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Natural Opportunities in Mass Retail

Lisa Doyle
  • A study concluded that mass-market retail options were the preferred outlets for natural and organic products.
  • Colocating products by price point increases visibility of natural products, and may draw new customers.
  • Obstacles to growth include confusion regarding standards and labeling, and the costs involved in mass production of natural and organic ingredients.

Long gone are the days of organic personal care products sold only in select natural goods retailers up and down the coastlines of the United States. Today, one can pick up a bottle of sulfate- and paraben-free shampoo at a Midwestern drugstore almost as easily as at a health food retailer in San Francisco. However, according to a study released in late 2009 by market research firm TABS Group, the natural and organic personal care market still has a long way to go before truly penetrating the mainstream marketplace. The study found that purchase levels for organic skin care hovered around 6%, and organic hair care and cosmetics remained near 4%, a steady figure since 2008.

However, the study also concluded that mass-market retail options such as supermarkets were the preferred outlets for these products compared to natural food stores by a margin of 12% (39% for supermarkets versus 27% for natural food stores). “Mass market retailers offer natural brands the opportunity to attract new customers that are not aware of natural products or that live in areas without any natural/health product retailers,” says Laura Setzfand, vice president of marketing for Nature’s Gate. “In addition, they offer existing brand users a more convenient outlet if the local natural/health product store is 10 or more miles away.” Certain retail chains are opting to capitalize on this trend by incorporating more natural beauty products into their shelf space in unique ways.

Duane Reade Does it Right

In October 2009, Duane Reade, a New York-centered drugstore chain with more than 250 outposts, opened its first Look Boutique in its new location in Manhattan’s Herald Square. This beauty hot spot, located on the top floor, features 5,400-square feet dedicated solely to beauty retail, selling everything from cosmetics and spa-positioned skin care lines to fragrance and hair care products typically found solely in high-end salons.

Products in the Look Boutique are separated not by their level of natural ingredients; rather, they are arranged more by price point, with the majority of natural products holding court in the prestige sections. Colocating products by price point increases visibility of natural products, and may draw new customers. For example, luxury skin care lines that have a natural focus, such as 100% Pure, are located near cosmeceutical line MD Skincare in the LookRx healthier skin care center. The salon hair care center features the 100% vegan and sulfate-free PureOlogy line and Moroccan Oil. Exclusive beauty lines touting their lack of chemicals, such as Pür Minerals, feature their own displays in the cosmetic section, near the high-end Too Faced collection. Located between the mass and prestige areas is a section dominated by Duane Reade’s private label Look NY beauty tools and makeup brushes, as well as a nail polish library.

The Herald Square Look Boutique is staffed full-time by a team of beauty advisers, and serves as a model for future locations as well. By the end of 2010, Duane Reade expects to open 15 more Look Boutiques in new or remodeled outlets.

On Target

Target will ring in Spring 2010 by introducing a plethora of naturally focused personal care lines. “New offerings include Green by Nature, Jason, J.R. Watkins, Kings & Queens, Lavera, Nature’s Gate and Softlips,” says Michaela Gleason of Target Communications. “These personal care products are free of the following synthetic ingredients: parabens, phthalates and sodium lauryl sulfates, and none of the products are tested on animals. This expansion further delivers on Target’s ‘Expect More. Pay Less’ brand promise while providing a fun, convenient shopping experience and access to thousands of highly differentiated items.”

In addition, each store will market these products’ location as its own natural beauty haven near the more mainstream beauty lines. “As a true beauty destination, Target strives to offer accessibility to the most sought-after and often hard-to-find beauty brands to its guests,” Gleason adds. “The naturals offerings can be found in the beauty and personal care products area, grouped together in a naturals products section.”

Gleason notes that, due to market preferences, not every store will carry all of the newly offered brands; however, Target plans to offer some of these products on its Web site as well. “Our goal is to always be in stock with the products our guests want and need,” she adds. “If a guest is unable to find a product, a team member within our store can identify the product a guest is looking for and find the nearest store that has it.”

Across the Pond

The mainstreaming of natural personal care products certainly isn’t unique to the United States—Europe has seen a marked increase in the natural and organic personal care market, with revenues projected to reach €2 billion by the end of 2010, according to market research firm Organic Monitor. To keep up with demand, many mainstream retailers are introducing natural and organic personal care products under their private labels, shifting the sales away from the specialty apothecaries. Natural beauty products are now easily found in supermarkets, hypermarkets and drugstores. This is especially apparent in Germany, where Organic Monitor has found that the natural and organic personal care market has reached 5%.

In Europe as in North America, the natural products market faces several obstacles to future growth: educating potential consumers of the benefits of these products; confusion regarding standards and labeling; and the costs involved in mass production of natural and organic ingredients. “Increasingly, mass market retailers are integrating natural personal care into mainstream personal care sections increasing visibility and sales of these items,” Setzfand notes. “It is still necessary to highlight the natural content and philosophies of natural brands integrated into mainstream sets to help shoppers evaluate and understand a natural brand’s value proposition.” As consumer demand for green beauty alternatives increases, we can expect that the product offerings—and variety of retail locations—will continue to grow.

Lisa Doyle was formerly the associate editor of GCI magazine and is a freelance writer in the Chicago area. Her work has appeared in Skin Inc. magazine, Salon Today, America’s Best, Renew and Modern Salon.

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