The UK health & beauty market is forecast to grow 16.5% until 2023, but the three market leaders are losing share as discounters, department stores, general merchandisers and clothing specialists all focus on growing their health & beauty sales.
Charlotte Pearce, Retail Analyst at GlobalData, comments: “Continued investment from value retailers such as Aldi, Lidl and Poundland is encouraging price-sensitive shoppers to trade down across everyday toiletries and seek cheaper branded products.
“As many health & beauty items are low-value essential purchases with quick replacement cycles, discounters have been able to drive greater volumes and increase their penetration in the sector.”
This is alongside a rising consumer demand for premium, with the premium segment now outperforming the wider beauty market.
Mass market retailers sat in the middle appear to be losing out, and researchers suggest this is set to continue unless they act decisively.
How to act
Pearce suggests 2018 is set to be another challenging year for retailers as consumers’ disposable income remains restricted, discounters and general merchandisers will continue to appeal to shoppers.
“To retain their market shares, Tesco, Sainsbury’s, ASDA and Morrisons must ensure that their prices and offers are more competitive (both online and instore) and leverage their loyalty schemes where available to keep shoppers from switching to discounters,” she advises.
Pearce explains that when they’re not hunting bargains, consumers are increasingly trading up to more premium products.
“Upper midmarket and premium cosmetic brands, such as Fenty Beauty, are encouraging younger shoppers to trade up from cheaper drugstore brands such as L’Oréal,” she says.
“With greater awareness and interest in cult products driven by bloggers and celebrities on social media, millennials are increasingly buying into more premium brands.
“This is drawing spend away from the likes of Boots and grocers to department stores, brands’ own channels and online pureplays like Amazon, ASOS and Feelunique.”
In an example of these wider trends, Boots is one of the retailers that’s been struggling with sales of late.
“Boots, which announced in March 2018 that it had seen a 3.3% fall in its like-for-like retail sales in the three months to February 28, 2018, must invest in its branded offers, ensuring it is up-to-date and relevant, as competitor Superdrug continues to do,” suggests Pearce.
The analysts suggests Glossier, with its accessible price points and popularity with younger consumers, is a good example of brands Boots could look at stocking.