European health and beauty retail remains resilient in recession

The market dropped 0.7 per cent over the year, as consumers across Europe spent €129bn on products in the health and beauty sector, according to a recent Verdict report.

One of the reasons for the relative resilience of the sector is the quick reactions of retailers to the new consumer demands, Verdict analyst and report author Natalia Grabov explained.

Private label growth​

“There was a bigger uptake of private label and own brand products, as financially strained consumers traded down to cheaper items. Health and beauty specialists spotted this and responded quickly by focusing on extending and launching new and exclusive product lines,”​ Grabov said.

Private label brands not only help to differentiate the retailer’s offering from their competitors and thereby increase footfall, they also generate higher margins for the retailer.

While private label ranges have found success during downturn, retail consultant Simon Chinn at Verdict, a subsidiary of Datamonitor, explained that success very much depends on the product.

“Consumers can be very loyal to certain products, for example moisturisers. Even if the price goes up they will stick with their favourite brand, whereas basics such as shower gels receive less loyalty,”​ he told CosmeticsDesign-Europe.com.

Similarly, the destocking that was experienced by manufacturers in the sector during the last couple of years is very product and channel specific. While department stores decreased their orders of higher end more discretionary items, sales of basics remained fairly steady, although cheaper versions were at times sought by consumers.

New retailing channels​

Another consequence of the difficult climate has been the search for new and innovative channels through which retailers can reach their consumers.

Chinn noted the recent move from Sephora to target consumers in the Paris metro with vending machines supplying small, travel sizes of popular products.

In addition, the internet remains a growing channel for the health and beauty sector with perfumery Douglas making significant advances, according to Chinn.

The consultant also noted the ongoing development of the hypermarket channel such as Carrefour and Auchun, where these retailers have been making efforts for some time to make their health and beauty offering more attractive to consumers.

Chinn said manufacturers should look to target these stores in the future, as they develop this sector.