manufacturer expansion of co-op advertising allowances and policies. Some manufacturers are providing in-store demos of their products.

But for most chains and multi-store independents, the main sticking point for advertising is how to advertise and promote products not stocked in all stores. Some chains simply avoid chainwide advertising for ethnic items in favor of in-store specials in ethnic-stocking stores.

"We donht like using disclaimers in ads," says Giant Food Buyer John Burns, who expresses a typical viewpoint. "If we don't have a featured item available chainwide--and ethnic HBA isn't--we just don't run it." What the chain does do is effective enough: in-store promotion of ethnic items on a weekly basis in stores carrying the items. The in-store-special concept is used by several chains, although not as frequently as at Giant. Inshelf p-o-s materials, endcap displays and floorstands are common techniques.

Houston-based Supermarket Merlchandising, takes a different tack for retailers seeking chainwide advertising of ethnic HBA items without disclaimers. In-and-out floorstands with merchandise including the ethnic specials are brought in to all of a chain's stores. Outlets not reguarly carrying ethnic items do not, of course, receive many units of the special.

Another way around the problem is to advertise in black media and offer the general disclaimer, "available in selected stores." Since the media targets black people, it's assumed they would seek the specials in stores where they usually shop--and where the feature would likely be available. Some retailers, feeling their ethnic HBA distribution is suitably widespread, will present black-oriented ad features in their regular advertising and list applicable store locations without worry about disclaimers.

Many service merchandisers and distributors help arrange advertising/promotional programs for retailers. This includes manufacturer advertising with "tag" mentions on black radio.

"Supermarkets have improved their ethnic advertising, but they still have a long way to go," says a manufacturer senior vice president. "One problem, besides lethargy, is that the ad manager doesn't want to bother making ads for the limited audience of black newspapers and radio even though the co-op dollars are there to pay for them. But this will change once they see the competition doing it."

Ethnic Hair Care

Along with technological innovations, fad and fashion bring constant sales changes in the various ethnic hair care categories. One thing, however, remains constant: Caring for the more delicate hair structure of black people requires many products outside of the general market HBA.

Ethnic hair care, which accounts for an estimated 90% of supermarket ethnic HBA sales, enjoyed a tremendous sales surge in recent years. A.C. Nielsen, in research covering mass merchandisers and drug and food outlets, reports that sales more than tripled from the $66 million mark in 1978 to $210 million in 1982.

A lot of the increase came from expanded distribution, but a change in fashion was also a major factor. Styling for black women turned to curls and with this came a flood of new and high-priced products, including curl kits and maintenance products.

Now the latest fashion for black females (and there are 10,698,000 of them in the U.S. over the age of 15) is a swing back to "relaxed" hair, a somewhat '40s look, a coiffure that emphasizes straight or wavy locks. This, too, involves hair care products, but they tend to carry lower retails. For black men, the fashion is toward shorter hair--the athletic look--which requires fewer products and allows more use of less expensive pomades.

All in all, the growth levels of the past are not being maintained. That is not, are not being maintained. That is not, however, as gloomy a picture as it might appear.

Lafayette Jones, executive director of the American Health & Beauty Aids Institute, chicago, observes that as any base increases, its rate of change will tend to decline. "The fashion for curls brought in a lot of new business so we're working from a bigger base. But we still look for overall sales increases to continue to exceed those of the overall HBA category."

a recent report from Towne-Oller Associates supports Jones' assertion. The research firm, which specializes in audits of warehouse withdrawals, finds that ethnic sales in its sample advanced 15.7% last year, considerably above all-HBA's gain of 8.3%. Of course, ethnic HBA's increases reflect increased distribution.

Several manufacturers and distributors point out that fashion trends do not chnage the market overnight. Rock Piccirillo of Beauty Enterprises, says, "We're still selling a lot of curl kits around the country. It takes a while before the big-city trends take over. Activators and moisturizers are selling well everywhere. What it comes down to is that a greater variety of product is needed for the shelf."

Facetiously, he adds: "Let's put it this way: Overall sales are no longer booming--they're just soaring!"

Frank David, president of Worlds of Curls, Compton, Calif., believes that curly styles and relaxed styles will eventually split the market about equally between them.

In any event, blacks' hair--being dry and brittle-will always require constant maintenance involving packaged products. Lewis L. Clark, ethnic product specialist for A.C. Nielsen, points out that packaged products gained from the recent recession. He explains the high prices of beauty salon treatments "turned many women to do-it-yourself." He adds that product improvements are also helping draw black women to retail stores.

Skin care products from a small, but profitable, part of the ethnic HBA business, while lower-priced shaving powder shows excellent turnover.

Black-oriented cosmetics have not had much representation in supermarkets, due to limited display footage. Merchandisers report that some cosmetics items do fairly well in larger sections or stores with very high black concentration.

Black-oriented hair color, like cosmetics, sells best in the general market shelving, according to Gregory Andrews, brand manager for Clairol's ethnic line. Pete Smith of Supermarket Merchandising disagrees. "For us, getting space there means moving in on another distributor's (or store's) jurisdiction," he says. "That causes difficulties, so the regular-line position is just not practical." He adds that he thinks ethnic hair coloring has more of an identity and better traffic inside the ethnic section.
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Title Annotation:contains related article on ethnic HBA; Ethnic HBA: problems and opportunities
Author:Snyder, Glenn
Publication:Progressive Grocer
Date:Mar 1, 1985
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