RETAIL: Spheres of Influence

Natural&Organics

The face of retail has changed a great
deal over the past decade. Online sellers
and the QVCs and Wal-Marts of the
world have altered the way consumers across
segments shop. Euromonitor International
reports that convenience and low prices are
key drivers of change, and retailers built to
deliver both attract market share from other
channels. However, other retail formats—
specialty shops and department stores, for
example—have been able to leverage their
ability to engage consumers shopping for
beauty products to maintain an edge in the
category. Nicola Kinaird, founder of the
highly successful Space NK stores in the
U.K. and the U.S., said, “Consumers in this
category are increasingly knowledgeable
about products and look to retailers not
only to purchase, but also as a source for
information. In today’s marketplace, it is
essential that retailers have foresight and
insight into products and trends that appeal
to consumers.”

Mainstreaming Natural:

As these factors evolve, other trends impact
what consumers shop for, notably natural
and organic products. e natural personal
care market, already worth nearly $7 billion,
is growing at approximately ve times the
rate of the personal care market as a whole,
according to Green Marketing, Inc. Mintel’s
Global New Products Database recorded
624 new natural or organic cosmetics and
toiletries launches in 2002, and 2,900 in
2004—illustrating the increasing amount
of shelf space dedicated to these products.
Natural and organic products—regardless of
real and perceived bene ts or de ciencies—
engage consumers, and the “mainstreaming”
of natural and organic products, according to
Organic Monitor, is a major driver of market
growth. Kline & Company’s “Natural Personal
Care 2007: Competitive Brand Assessment
and Ingredient Analysis” report (released in
October 2007) cites consumer demand for natural personal care products as driving
a signicant shift from niche distribution channels to more mainstream mass retail
outlets. Wal-Mart, for example, introduced
Natural & Organic Bodycare Oasis in
nearly 400 superstores, which, according to
Euromonitor (“State of the Industry: Ecovalues
Escalate,” GCI magazine, June 2007),
helped lift the profile of natural and organic
products.
The product category itself engages
consumers, and mass retailers leverage this appeal to neutralize, to an extent,
the competitive “engagement” edge of
niche and specialty retailers. To navigate
these continually changing currents,
manufacturers and marketers must be
willing to consider multiple distribution
channels to maximize growth and achieve
a cross-sectional consumer base. Greater
market segmentation has also led to
dedicated brands being developed for
speci c channels and the emergence of
private label natural and organic products.
e latter adds another level of complexity
to the retail decision making process—
manufacturers and marketers must compete
with the retailers they are selling through.

Increasingly, mass merchandisers
are introducing natural and organic
personal care products. Boots launched
an organic cosmetics line in October. e
pharmaceutical, health and beauty retailer’s
Botanics Organic line ranges from 90%
to 100% certi ed organic content, and all
contain a 100% organic essential oil blend
authenticated by
the U.K.-based
Royal Botanic
Gardens.
According
to Organic
Monitor, the
move follows
the launch of
ErbaOrganics
organic skin
care products by Target stores
earlier in 2007. Natural cosmetics are also
becoming more visible in drugstores;
Be Fine Food Skin Care was launched in
CVS drugstores, for example.

5X
The growth of the natural
personal care market
compared to the personal
care market as a whole

2,258
The number of new natural
or organic cosmetics and
toiletries launched in a
two-year period

$7 billion
The approximate value of
the natural personal care
market



Mass Not A Given:

Not all natural and organic brands are
including mass retailers as a signi cant
portion of their distribution plan.

As explored in “Sustaining Natural
Growth,” in GCI
magazine’s April 2006
issue, the distribution strategy of Hain
Celestial brands Zia and JASON Natural
Products focuses primarily on the
natural channel, given the “tremendous
opportunity to continue to improve
depth of distribution in these outlets.”
The company continuously evaluates
opportunities to grow its brand through
this channel. Weleda, too, has been
committed to natural retailers as its primary
distribution channel, and based its decision
to commit to the channel on what it sees as
these retailers’ development potential.
It is interesting to note that the concept
and lifestyle implications of natural and
organic products in general have allowed
niche retailers in the segment to expand.
Whole Foods Market, a retailer of natural
and organic foods, added Save Your World’s
Save Your Skin brand exfoliating soaps, body
lotions and shower gels to its Midwest store
shelves. Founded in 2006, Save Your World
markets all natural, handcra ed personal
care product lines that feature biodegradable
raw materials and recycled or recyclable
packaging. “A company that shares our
values, like Save Your World, ts in perfectly
in the Whole Foods Market culture,” said
Noelle Wagner, midwest regional Whole
Body coordinator, Whole Foods, in a press
release announcing the addition.
For retailers across the board, however, the
sales growth and potential from the success
of natural and organic products across
channels has not completely o set economic
concerns negatively impacting retail sales.
The National Retail Federation forecast that
2007 holiday season sales would only rise
4.0% to $474.5 billion, below the 10-year
average of 4.8%, to be the slowest holiday
sales growth since 2002, when sales rose
1.3%. e concerns that a ect retail sales
are also particularly felt by low to middle
income consumers, the primary target for
many mass retailers and discounters, and
the channels cited by market data rms as
signi cant players in the sales growth of
natural and organic products.
In addition to documented sales gains,
the addition of natural and organic personal
care products on mass retailers’ shelves
has also influenced the acquisition game.
The gains have made natural brands ideal
additions to brand arsenals, according to
Kline & Company, which cites Clorox’s
acquisition interest in Burt’s Bees (an
already well-established mass-channel
brand) and other acquisition activity over
the past two years—L’Oréal’s acquisition
of The Body Shop, Colgate-Palmolive’s
purchase of Tom’s of Maine, and Hain
Celestial’s acquisition of JASON Natural
Products. These moves are indicators
that larger manufacturers are searching
for footholds in segments with growth
potential prior to the recent gains in mass
distribution channels.

It is clear that the impact of naturals and
organics goes beyond the products themselves.
Trends cast spheres of in uence, and retail is
spinning upward and onward on the sphere of
the naturals and organics trend.

JEFF FALK is senior editor
of GCI magazine.

Global Report n Natural & Organic GCI December 2007
http://web.ebscohost.com/bsi/pdf?vid=3&hid=114&sid=9223cf78-f9c8-47be-b435-d3df96d30c35%40sessionmgr107

I think;Green marketing is growing and finding the new needs of the consumers in personal cosmetic.
As distribution channels evolve and marketers seek the most advantageous
Shelf positioning to capitalize on product trends, retail and natural and
Organic personal care products meet at a crossroads.
Even the big brands and indicators of the markets should enlarge their products with new organics because of consumers are willing to these products. Now they are very knowledgeable about all the products and the about their needs…
On the other hand the addition of natural
and organic personal care products on mass retailers’ shelves started to think the acquisition game of the firms.

Karen Şalom
107604064