Post-9/11 Travel Rules Inspire New Products - Fox Business
NEW YORK -(Dow Jones)- The restriction on liquids and gels on flights stemming from a foiled terrorism plot in 2006 may have inconvenienced airline travelers, but they also helped to breathe new life into personal care and beauty products in travel-size packaging and offshoot products.
Once an industry afterthought, travel-size minipackaging has led marketers beyond merely travel-friendly bottles of shampoo and mouthwash and helped drive innovations like dry solid perfume or hair styling sheets.
The trend has also become something convenient for shoppers to carry on the go. Moreover, smaller packages let curious but budget-conscious consumers sample a fragrance or facial cream before plunking down big money for a larger container.
"The restriction really starts this snowballing effect," said Benjamin Punchard, head of packaging research at data firm Euromonitor. "There were few travel-pack choices because manufacturers didn't see a demand for it. People have found there's a convenience factor. It's also about trying a brand at a significantly lower unit cost. We've seen retailers devote shelf space to that. There's been a much bigger push into the smaller pack sizes."
As higher fuel prices and food costs ate into low-income shoppers' budgets, smaller pack sizes in various merchandise categories also are a growing focus of discount retailers from Dollar General Corp. (DG) to Wal-Mart Stores Inc. (WMT), analysts said.
"Consumers that are still struggling and living paycheck to paycheck can only afford smaller pack sizes," said BMO Capital Markets retail analyst Wayne Hood. Retailers such as Wal-Mart "have expanded shelf space in those. In health and beauty categories, you'll see a more dominant presentation and offerings at supermarket and drugstores. Every year it seems to gain more space."
Sales in packaging sizes of three ounces or less in personal care have grown an average of 10% a year since 2006, when the liquid restrictions began, Punchard said.
Part of the growth was also fueled by the popular use of single-serve sachets in Asia and by the bird and swine flu scares that led to an explosion in the use of hand sanitizers.
In the skin-care category alone, smaller packaging has consistently outpaced industry growth in each of the past 10 years, according to Punchard, and six of the top 10 fastest-growing package sizes are under three ounces.
"It's a whole new industry that's picked up in new categories," said Alexi Mintz, a 30-year-old co-founder of online smaller-packaging shop 3floz.com, which carries things including Procter & Gamble Co.'s (PG) The Art of Shaving brand's carry-on kit and shaving cream and P&G's Fekkai hair travel kit and hair spray.
"We are not only catering to people who are getting on trains and flights," she said. "After 911, the whole country becomes a little more conscious of their spending. You become more conservative and bear costs in mind. People want to try things before they commit to it. More and more brands are adding smaller and travel sizes to their lineup."
To echo the reasons behind such industrywide growth, Mintz's Web site carries a tagline, "For those who travel, those who are curious and those who can't commit."
Since the site launched in February 2010, year-over-year sales have risen 57%. Mintz said the site has been approached by different brands to design 3-ounce packages and is expected to be profitable next year.
"Suddenly everybody tries to come up with three-ounce containers if they are selling anything liquid," said David Reibstein, a professor of marketing at University of Pennsylvania's Wharton School.
No. 1 U.S. drugstore chain Walgreens, which also owns the Duane Reade pharmacy chain, in the past six months has redesigned its travel pack section to make it easier for consumers to shop.
In the past, travel-size shampoo and toothpaste were sporadically displayed near each product category. Now the company has a dedicated travel section with expanded offerings, featuring things such as empty squeeze or spray bottles.
Pricier salon-inspired hair and other products that used to only come in larger sizes are now also available in travel sizes, Walgreens spokeswoman Tiffani Washington said.
At beauty company Coty Inc., which holds the licenses to make fragrance under labels from designer Marc Jacobs to singer Lady Gaga, smaller packages have also become a key focus. For instance, Marc Jacobs's smaller fragrance size and solid perfume have seen faster growth than the traditional 3.4-ounce size, which as a percentage of the total business has declined, said Lori Singer, head of global marketing for the label at Coty.
On the other hand, although the brand used to offer 1-ounce fragrance occasionally in limited edition, it's now part of the regular lineup. Sales in the one-ounce category have doubled the past two years in the U.S., vs. between 10% and 20% growth for regular sizes, she said.
Singer says the 0.02-ounce dry solid perfume packaged inside jewelry and accessories such as necklaces and rings also has seen growth triple in the past five years at airport duty free shops and in-flight sales.
"Consumers are looking to buy a smaller size as an entry to sample a fragrance to make sure they don't spend a ton of money," said Singer. "In days past, consumers bought a bigger bottle that gave them better value. But they are careful about how they invest their money. They want to maximize their investment and make sure it's an investment they love. It's become a viable business for us."
-Andria Cheng; 415-439-6400; AskNewswires@dowjones.com
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14 Sep, 2011--
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