June 25, 2001 -- It's just become cheaper for more girls to get the smoky-eyed look of Christina Aguilera.
That's because Wal-Mart Stores is moving into the cosmetics aisles, ready to battle for billions in teen dollars.
Wal-Mart recently decided to expand its "No Boundaries" line of low-priced cosmetics for teenagers and tweens — children in the 8- to 14-year-old age group who are hovering between childhood and adolescence — into 1,500 of its 2,600 stores.
Wal-Mart first introduced the makeup line, an extension of the chain's private label brand of apparel, shoes and accessories of the same name, in selected stores in March. The retail giant will also continue to roll out the line in new and renovated Wal-Mart stores that have a high percentage of teen customers, says Wal-Mart spokeswoman Suzanne Decker.
Lipstick at a Bargain
Priced at $1.74 for nail polish and $2.74 for other cosmetics such as mascara and cheek stain, Wal-Mart's cosmetics line will compete with higher-priced mainstays of teen cosmetics as Bonne Bell and jane, which are also sold in Wal-Mart.
To compare, the average price of nail polish sold in supermarkets, drug stores and mass merchandisers is currently around $2.37, while other facial cosmetics cost an average of $4.55, according to Information Resources Inc.
Wal-Mart's move reflects the growing interest among retailers in attracting teens and tweens (see sidebar, below). With youth customers accounting for $5.6 billion, or about 20 percent of the $28.4 billion cosmetics and toiletry market in the United States in 1998, according to market analysis firm Datamonitor, cosmetics are a particularly attractive area for sales in the teen market.
"Teens are a big segment of the population right now with a lot of disposable income to spend," says Adelle Kirk, principal of the global strategy group at Kurt Salmon Associates, a consulting firm specializing in the consumer products, retail and health-care industries.
What's more, the teenage market for cosmetics and toiletries is growing. Datamonitor estimates that youth spending on cosmetics in the United States will grow at a rate of almost 8 percent a year until 2002. In contrast, overall U.S. sales for cosmetics and toiletries grew at an average of 3.3 percent from 1994 to 1998.
Though the spending power of teenagers is enhanced by the income they make from jobs as well as the amount their parents spend on them, the price of cosmetics is still a key factor to lure teenage purchases. Girls spent an average of $1.39 a week on cosmetics and toiletries in 1998, with the amount increasing the older the teen got, according to Datamonitor.
"Teens have a lot of disposable income to spend but they're also very careful how they spend it," says Kirk. "Quantity is often as important as name brand or quality."
In the price category, "No Boundaries" will be offered at a discount to lines like jane, which sells most of its cosmetics for $3.49 each. And though image-conscious adolescents often shun private-label products for name brands, Kirk says retailers like Wal-Mart have become savvier in marketing its lines as if they were outside brands.
"To the consumer, if a private label is effectively funded managed and executed like a brand, it is a brand," says Kirk. "There's no stigma attached to it. Not if you do a good job."
Adults Use It Too
Yet another reason to market to teens is to build customer loyalty among the younger demographic who will then continue to shop at the store as they get older and have more money to spend, says Robertson Stephens retail analyst Bill Dreher.
"This tells us that Wal-Mart is continuing to try to bring excitement into stores and trying to bring in the Generation X and Generation Y customers," says Dreher.
One unexpected consequence of the boom in teen cosmetics is that even some adults are using them. With the economic slowdown prompting many people to cut back on discretionary spending, companies like jane say they routinely get letters from women who say they use their products. That could be because many of jane's cosmetic formulas are the same as more expensive prestige brands, says a company spokeswoman.
Plus, consumers are now looking for less expensive options in cosmetics, says Allan Mottus, publisher of cosmetics trade magazine The Informationist.
"If the color is right, women are going to buy it, whether or not it's positioned for someone else," says Mottus.