Market Research Logo

Beauty Retailing - UK - January 2016

Beauty Retailing - UK - January 2016

“Spending on beauty and personal care contracted marginally in 2015. The market remains very price sensitive and discount retailers’ customer numbers grew significantly. Even buyers of prestige brands are price conscious. The market will recover in 2016 but premium retailers must give consumers original and compelling reasons to trade up.”

– Hilary Monk, Senior Retail Analyst

This report looks at the following areas:

Where next for the value retailers and supermarkets?

What are the prospects for the premium end of the market

How are smartphones being used for beauty purchases and what are the opportunities for driving engagement?


OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Beauty market dips 0.1% in 2015
Figure 1: Market size and forecast: spending on beauty and personal care products (including VAT), 2010-2020
Health and beauty specialists deliver growth in 2015
Figure 2: Health and beauty specialists’ sales (including VAT), 2010-20
Discount shopping impacts value sales
Better prospects for prestige brands
Companies, brands and innovations
Boots and Superdrug mature businesses
Beauty specialists account for 36% of the market
Figure 3: Estimated distribution of spending on beauty and personal care products, 2015
Fashion retailers branch out into beauty
Delivering new experiences
Online accounts for 10% of BPC spending
The consumer
Skincare is the most purchased category
Figure 4: Types of product bought either in-store or online, October 2015
Discount stores are the winners
Figure 5: Where they bought beauty products, in-store and online, November 2014 and October 2015
Young women are most fickle
Competitive prices are the key driver
Figure 6: Key factors in deciding where to shop for beauty products in the last 12 months, October 2015
Discount shoppers rate their prices and own label
Figure 7: Reasons for using discount stores in the last 12 months, October 2015
Word-of-mouth recommendation more important for prestige than discount shoppers
Smartphones used for research
Figure 8: How beauty buyers have used a smartphone to research and shop for beauty products in the last 12 months, October 2015
Under-45s men most important prestige buyers
Figure 9: Reasons people bought prestige brands in the last 12 months, October 2015
What we think
ISSUES AND INSIGHTS
Where next for the value retailers and supermarkets?
The facts
The implications
What are the prospects for the premium end of the market
The facts
The implications
How are smartphones being used for beauty purchases and what are the opportunities for driving engagement?
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Beauty market dips 0.1% in 2015
Specialists sector grows 3.2%
Discount shopping impacts value sales
Better prospects for prestige brands
Growing interest in men’s grooming
Aging population presents an opportunity
MARKET DRIVERS
Aging population presents an opportunity
Figure 10: Trends in the age structure of the UK population, by gender, 2010-20
Figure 11: Trends in the age structure of the UK population, by gender, 2015-20
Women most concerned with wrinkles
Figure 12: Women’s facial skin type, March 2015
Figure 13: Men’s facial skin type, March 2015
Men show growing interest in health and beauty
Consumers spend their extra money on beauty categories
Figure 14: Trends in what extra money is spent on – beauty categories, January 2014 – October 2015
Better prospects for prestige brands
Savvy shopping habits
Figure 15: Savvy shopping habits in total and BPC markets, August 2015
Growth of the discounters
Loyalty card usage
Smartphone ownership
Figure 16: Personal ownership of consumer technology products, by demographics, June 2015
MARKET SIZE AND FORECAST
Discounters and promotional activity impact growth in 2015
Figure 17: Market size and forecast: consumer spending on all beauty and personal care products (including VAT), 2010-20
Figure 18: Market size and forecast: consumer spending on all beauty and personal care products (including VAT), at current and constant prices, 2010-20
Segment forecast: beauty products
Figure 19: Consumer spending on beauty products, 2010-20
Figure 20: Consumer spending on beauty products, 2010-20
Category performance in beauty
Figure 21: Consumer spending on beauty products, by category, 2014 and 2015
Colour cosmetics
Fragrances
Facial skincare
Body, hand and foot care
Segment forecast: other personal care products
Figure 22: Consumer spending on personal care products, 2010-20
Figure 23: Consumer spending on personal care products, 2010-20
Consumer spending on personal care items
Figure 24: Total consumer spending on personal care items (including VAT), 2010-14
Forecast methodology
SECTOR SIZE AND FORECAST
Health and beauty specialists’ sales
Figure 25: Health and beauty specialists’ sales (including VAT), 2010-20
Figure 26: Health and beauty specialists’ sales (including VAT), at current and constant prices, 2010-20
Annual growth in beauty specialists sales vs annual growth in BPC spend
Figure 27: Annual growth in specialists’ sector sales and annual growth in spending on beauty and personal care products, 2016-20 (fore)
Notes on the sector size
Outlet and enterprise numbers
Figure 28: Health and beauty specialists: outlet numbers, 2010-15
Figure 29: Health and beauty specialists: enterprise numbers, 2010-15
KEY PLAYERS – WHAT YOU NEED TO KNOW
Boots and Superdrug mature businesses
Value retailers excel
Niche specialists outperform too
Supermarkets suffer
Delivering new experiences
Online beauty spending
MARKET SHARES
A fragmented market
Figure 30: Leading specialist and non-specialist retailers: estimated market shares, 2014
Figure 31: Leading specialist and non-specialist retailers: market shares, 2012-14
Note on market shares
LEADING SPECIALIST RETAILERS: FINANCIALS AND OUTLETS
Boots and Superdrug mature businesses
Boots could do with more in-store experiences
Superdrug unveils new concepts
Price-led specialists do well
Niche players excel too
Top specialists by sales
Figure 32: Leading specialist retailers: net revenues, 2010-14
Figure 33: Leading pharmacy chains’ net revenues, 2010-14
Outlet numbers and sales per outlet
Figure 34: Leading specialist retailers: store numbers, 2010-14
Figure 35: Leading specialist retailers: annual sales per outlet, 2010-14
Operating profits and margins
Figure 36: Leading specialist retailers: operating profits, 2010-14
Figure 37: Leading specialist retailers: operating margins, 2010-14
Sales area and sales densities
Figure 38: Selected leading specialist retailers: estimated total sales area, 2010-14
Figure 39: Selected leading specialist retailers: estimated annual sales per sq m, 2010-14
LEADING NON-SPECIALIST RETAILERS
Aldi and Lidl outpace the market
Figure 40: Leading non-specialist retailers: estimated sales growth by segment, 2014
Leading non-specialists: Estimated beauty revenues
Figure 41: Leading non-specialist retailers: estimated beauty and personal care goods sales (excluding VAT), 2012-14
The supermarkets
The discounters
Figure 42: Leading discounters: Health and beauty space allocation estimates, August 2015
The department stores
Figure 43: John Lewis Liverpool: the retailer’s first Charlotte Tilbury concession
SPACE ALLOCATION SUMMARY
Summary allocation overview
Figure 44: Leading health and beauty retailers: Health and beauty products space allocation, December 2015
Detailed space allocation
Figure 45: Leading health and beauty retailers: Estimated health and beauty products space allocation, December 2015
Figure 46: Leading health and beauty retailers: Estimated health and beauty products space allocation, December 2015
Beauty versus non health and beauty-related in-store space
Figure 47: Department store, supermarket and discount store: Estimated percentage of total in-store space dedicated to health and beauty category, December 2015
ONLINE
Online spending accounts for 10% of the market
Figure 48: Estimated online consumer spending on BPC products, 2010-16
Supermarkets most commonly used BPC online retailer
Figure 49: Retailer shares of online sales of BPC products, 2013-15
CHANNELS OF DISTRIBUTION
Discounters gain share
Figure 50: Estimated distribution of spending on beauty and personal care products, 2015
Figure 51: Estimated distribution of spending on beauty and personal care products, in percentage and value terms (including VAT), 2014 and 2015
LAUNCH ACTIVITY AND INNOVATION
Fashion retailers branch out into beauty
Figure 52: H&M’s beauty range, 2015
Harvey Nichols launches beauty concierge
Tesco teams up with online bloggers
Bridging the gap between in-store and online
Boots taps into expanding dermo-cosmetic market
Figure 53: The Eau Thermale Avène range in Boots’ Brent cross store
Harvey Nichols’ customised beauty launches
Aldi launches caviar skin cream
Augmented reality app for trying new hair colours
John Lewis and Elemis ramp up in-store beauty service
Charlotte Tilbury’s first store
ADVERTISING AND MARKETING ACTIVITY
Beauty retailers cut back on advertising in 2014, but spend in 2015
Figure 54: Recorded above-the-line, online display and direct mail total advertising expenditure on beauty, personal care and body care, by leading retailers, 2012-15
Television accounts for half of beauty ad spend
Figure 55: Recorded above-the-line, online display and direct mail total advertising expenditure on beauty, personal care and body care, by leading retailers, 2014
Nielsen Media Research coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 56: Attitudes towards and usage of selected brands, November 2015 and December 2015
Key brand metrics
Figure 57: Key metrics for selected retail brands, November 2015 and December 2015
Brand attitudes: Lush has advantage on environmental and social responsibility
Figure 58: Attitudes, by brand, November 2015 and December 2015
Brand personality: L’Occitane has a particularly exclusive image
Figure 59: Brand personality – macro image, November 2015 and December 2015
Superdrug has an association with being basic
Figure 60: Brand personality – micro image, November 2015 and December 2015
Brand analysis
Amazon continues to enjoy a strong position
Figure 61: User profile of Amazon, December 2015
John Lewis leads direct competitors on customer service and online offering
Figure 62: User profile of John Lewis, November 2015
Boots is noted for reliability and accessibility
Figure 63: User profile of Boots, November 2015
Lush offers a fun and vibrant option
Figure 64: User profile of Lush, November 2015
Marks & Spencer still has a strong reputation but is more likely to be seen as boring and tired than others
Figure 65: User profile of Marks & Spencer, November 2015
Superdrug is considered a value option but some see it as basic
Figure 66: User profile of Superdrug, November 2015
Debenhams lags behind other department stores
Figure 67: User profile of Debenhams, November 2015
L’Occitane has premium connotations but exclusivity means it lacks trust and usage
Figure 68: User profile of L’Occitane, November 2015
World Duty Free’s image and usage is limited by locations
Figure 69: User profile of World Duty Free, November 2015
ALLIANCE BOOTS
What we think
Spending spree
Restructuring the US business
Implications for Boots
Boots strategy
Company background
Company performance
Figure 70: Alliance Boots: Group financial performance, 2010/11-2014/15
Figure 71: Alliance Boots: Outlet data, 2010/11-2014/15
Retail offering
Figure 72: Boots: UK Sales mix, 2008/09-2013/14
A. S. WATSON UK
What we think
Superdrug recovers in 2014
Figure 73: Superdrug’s Beauty Studio store in Cardiff
The Perfume Shop opens up store environment
Savers expands store network
Company background
Company performance
Group financial performance
Figure 74: A. S. Watson UK: Group financial performance, 2010-14
Outlet data
Figure 75: A. S. Watson UK: Outlet data (part estimated), 2010-14
Retail offering
Superdrug
The Perfume Shop
Savers
THE BODY SHOP
What we think
Pushing its ethical credentials in an increasingly crowded market
New loyalty scheme
Rush-hour makeovers
Company background
Company performance
Figure 76: The Body Shop - Retail Sales: Group financial performance, 2010-14
Figure 77: The Body Shop: Estimated UK sales performance, 2010-14
Figure 78: The Body Shop - Retail Sales: Outlet data, 2010-14
Figure 79: The Body Shop: Outlet breakdown, 2010-14
Retail offering
DEBENHAMS
What we think
In-store experience and beauty exclusives
Conveniently located stores
Multichannel improvements aimed at making online beauty purchasing more convenient
Customer service
Company background
Company performance
Figure 80: Debenhams: Group financial performance, 2010/11-2014/15
Figure 81: Debenhams: Estimated beauty sales, 2011/12-2013/14
Figure 82: Debenhams: Outlet data, 2010/11-2014/15
Retail offering
THE FRAGRANCE SHOP
What we think
Affordable prices
Free gifts and samples
Making online fragrance shopping risk-free and as convenient as possible
Authentic scents direct from the fragrance houses
Wide selection of brand names and exclusives
Perfumery expertise
New product categories
Company background
Company performance
Figure 83: The Fragrance Shop: Group financial performance, 2010/11-2014/15
Figure 84: The Fragrance Shop: Outlet data, 2010/11-2014/15
Retail offering
HOUSE OF FRASER
What we think
Refurbished beauty halls to attract new prestige brands
Beauty Confidential
Expanding online beauty offering
Enhanced multi-channel shopping experience
Ancillary beauty services
House Brand beauty opportunity?
Company background
Company performance
Figure 85: House of Fraser Plc: Group financial performance, 2010/11-2014/15
Figure 86: House of Fraser Plc: Estimated beauty sales, 2011/12-2014/15
Figure 87: House of Fraser Plc: Outlet data, 2010/11-2014/15
Retail offering
JOHN LEWIS
What we think
Price promise pledge
Refurbished beauty departments attract new brands
New lifestyle shopping concept
In-store beauty services
Impact of click-and-collect charge on online beauty sales
Company background
Company performance
Figure 88: John Lewis Plc (department store): Group financial performance, 2010/11-2014/15
Figure 89: John Lewis: Estimated beauty and personal care goods sales (excluding VAT), 2011/12-2013/14
Figure 90: John Lewis Plc (department store): Outlet data, 2010/11-2014/15
Retail offering
LUSH RETAIL
What we think
Unique and innovative product offering
Bigger stores to showcase brand uniqueness and full product range
Online sales growth on back of fully responsive website launch
In-store digital customer engagement
Scent and mood shopping app
In-store spa experience
Company background
Company performance
Figure 91: Lush Retail Ltd: Group financial performance, 2010/11-2014/15
Figure 92: Lush Retail Ltd: Outlet data, 2010/11-2014/15
Retail offering
THE CONSUMER – WHAT YOU NEED TO KNOW
Discount stores are the winners
Young woman are most fickle
Smartphones used for research
Competitive prices are the key driver
Discount shoppers rate their prices and own-label
Word-of-mouth recommendation more important for prestige than discount shoppers
Delivering on claims
TYPES OF BEAUTY PRODUCTS BOUGHT
Skincare is the most purchased category
Figure 93: Types of product bought either in-store or online, October 2015
Women’s beauty purchases
Figure 94: Types of product bought either in-store or online – by women, October 2015
Men’s beauty purchases
Figure 95: Types of product bought either in-store or online – by women, October 2015
WHERE THEY BOUGHT
Beauty/health stores most popular channel
Figure 96: Main channels where they bought beauty products in the last 12 months, October 2015
Boots dominates the market
Figure 97: Where they bought beauty products in the last 12 months, either in-store or online, October 2015
Gender preferences
Figure 98: Where they bought beauty products in the last 12 months, by gender, October 2015
Online versus in-store
Figure 99: Beauty/health specialists: where they bought beauty products in the last 12 months, October 2015
Figure 100: Supermarkets and discounters: where they bought beauty products in the last 12 months, October 2015
Figure 101: Other retailers: Where they bought beauty products in the last 12 months, October 2015
Consumer usage by age and affluence
Figure 102: Where they bought beauty products in the last 12 months, by age and affluence, October 2015
Trend data
Figure 103: Where they bought beauty products, in-store and online, November 2014 and October 2015
Men, the elderly and the retired shop around less
Young women are the most fickle
Figure 104: Buying repertoire (in-store and online) in the last 12 months by gender, age and socio-economic group, October 2015
The less affluent shop around more
Figure 105: Buying repertoire (in-store and online) for those who shop at five or more stores in the last 12 months by gender, age and socio-economic group, November 2014 and October 2015
Boots has the most loyal customers
Opportunity for Wilkinsons
Figure 106: Buying repertoire (in-store and online) by where they buy, October 2015
WHY THEY USE DISCOUNT STORES
Price the number one driver
Word-of-mouth recommendation could become more important
Figure 107: Reasons for using discount stores in the last 12 months, October 2015
Men more influenced by advertising
Women rate the discounters’ own-labels
Figure 108: Reasons for using discount stores in the last 12 months, by gender, October 2015
Brands are cheaper at other discount stores
Figure 109: Reasons for using discount stores in the last 12 months, crossed by discount stores used, October 2015
KEY DRIVERS ANALYSIS
Price the most important driver in all product categories
A promotions driven market
Fragrance and aftershave – quality counts
Figure 110: Key factors in deciding where to shop for beauty products in the last 12 months, October 2015
Loyalty cards and staff expertise
Figure 111: Further factors in deciding where to shop for beauty products in the last 12 months, October 2015
Own-label is a key driver for older shoppers
Figure 112: Key factors in deciding where to shop for skincare in the last 12 months, by age and affluence October 2015
Convenient opening hours matter to younger shopper
Figure 113: Key factors in deciding where to shop for Make-up in the last 12 months, by age and affluence October 2015
Competitive prices on fragrance and aftershave
Figure 114: Key factors in deciding where to shop for fragrance/aftershave in the last 12 months, by age and affluence, October 2015
Figure 115: Key factors in deciding where to shop for men’s shaving cream in the last 12 months, by age and affluence October 2015
SMARTPHONE USAGE
Smartphones predominantly used for researching purposes
Figure 116: How beauty buyers have used a smartphone to research and shop for beauty products in the last 12 months, October 2015
Figure 117: How beauty buyers have used a smartphone to research and shop for beauty products in the last 12 months – 16-24s, by gender, October 2015
Opportunity for more personalised approach in apps
Alert services could be used to offer guidance for men
Using virtual reality to encourage product testing
Department store shoppers use their phone for research purposes
PRESTIGE BEAUTY BUYERS
Under-45s men most important prestige buyers
Figure 118: Those who had bought prestige brands in the last 12 months, by gender/age, October 2015
Buying also skewed to the most affluent
Figure 119: Those who had bought prestige brands in the last 12 months, by household income, October 2015
London centric
Figure 120: Those who had bought prestige brands in the last 12 months, by region, October 2015
Quality tops the bill
Personal recommendations are influential
Packaging matters to the young and to men
Delivering on claims
Figure 121: Reasons people bought prestige brands in the last 12 months, October 2015
Figure 122: Reasons for people buying prestige brands in the last 12 months, by age and affluence, October 2015
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Market size
National statistics data
Market shares
Retail sector size
Forecast methodology
Usage of IRI data

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report