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Natural Opportunities in Mass Retail

By: Lisa Doyle
Posted: March 3, 2010, from the March 2010 issue of GCI Magazine.
  • 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.