June 11, 2007
Ethnic Products Now Front and Center
By Laura Klepacki, special to GMDC
The U.S. ethnic cosmetics market has had its share of fits and starts. Now the engines are revving up again.
A decade ago, major corporate players including Revlon, Maybelline and Almay were marketing dedicated lines for women of color with names like ColorStyle, Shades of You and Darker Tones, respectively. However, the efforts lost momentum and strategies shifted to expanding shade ranges of core lines to provide selections for a spectrum of women.
Now the winds of change are blowing again.
In the last two years, Procter & Gamble has aggressively entered the ethnic market. First it invested in the Iman Cosmetics brand, created by international fashion model Iman. Last year it introduced the CoverGirl Queen Collection, a flanker brand for black women named for singer/actress and CoverGirl spokesmodel Queen Latifah. At the same time, L’Oreal unveiled H.I.P, short for High Intensity Pigment, a brand offering a wide face makeup shade range and brighter, bolder lip and eye colors.
Meanwhile, longstanding niche companies such as Black Opal, Black Radiance and Posner, along with the five-year-old Milani brand, show no signs of backing away from this market.
Black Radiance, a division of Markwins, is kicking off a summer promotional campaign that will tie in with local concert events in Detroit, Chicago, Philadelphia, New York, Miami, Atlanta, Los Angeles and Washington, D.C. There will be makeovers and product giveaways, according to a brand spokeswoman. Last year, Milani launched its first national advertising campaign and hired a public relations firm to garner more publicity. Add to that, the chief executive officer of Posner said it has just introduced a new display in Walgreen stores and next year the brand will expand into two new product categories.
The activity is no surprise, for the numbers are enticing.
Together, Hispanics, African-Americans and Asian-Americans accounted for 88 million people in 2006, according to U.S. Census data. That included: 39.3 million Hispanics, 36 million African-Americans and 12.9 million Asian-Americans. Together, these segments are expected to grow 8.6 percent to 95.6 million by 2010, representing about one-third of the total U.S. population. Indeed, those in the U.S. population who are classified as “minority” have just now breached the 100 million mark.
In a recent study on the ethnic HBC market in the U.S., market research firm Packaged Facts urged mass retailers to “wake up” to the potential of sales in this segment. The study estimated ethnic HBC retail sales at $1.9 billion in 2006, up 6 percent over the previous year and projected that number would climb to $2.5 billion by 2012. That figure includes hair care, skin care and cosmetics. Within that, cosmetics are expected to deliver a bulk of that growth – skyrocketing from $621 million in 2006 to $1 billion in 2012, according to the study.
Apparently everyone is looking to get a piece of the action.
Discussion Questions: Has ethnic or multicultural marketing becoming so important that retailers and suppliers are now being forced to address it? What are the potential costs of not engaging in ethnic marketing?
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In the mid-1970s, Flori Roberts was sold in Abraham & Strauss department stores (Federated). Flori Roberts claims that they were the first Black cosmetics line to be sold in upscale department stores. The very nature of the cosmetics business involves making people of all complexions look their best.
Fits and Starts is a great way to describe it, but mostly “Fits.” Ethnic Cosmetics will never be BIG business in FDM because of several structural issues:
1. Ethnic consumption and spending on the category is much lower (30%+) than for Whites.
2. Except for Face Cosmetics, there’s not a lot of rationale for Ethnic-specific products.
3. The lower sales productivity from these products means that the major brands will serve up these items during planogram review season to make way for new products and Subbrands.
4. These products are only sustainable if they deliver above average margins, and that typically can’t be delivered within a major franchise platform. It’s really only the smaller vendors that can do that.
That said, there should always be a place for Ethnic Cosmetics in any FDM assortment because Ethnic consumers comprise over 20% of the US population now. It is a segment best serviced by the targeted brands like Black Opal, not the big guys. However, the segment should be treated as a niche and not as a major opportunity.
As our industry and the retail department store types know, the make up of the population has been changing over the last ten years. Few have taken the major step(s) necessary to focus on stand-alone ethnic cosmetic stands or supplemental display centers with makeup artists from the comestic companies.
As the department stores secure makeup artists, the supermarket industry could do likewise and have special classes and individual sessions for their female shoppers.
Point of difference, and profitable–yes! Hmmmmmmmmmmmm
No question that retailers that do not have ethnic efforts are leaving money on the table. In my keynote on Thursday to the Hispanic Boom Conference here in L.A., I will be making the following points:
1. Hispanics are now the nation’s largest minority group.
2. Projections for further growth are astounding.
3. Native-born Hispanics will fuel Hispanic population growth in the future.
4. The Latino population extends beyond traditional metropolitan areas to include suburban fringes, small cities and towns, rural areas, and Southern states.
5. Hispanic buying power will reach $1 trillion by 2008, and continue to grow 9% a year.
6. The Hispanic population is the fastest-growing sub-market for almost every consumer product or service.
7. The Hispanic urban youth market is large, growing, lucrative and influential.
8. There will be plenty of both assimilation and separatism among Hispanic Americans in the coming decades.
Feel free to contact me for more info.
Ethnicity today is nothing more than a demographic segment due to the continued blending of the US population. For that reason alone it’s impossible for a retailer to ignore any single ethnic group beyond what the demographics of a particular store’s location would dictate.
In the next five years we’re going to see ethnicity become an even bigger player as it we will find many more brands attempting to use ethnic focus as a way to stand out in a category.
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In the mid-1970s, Flori Roberts was sold in Abraham & Strauss department stores (Federated). Flori Roberts claims that they were the first Black cosmetics line to be sold in upscale department stores. The very nature of the cosmetics business involves making people of all complexions look their best.
Fits and Starts is a great way to describe it, but mostly “Fits.” Ethnic Cosmetics will never be BIG business in FDM because of several structural issues:
1. Ethnic consumption and spending on the category is much lower (30%+) than for Whites.
2. Except for Face Cosmetics, there’s not a lot of rationale for Ethnic-specific products.
3. The lower sales productivity from these products means that the major brands will serve up these items during planogram review season to make way for new products and Subbrands.
4. These products are only sustainable if they deliver above average margins, and that typically can’t be delivered within a major franchise platform. It’s really only the smaller vendors that can do that.
That said, there should always be a place for Ethnic Cosmetics in any FDM assortment because Ethnic consumers comprise over 20% of the US population now. It is a segment best serviced by the targeted brands like Black Opal, not the big guys. However, the segment should be treated as a niche and not as a major opportunity.
As our industry and the retail department store types know, the make up of the population has been changing over the last ten years. Few have taken the major step(s) necessary to focus on stand-alone ethnic cosmetic stands or supplemental display centers with makeup artists from the comestic companies.
As the department stores secure makeup artists, the supermarket industry could do likewise and have special classes and individual sessions for their female shoppers.
Point of difference, and profitable–yes! Hmmmmmmmmmmmm
No question that retailers that do not have ethnic efforts are leaving money on the table. In my keynote on Thursday to the Hispanic Boom Conference here in L.A., I will be making the following points:
1. Hispanics are now the nation’s largest minority group.
2. Projections for further growth are astounding.
3. Native-born Hispanics will fuel Hispanic population growth in the future.
4. The Latino population extends beyond traditional metropolitan areas to include suburban fringes, small cities and towns, rural areas, and Southern states.
5. Hispanic buying power will reach $1 trillion by 2008, and continue to grow 9% a year.
6. The Hispanic population is the fastest-growing sub-market for almost every consumer product or service.
7. The Hispanic urban youth market is large, growing, lucrative and influential.
8. There will be plenty of both assimilation and separatism among Hispanic Americans in the coming decades.
Feel free to contact me for more info.
Ethnicity today is nothing more than a demographic segment due to the continued blending of the US population. For that reason alone it’s impossible for a retailer to ignore any single ethnic group beyond what the demographics of a particular store’s location would dictate.
In the next five years we’re going to see ethnicity become an even bigger player as it we will find many more brands attempting to use ethnic focus as a way to stand out in a category.