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General Merchandise

Beautify Your HBC

Will cosmetics ever become a key category for c-stores?

"I was at 7-Eleven, getting my Slurpee. It was, like, 1 a.m. I think it was a Saturday night or something. And I saw at the end of an aisle … that 7-Eleven had a full-on, like, makeup section and I was like, ‘What? … I need to pick up a full face of 7-Eleven makeup and do it on camera for you guys.’ ”

That’s Carly Humbert, a YouTube personality who on that visit spent more than $50 on makeup and shared the experience with her 163,000 followers. Luxury beauty brands pay for this kind of publicity from social-media influencers. And here’s 7-Eleven, getting it for free.

Cosmetics have long been a small piece of the c-store sales pie, holding a sliver share (0.004%) of total general-merchandise sales, according to IRI. But does 7-Eleven’s Simply Me Beauty line—launched last November to major social-media buzz—reveal opportunities to breathe new ideas into the category?

274%—Lipstick surged 274% in unit sales, topping the lip category in individual growth. Source: IRI, c-store sales, 52 weeks ending Feb. 25, 2018

Where the Gains Are

Three of the four major cosmetics categories—eye, facial and lip—grew to a combined $1.2 million in the 52 weeks ending Feb. 25, 2018, according to IRI. Eye cosmetics saw an 83% growth in unit sales, while facial cosmetics grew 301% and the lip category saw 101% unit growth. The only category with a drop in unit sales was nail items, down 2%.

Kirk Bailey, product director of grocery and snacks for Temple, Texas-based McLane Co., sees a correlation between growth in cosmetics sales and the industry’s attempts to better cater to female consumers.

“Most [retailers] are looking to see if it’s viable,” Bailey says of the category. “If you go into a drug or dollar store, they’ll have a big selection. C-stores are still reviewing this category to see if it fits.”

McLane has explored cosmetics in the past, with mixed results. But Bailey believes in today’s market, cosmetics will become regular c-store items, likely within the next three to five years. “We will look back on it in a few years and continue to see the category emerging in more stores,” he says.

7-Eleven’s entry into the category will set the standard for its viability in c-stores, says Marcia Hunt, senior vice president of marketing and business strategy for Convenience Valet, Glendale Heights, Ill. “Offering cosmetics and accessories for the eyes, lips and face can be a point of differentiation,” she says. (7-Eleven declined comment for this story.)

The c-store opportunity may rest in two crucial areas: packaging and price point. Smaller packaging allows for lower price points and, therefore, more trial.

“[Cosmetics shoppers] like to buy and try,” said Lindsay Robertson, 7-Eleven’s product development category manager, in a release announcing the rollout of Simply Me Beauty.

“It’s all about the impulse buy,” says Daniela Ciocan, marketing director for Las Vegas-based Cosmoprof North America, a B2B cosmetics trade show. “People will always try new items in cosmetics. C-stores will jump on the cosmetics bandwagon because the impulse buy is so big for their business.”

Proof of the potential of impulse cosmetics can be found at the popular beauty chain Sephora. There, guests zigzag through aisles of trial-size products to get to the checkout.

“Hundreds of beauty brands are popping up every day alone, fueled out of consumer demand,” Ciocan says.

Some c-stores will thrive more than others, and location is a factor. Christina Dokos, senior vice president of marketing for Naperville, Ill.-based Eby-Brown, says that in her personal view and based on the research and information she has read, cosmetics may emerge more in urban stores compared to suburban or rural ones. “This will be more of a niche play in metropolitan areas where people are in a city and looking for a bargain and easily accessible cosmetics,” she says.

$6.2 Million—Sales of nail cosmetics fell to about $6.2 million in 2017, a 7% drop. Source: IRI, c-store sales, 52 weeks ending Feb. 25, 2018

Merchandising Right

Space is the biggest hurdle retailers must face with cosmetics. Paul Rossberger, vice president of sales for Cedar Rapids, Iowa-based Lil’ Drug Store Products Inc., believes the industry will continue to struggle to meet consumers’ various cosmetics preferences, such as brand and color choices. “We look at categories that sell in other channels and determine if we think they can sell in c-stores,” he says. “This is one that our research has shown the products and subcategories have difficulty meeting the majority of consumers’ needs.

“[Cosmetics] need 3 to 4 feet of linear space to meet consumers’ needs,” he says.

Bailey of McLane recommends retailers carry 12 to 15 SKUs; he also emphasizes that they must be placed in the center of the store within the health and beauty care set. “If you do it on the wing, they’ll get lost,” he says.

Hunt of Convenience Valet believes successful c-store cosmetic merchandising should have triple the SKUs Bailey predicts; she also stresses the need to find the balance between quality and price.

“The category is fairly complex,” she says. “To [merchandise] it well, you would have to have a dedicated space with an assortment of up to 40 or 50 SKUs, targeting main complexion color profiles and offering a value price.” (7-Eleven’s line features 40 products.) The key cosmetic mainstays should include one or two SKUs of mascara, makeup-remover wipes, black eyeliner and lipstick, Hunt says.

“People will always try new items in cosmetics.”

And don’t forget about the packaging. Ciocan emphasizes portability—the biggest trend Cosmoprof saw last year—along with playful designs and multipurpose products. She points to Glamspin, the fidget-spinner lip balm that officially became part of Sephora’s line back in August.

“Whimsical designs will draw consumers, especially for companies who make up a smaller market share,” she says.

Ciocan suggests c-stores could consider implementing beauty vending machines and pop-ups. “C-stores would be light-years ahead if they draw in consumers with seasonal, one-time-only features for cosmetics,” she says. “[The pop-up] would move from location to location and only be available in brick-and-mortar.”

Bailey stresses the importance of using social media to get the word out, and Simply Me Beauty is the perfect case study. “You have to put money behind it to let [consumers] know it’s there,” he says. “If you have something, you better get them excited about it.”

Despite the excitement, it’s too early to tell if c-store cosmetics are having a moment. “C-stores are now competing with dollar and drugstores, and the channel blur will drive the category,” says Bailey, who sees energy coming from both the retailer and supplier side. “We get people saying, ‘I looked at [cosmetics] 10 years ago and want to get back into it.’ Suppliers will continue to look at c-stores to expand their sales because of its 151,000-plus doors.”


Inside 7-Eleven’s New Beauty Line

7-Eleven launched its Simply Me Beauty cosmetics line in November 2017, generating a surge of interest and curiosity among beauty bloggers and social-media influencers. The line is priced at $3 to $5 and is designed to appeal to millennial women on the go.

“Much of the time, makeup items like lip and eye colors are spur-of-the-moment, impulse buys,” said Joy Pico, 7-Eleven category manager, in a statement released by the company. “If the price is right, that makes it easier to justify.”

Simply Me Beauty is merchandised in free-standing “Gorgeous on the Go” displays, which spotlight the brands 40 products, from eyeshadow palettes to concealers and blender sponges.

The launch propels 7-Eleven into the $46 billion beauty-product industry, which is mostly owned by drugstores and supermarkets.

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