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Beauty Retailing - UK - January 2010

ISSUES IN THE MARKET
Main themes
Definitions
Sources
Abbreviations
FUTURE OPPORTUNITIES
Reviewing and re-evaluating
Prove it – Accountability
The reluctant ‘male groomer’
MARKET IN BRIEF
Protracted and fragile recovery forecast
Mixed fortunes in the beauty market
Consumer context
Specialists competitive landscape
Channels of distribution
INTERNAL MARKET ENVIRONMENT
Key points
Pricing
Value-aware consumers
Budget options in new product development
Own brands
Own brands resonate with shoppers too
Recent developments
Driving loyalty
Repeat business matters in recession
Loyalty cards
Product exclusives
In-store experience
Online developments
Discretionary beauty spend comes under pressure
Figure 1: Trends in what extra money is spent on, Nov 09-Dec 09
BROADER MARKET ENVIRONMENT
Key points
Mixed impact of changing demographics
Figure 2: UK: Implications of changing population demographics for beauty market, 2009-14(f)
The economy – still in recession
Figure 3: UK: GDP growth, 1989 Q1-2009 Q3
Tough times still to come
Consumer confidence on the rebound
Figure 4: UK: Nationwide Consumer Confidence Index, Jan 2006-November 2009
Retail sales
Figure 5: UK: Retail sales value growth, 2007-09 (October)
Implications for beauty retailers
Inflation eases
Figure 6: UK: Consumer prices, percentage change year-on-year, 2003-09
Consumer price implications for beauty retailers
COMPETITIVE CONTEXT
Key points
Personal care spending contracts in 2009
Figure 7: UK: Consumer spending on selected categories, 2004-09
Perfumes, cosmetics and toiletries
Figure 8: UK: Sales of cosmetics, fragrances and toiletries, by category, 2004, 2006, 2007 and 2008
Figure 9: UK: Relative sales importance of categories vs Western Europe, 2008
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
WHO’S INNOVATING?
Adding value and driving loyalty through new ideas
SECTOR SIZE AND FORECAST
Key points
Technical notes
Retail forecasts
Figure 10: UK: Health and beauty retailers’ sales, 2004-14
Beauty retailers’ prospects
Past trends
NHS business grows faster than other health and beauty sales
Figure 11: UK: Estimated total health and beauty retailers’ sales, 2004-08
Cosmetics/toiletries specialists hold their market share
Figure 12: UK: Beauty specialists* as a % of the personal care market**, 2004-08
Outlet and enterprise data
Enterprises
Figure 13: UK: Health and beauty retailers, number of enterprises, by sub-sector, 2003-07
Outlets
Figure 14: UK: Health and beauty retailers, number of outlets, by sub-sector, 2003-07
CHANNELS OF DISTRIBUTION
Key points
Supermarkets dominate
Figure 15: UK: Beauty and toiletries market, channels of distribution, 2008
Grocery retailers
Health and beauty specialists
Boots
Department stores and other mixed goods retailers
Non-store
Figure 16: UK: Beauty market, leading direct sellers, 2009
RETAIL COMPETITOR ANALYSIS
Key points
Leading specialists
Technical note
Figure 17: UK: Leading beauty specialists, 2008/09
Market shares
Figure 18: UK: Leading specialists’ market shares, 2008
Evaluation
Figure 19: UK: Beauty specialists, evaluation, 2008
RETAIL ADVERTISING AND PROMOTION
Key points
Advertising expenditure continues to rise
Total spend continues to rise in 2008
But concentrated into just a few hands
Upper end retailers cut back
Avon a high spender relative to turnover
Figure 20: Main media advertising spend on cosmetics and toiletries, by retailer, 2004-08
Spending by media
Figure 21: Main media advertising spend, by leading beauty specialists, by media, 2008
Advertising themes
BRAND ELEMENTS
Key points
 BRAND MAP
Figure 22: Attitudes towards and usage of beauty retail brands, December 2009
 BRAND QUALITIES OF BEAUTY RETAIL BRANDS
Service and a smile most important for beauty shoppers
Figure 23: Personalities of various beauty retail brands, December 2009
 EXPERIENCE OF BEAUTY RETAIL BRANDS
Prestige brands have niche awareness
Figure 24: Consumer visitation of various beauty retail brands, December 2009
 BRAND CONSIDERATION FOR BEAUTY RETAIL BRANDS
Avon not for everyone
Figure 25: Consideration of various beauty retail brands, December 2009
 BRAND SATISFACTION FOR BEAUTY RETAIL BRANDS
Boots most rounded, Molton Brown offers best experience
Figure 26: Satisfaction with various beauty retail brands, December 2009
 BRAND COMMITMENT TO BEAUTY RETAIL BRANDS
Boots has loyalty, department stores less desirable
Figure 27: Commitment to various beauty retail brands, December 2009
 BRAND INTENTIONS FOR BEAUTY RETAIL BRANDS
Boots has best retention
Figure 28: Future visiting intentions for various beauty retail brands, December 2009
 BRAND RECOMMENDATION FOR BEAUTY RETAIL BRANDS
Avon gets thumbs up from audience
Figure 29: Commitment to various beauty retail brands, December 2009
 SUPERDRUG
What the consumer thinks
Figure 30: Attitudes towards the Superdrug brand, December 2009
 DEBENHAMS
What the consumer thinks
Figure 31: Attitudes towards the Debenhams brand, December 2009
 LUSH
What the consumer thinks
Figure 32: Attitudes towards the Lush brand, December 2009
 TESCO
What the consumer thinks
Figure 33: Attitudes towards the Tesco brand, December 2009
 MOLTON BROWN
What the consumer thinks
Figure 34: Attitudes towards the Molton Brown brand, December 2009
 BOOTS
What the consumer thinks
Figure 35: Attitudes towards the Boots brand, December 2009
THE CONSUMER – WHERE THEY BUY BEAUTY PRODUCTS
Key points
Where they buy beauty products
Boots dominates, but sales growth is minimal
Superdrug repositions
Supermarket channel acceptable to many
Department stores struggle to win the popular vote
Figure 36: Where they bought beauty products in the last 12 months, November 2009
Who buys where
Women far more enthusiastic shoppers than men
Figure 37: Top nine retailers: where they bought beauty products in last 12 months, by gender, November 2009
Figure 38: Leading retailers: Where they bought beauty products in last 12 months, by gender, November 2009
The major retailers dominate across all age groups
Figure 39: Leading retailers: where they bought beauty products in the last 12 months, by age, November 2009
But The Body Shop and Specialists have a younger bias
Figure 40: Beauty specialist and The Body Shop: Penetration levels, by age, November 2009
Department stores and Avon have wider appeal
Figure 41: Department stores and Avon: Penetration levels, by age, November 2009
While M&S and chemist/drugstores have an older skew
Figure 42: Chemist/drugstores and M&S: Penetration levels, by age, November 2009
Figure 43: Other retailers: Where they bought beauty products in last 12 months, by age, November 2009
Winners and losers in the socio-economic stakes
Figure 44: Selected retailers: Where they bought beauty products in the last 12 months, by socio-economic group, November 2009
Figure 45: Selected retailers: Where they bought beauty products in last 12 months, by socio-economic group, November 2009
Potential to collaborate?
Boots and Waitrose
Who else?
Figure 46: Selective retailers: Where bought beauty products in the last 12 months, by where they shop for groceries, November 2009
Repertoire – Superdrug shoppers less loyal
Figure 47: Beauty cosmetics, skincare products or fragrances/aftershaves bought from, by repertoire of beauty cosmetics, skincare products or fragrances/aftershaves bought from, November 2009
Women and ABC1 families shop around a lot more
Figure 48: Repertoire of beauty cosmetics, skincare products or fragrances/aftershaves bought from, by demographics, November 2009
THE CONSUMER – THE WAY THEY SHOP FOR BEAUTY PRODUCTS
Key points
Many have not changed their habits
Figure 49: The way they shop for beauty products, November 2009
The capricious
Future intentions
Figure 50: Future spending intentions on clothing (July 2009) and beauty (November 2009)
Women have changed their habits more than men
Figure 51: Way in which they shop for beauty brands, by gender, November 2009
Older people less likely to change
Figure 52: Those with unchanged shopping habits and those shopping around more, by age, November 2009
Young people and families most likely to have cut back
Figure 53: Those spending less or changing brand habits, by lifestage, November 2009
Consumers shopping habits by where they’ve shopped
Trust
Figure 54: Those sticking to a few retailers they trust, by where they bought beauty products, November 2009
Spending less
Figure 55: Those spending less this year than last, by where they bought beauty products, November 2009
THE CONSUMER – ATTITUDES TO BEAUTY SHOPPING
Key points
Practicalities matter
Loyalty cards appeal to a significant minority
Call to action
Figure 56: Attitudes to beauty shopping, November 2009
Young people actively managing their budgets
Figure 57: Attitudes to beauty shopping, 16-24s vs all, November 2009
The gender divide
Figure 58: Main differences by gender in attitudes to beauty shopping, November 2009
Some common ground
Figure 59: Other attitudes to beauty shopping, by gender, November 2009
Other findings
A.S. WATSON (UK)
Figure 60: AS Watson UK: Sales as share of UK health and beauty retailers’ sales, 2004-08
Figure 61: Superdrug: Sales as share of UK health and beauty retailers’ sales, 2004-08
Figure 62: Savers Health & Beauty: Sales as share of UK health and beauty retailers’ sales, 2004-08
Figure 63: The Perfume Shop: Sales as share of UK health and beauty retailers’ sales, 2004-08
Strategic evaluation
Recent history
Financial performance
Figure 64: AS Watson UK: Financial performance, 2004-08
Store portfolio
Figure 65: AS Watson UK: Outlet data, 2004-08
Retail offering
BOOTS UK
Figure 66: Boots UK: Sales as share of health and beauty retailers’ sales, 2004-08
Strategic evaluation
Recent history
Financial performance
UK Health and Beauty Division
Figure 67: Alliance Boots UK Health and Beauty Division: Financial performance, 2004-08
Store portfolio
Figure 68: Alliance Boots UK Health and Beauty Division: Outlet data, 2004-08
Retail offering
Market positioning
Brands
Product offer
Figure 69: Alliance Boots UK Health and Beauty: Sales mix by major product category, 2008/09
Pricing
Advertising and marketing
e-commerce and home shopping
LUSH
Figure 70: Lush Retail Ltd: Sales as share of UK health and beauty retailers’ sales, 2004-08
Recent history
Financial performance
Figure 71: Lush Retail Ltd: Financial performance, 2004-08
Store portfolio
Figure 72: Lush Retail Ltd: Outlet data, 2004-08
Retail offering
Market positioning
Product offer and brand
e-commerce
MOLTON BROWN
Figure 73: Molton Brown Ltd: Sales as share of UK health and beauty retailers’ sales, 2005-08
Recent history
Financial performance
Figure 74: Molton Brown Retail Division: Sales performance, 2004-08
Store portfolio
Figure 75: Molton Brown: UK Outlet data, 2004-08
Retail offering
SPACE NK
Figure 76: Space NK Ltd: Sales as share of health and beauty retailers’ sales, 2004-08
Recent history
Financial performance
Figure 77: Space NK: Group financial performance, 2004-08
Store portfolio
Figure 78: Space NK: Outlet data, 2004-08
Retail offering
THE BODY SHOP
Figure 79: The Body Shop UK & Republic of Ireland: Estimated sales as share of UK health and beauty retailers’ sales, 2004-08
Strategic evaluation
Recent history
Financial performance
Figure 80: The Body Shop UK & Republic of Ireland: Financial performance, 2004-08
Store portfolio
Figure 81: The Body Shop UK: Outlet data, 2004-08
Retail offering
Market positioning
Product offer
Pricing
Advertising and marketing
e-commerce and home shopping
APPENDIX – WHERE THEY BUY BEAUTY PRODUCTS
Figure 82: Next most popular beauty cosmetics, skincare products or fragrances/aftershaves bought from, by demographics, November 2009
Figure 83: Other beauty cosmetics, skincare products or fragrances/aftershaves bought from, by demographics, November 2009 (continued)
Figure 84: Least popular beauty cosmetics, skincare products or fragrances/aftershaves bought from, by demographics, November 2009 (continued)
Figure 85: Agreement with selected lifestyle statements on appearance/beauty, GB, by demographics, 2009
APPENDIX – THE WAY THEY SHOP FOR BEAUTY PRODUCTS
Figure 86: Most popular statements on buying cosmetics, skincare and fragrances/aftershaves, by demographics, November 2009
Figure 87: Next most popular statements on buying cosmetics, skincare and fragrances/aftershaves, by demographics, November 2009 (continued)
Figure 88: Most popular statements on buying cosmetics, skincare and fragrances/aftershaves, by demographics, November 2009 (continued)
Figure 89: Beauty cosmetics, skincare products or fragrances/aftershaves bought from, by most popular statements on buying cosmetics, skincare and fragrances/aftershaves, November 2009
Figure 90: Beauty cosmetics, skincare products or fragrances/aftershaves bought from, by next most popular statements on buying cosmetics, skincare and fragrances/aftershaves, November 2009 (continued)
Figure 91: Beauty cosmetics, skincare products or fragrances/aftershaves bought from, by other statements on buying cosmetics, skincare and fragrances/aftershaves, November 2009 (continued)
APPENDIX – ATTITUDES TO BEAUTY PRODUCTS
Figure 92: Most popular attitudes towards buying cosmetics, skincare, fragrances/aftershaves, by demographics, November 2009
Figure 93: Next most popular attitudes towards buying cosmetics, skincare, fragrances/aftershaves, by demographics, November 2009 (continued)
Figure 94: Other attitudes towards buying cosmetics, skincare, fragrances/aftershaves, by demographics, November 2009 (continued)
Figure 95: Beauty cosmetics, skincare products or fragrances/aftershaves bought from, by most popular attitudes towards buying cosmetics, skincare, fragrances/aftershaves, November 2009
Figure 96: Beauty cosmetics, skincare products or fragrances/aftershaves bought from, by next most popular attitudes towards buying cosmetics, skincare, fragrances/aftershaves, November 2009 (continued)
Figure 97: Beauty cosmetics, skincare products or fragrances/aftershaves bought from, by other attitudes towards buying cosmetics, skincare, fragrances/aftershaves, November 2009 (continued)

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