Toiletries Are Taking a Bath

Early sales results for the U.S. cosmetics and toiletries market in 2001 indicate a slowdown that is expected to carry through to full-year sales totals.

“The market grew by only 4 percent in 2000,” according to Lenka Contreras, manager of the Consumer Products Practice at Kline & Co. (Little Falls, N.J.), an international business consulting firm. “It was the lowest growth rate since 1995. And this year, growth is expected to be even lower.”

This reflects an enormous decrease for the cosmetics and toiletries market from the average 24 percent annual growth rates seen over the past five years, according to the 2001 edition of Kline's annual market study.

Even Bath & Body Works (Columbus, Ohio), which often drives this retail segment's success, is experiencing a decline. Parent organization Intimate Brands reported a 9 percent drop in comp-store sales for Bath & Body Works in its second quarter, while overall sales for Bath & Body Works increased by a mere 3 percent.

Specialty stores such as Bath & Body Works generally feature friendly and knowledgeable personnel that encourage the testing of products in stores, a constant influx of new and innovative products, and an extensive product line.

As the holiday season approaches, says Contreras, retailers and marketers will need to come up with ways to draw consumers to the stores. “Initially, many markers believed that the Internet was the answer,” she says, “but many have been disappointed.”

For the most part, she notes, marketers of personal care products are now using the Internet as a tool to communicate with consumers, rather than focusing on e-commerce sales. A recent Kline survey indicates that customers are using the Internet to browse and learn about beauty products but are typically visiting traditional outlets for purchase.