Dm-drogeriemarkt
By Karsten Knothe

Dm offers a variety of skin care products under its Sundance line and alverde line.

Dm-drogeriemarkt PL range tries to bridge gap between low prices and unique products

Chain drugstores remain an interesting phenomenon in the German retail market, combining low-price concepts with a high degree of specialisation and ranges that are both very wide and deep. The density of outlets is high, especially thanks to market leader Schlecker’s strategy to have a presence in less populous villages and less frequented streets in residential areas.

There are seven drugstore chains at the moment – led by Schlecker with more than 12,000 outlets, while the smallest chain, Budnikowski, has just over 100. Price competition remains intense and the sector has seen some consolidation movements. Thus Ihr Platz, a 600+ chain, was taken over by Schlecker at the end of 2007, although the Ihr Platz fascia will remain. Rossmann took over the majority of 160 chain Kloppenburg at the end of 2007, while Budnikowski cooperates with retail giant Edeka in the area of buying.

Dm-drogeriemarkt is the number two firm in the market. The company was founded in 1973. It is still owned by its founder and his business partner. In the 2006/2007 business year, it had some 936 outlets in Germany – 67 more than during the preceding year. Turnover was just over 3 billion euros, up 11.9% on 2005/06, well ahead of the 7.7% increase in the number of outlets. Turnover growth was three percentage points ahead of outlet growth also in the preceding business year. Dm also has has 347 outlets in Austria, 123 in the Czech Republic, 64 in Slovakia, 43 in Slovenia, 207 in Hungary and 93 in Croatia, 13 in Serbia and 8 in Bosnia. Including international sales, Dm’s turnover increased by 13% to 4.2 billion euros last year.

Dm’s market penetration is especially strong across Southern and Western Germany. In the first half of the 2007/08 business year (ending March 31th), turnover in Germany was up 10.9%, while the company also announced steps to enter the North German market. This is a sign of growing aggressiveness, especially between Rossmann and drogeriemarkt, which previously (more or less) avoided expansion into the other’s core territory. While market leader Schlecker continues to pursue a strategy mainly as a discounter, Dm is trying to build on distinctive advantages, such as lighter and less narrow stores, the babybonus loyalty program for young parents a free in-store colour magazine. Dm’s private label range is also an integral part in its strategy to combine uniqueness with discount prices. Dm-drogeriemarkt has 20 own-brand ranges, which include a total of more than 2,600 products accounting for more than 25% of its sales. Some 5 years ago, Dm had just 1,000 PL products and some 10 years ago PL had just 100 private label products. Most of Dm-drogeriemarkt’s PL brands are in the economy price bracket if compared to the price of similar manufacturer brands. However, in recent years the company also increased its activities in higher price segments, firstly with réell’e, a premium body and hair care range, and secondly with alverde, a natural plant-based cosmetics range with no chemical ingredients. However, relative to comparable branded ranges, both réell’e and alverde still offer a substantial price advantage to consumers. Over the past few years, packaging designs were increasingly made more distinctive and similarities to leading brands were removed. Private label products are often displayed alongside branded equivalents, and are not relegated only to the bottom shelf. Together with their unique packaging design and the substantial shelf space they can occupy, this makes PLs a very eye-catching feature in Dm stores.

All Dm own brand products are signalled to consumers with Dm shelf markers, while they all also bear the Dm logo. Several brands also have own websites. In addition to low prices, consumer trust in Dm own brands is also cemented by good quality. For example, 34 products were given the highest “very good” and “good” certifications in the well-established and respected quality monitor magazines Ökotest and Stiftung Warentest.

Dm’s PLs Prevail

Dm’s best-known brand arguably is Balea, a wide body and skin care range consisting of a number of sub-brands including Balea Haircare and Balea HairStyling, Balea Face and Balea Young Face (facial care), Balea Deodorant, Balea Vital (mature skin care), Balea Bath, Balea Body, Balea Med (soap-free products), Balea Fuss (foot care) and Balea Men. The concept of the Balea brand (and also its name) clearly mirror Beiersdorf’s Nivea range, although the packaging design is now distinctive from Nivea.
The Balea Body range consists of lotions and creams such as Body Milk, Body Lotion and Wohlfühllotion (“Wellbeing Lotion), skin-firming products, hand care products (Hand Concentrate, Hand & Nail Balsam, Hand Crème Q10) and depilatory products for women (razors, shaving gel, cold wax strips). In addition, Balea Body also jumped on the anticellulite bandwagon with products such as Cellulite Body Crème and Cellulite Gel Crème.

Balea Face includes cleansing products, facial care products, beauty products and lip and eye care products. Examples of cleansing products are a washing crème, a washing gel, exfoliating gel, toner and cleansing milk. The facial care range has various crèmes, for example moisturising crème with Hydro Complex, and Anti Wrinkle Crème with Q10 and Rona Care complex. The Balea Face Beauty Effect series includes an anti-aging crème, moisturising emulsion, eye-lift serum and a collagen filler. For easier orientation, there is a color coding according to skin types.

Balea Young has three sub-brands: Soft + Care (moisturising products for every day use), Soft + Pure (making pores more delicate and giving skin a smoother appearance) and Soft + Clear (freeing skin from black spots).

Balea haircare products include a variety of shampoos and conditioners such as Coconut & Milk Proteine Shampoo for shine, Apricot & Melon moisturising shampoo and Black Currant Shampoo against split ends. A recent line addition was the Balea Hair After Sun Series, consisting of shampoo, conditioners and sun protection spray, all containing avocado oil and vitamin B5.

Balea bath products include bath foams, shower gels and soaps. The Wellness range has unique fragrances such as Deep Inspiration and Water Rose. As a limited edition, Dm recently introduced “Bathing Caviar” a bath additive consisting of little oil pearls that dissolve in the water.

A separate Balea range with a distinctive blue design is Balea Men, which in turn is subdivided in further sub-brands, such as Face, Bath, Shave, Eau de Toilette, Deodorant, Hair and Sports. The sports range consists of shower gels and deodorants in the varieties Power and Energy.

Suncare products remain a strong area for private labels as over the years, they have built a good reputation of offering good quality at prices that are often just about half of equivalent branded products. At least four Dm PL suncare products were given “good” and “very good” mark during 2007. Dm’s suncare brand until recently was Sundance, but the range is now being incorporated into Balea as Balea Sun.

Dm’s réell’e was one of the first premium private label ranges to be launched on the German market. With only a few exceptions, réell’e hair care products do not contain any silicons or animal products, replacing silicones with new formulae such as the lipid care system or oil components. The hair care range is sub-divided into products for various hair types and includes the varieties Blond, Brown, Black, Volume, Shine, Repair, Color Protection, Curls and Age Control. Hair styling products includes sprays, waxes and mousse. réell’e body care ranges are Aqua Splash (reinvigorating care), Powder Relax (harmonising care) and Special Care (for problem areas). Réell’e was recently extended by the Figur Aktiv series, consisting of Cellulite Crème Gel containing ocean algae extracts, c caffeine and panthenol and Algae Wraps.

A fairly new and unique range is SauBär, literally SowBear–a pun on the German word “sauber” (clean). It is a colorful range of kid’s bath and shower products, for example a bubble bath with added moisturising panthenol, an apricot shampoo, or a raspberry shower gel and shampoo. Examples of other products are a moisturising crème with raspberry fragrance and added shea butter, a red crackle bath in a strawberry and cherry fragrance and fruity bath water colorants.

Alverde is a range of natural products, certified as “Controlled Natural Cosmetics” by the Federal Association of Industry and Trade (BDIH). Alverde products do not contain synthetic fragrances nor conservation agents and no animal-derived ingredients except bee’s wax, carmine and silk proteine, while many plant-based ingredients are organic. Initially a facial care and cosmetics range, it has grown to include body care products, hair care products and recently saw the addition of baby care products. The baby care range includes a face and body crème containing shea butter, jojoba oil an canola oil, a healing crème containing bee’s wax, jojoba oil an canola oil, a body oil and a bathing oil. Alverde hair products include a number of shampoos and conditioners, for example in the fragrances Birch & Sage, Olive & Henna, Aloe & Hibiskus and Lemon & Melissa. Hairstyling products are gels, mousses and spray. The Alverde body care range was recently extended by a skinfirming series, including a Cellulite Body Gel and Exfoliating Shower Gel, both containing lemon and rosmarine oils.

Lovin’ Baby

Dm’s baby care range is babylove, an extensive range of baby care products, but not baby food. Quality seals are particular valuable in this segment as parents are particularly cautious when buying PL products for their babies. 13 babylove products carry “good” or “very good” valuations from Ökotest or Stiftung Warentest. The range includes diapers in all sizes, accessory product needed for changing diapers, cleaning and washing products as well as baby skin care, hair care and sun care products. The line is rounded off with a large variety of accessories such as toothbrushes, cups, teething rings. At the beginning of the year, baby love diaper maxi packs were promoted by the addition of a free soft toy in each box. Recent line additions were Comfort Wet Wipes with a travel box, and a new diaper size, Junior Plus, for babies weighing between 13kg and 27kg.

In dietary supplements, almost one third of shelf space is taken by Das Gesunde Plus, a comprehensive range that stands out both by its uniform blue packaging design, as well as its low price, often just about half of branded equivalents. Recent line extensions were Magnesium plus C Liquid, a Rooibos Fruit Sorbet and L-Carnitin Liquid.

A brand with a strong identity and brand-like positioning is p2, Dm-drogeriemarkt’s color cosmetic range. It is presented on separate p2 shelves, alongside similar shelves for branded products such as Nivea Beaute, Loreal or Ellen Betrix.

Denk Mit is a comprehensive household care products range including textile care, dishwashing products, toilet and bath care, and surface care as well as air fresheners and room fragrances. Denk Mit has a strong packaging identity that bears no obvious resemblance to any branded product. Denk Mit laundry care products reflect all recent trends of the market, including products for allergy sufferers and people with sensitive skin, products that are more effective at lower temperatures and offer better stain-removing capabilities as well as products offering greater colour protection. Unique fragrances in the hand dishwashing segment include Elderflower & Wild Cherry, while airfresheners are available as sprays and gels, with varieties including Tropical Fruits, Vanilla Exotic and Cool Lemon.