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© Euromonitor International
1
HOW RETAILING CHANGES ARE AFFECTING
THE DISTRIBUTION OF BEAUTY AND PERSONAL
GOODSJON WRIGHT, HEAD OF RETAILING RESEARCH
MARCH 2011
© Euromonitor International
2ABOUT EUROMONITOR INTERNATIONAL
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Helping clients make informed decisions
Consumer focused industry, countries and
consumers
Subscription services and custom research
600 analysts in 80 countries
Regional research hubs and industry specialist
client support teams
HOW RETAILING CHANGES ARE AFFECTING THE DISTRIBUTION OF BEAUTY AND PERSONAL GOODS
© Euromonitor International
3
Introduction
Premium retailers formalise strategies to fight back
Beauty specialists find their niche
Parapharmacies and drugstores gain share
Internet retailing comes into its own
The future for distribution of beauty and personal care products
HOW RETAILING CHANGES ARE AFFECTING THE DISTRIBUTION OF BEAUTY AND PERSONAL GOODS
© Euromonitor International
4RETAILING ENVIRONMENT IS CHANGING
Changing retail
environment
Grocers growing
presence
Consumers looking to
save
Consumers looking for
convenience
Internet retailing
encroaching
INTRODUCTION
© Euromonitor International
5RETAILING CHOICES CONFLICT WITH DESIRE FOR QUALITY
ConvenienceAssurance over quality
INTRODUCTION
© Euromonitor International
6PRIVATE LABEL’S SHARE OF GLOBAL SALES BY INDUSTRY
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Sh
are
of
Sale
s (
%)
INTRODUCTION
© Euromonitor International
7GROCERY AND NON-STORE MAKE GAINS IN SHARE
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Sh
are
of
Valu
e S
ale
s
Grocery Retailers Non-Grocery Retailers Non-Store Retailing
INTRODUCTION
© Euromonitor International
8IMPORTANT CHANNELS MAINTAIN SHARE
0%
20%
40%
60%
80%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Sh
are
of
Valu
e S
ale
s
Other channels Beauty Specialist Retailers
Parapharmacies/Drugstores Department Stores
Internet Retailing
INTRODUCTION
© Euromonitor International
9
Introduction
Premium retailers formalise strategies to fight back
Beauty specialists find their niche
Parapharmacies and drugstores gain share
Internet retailing comes into its own
The future for distribution of beauty and personal care products
HOW RETAILING CHANGES ARE AFFECTING THE DISTRIBUTION OF BEAUTY AND PERSONAL GOODS
© Euromonitor International
10WHAT IS A DEPARTMENT STORE?
Department stores:
Mainly non-grocery merchandise
At least five lines in different departments,
Usually with a sales area of over 2,500 sq metres
Arranged over several floors
PREMIUM RETAILERS FORMALISE STRATEGIES TO FIGHT BACK
© Euromonitor International
11DEPARTMENT STORES’ SHARE OF SALES DECLINES
0.0
5.0
10.0
15.0
20.0
25.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Sh
are
of
Valu
e S
ale
s (
%)
PREMIUM RETAILERS FORMALISE STRATEGIES TO FIGHT BACK
© Euromonitor International
12BUT REGIONAL DIFFERENCES REMAIN
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
Ch
an
ge in
sh
are
of
dis
trib
uti
on
2000 - 2005 2005-2010
PREMIUM RETAILERS FORMALISE STRATEGIES TO FIGHT BACK
© Euromonitor International
13DEPARTMENT STORES IN US BOUNCE BACK
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
2006 2007 2008 2009 2010 2011 2012
Year-
on
-Year
Gro
wth
(%
)
Sales growth Store growth
PREMIUM RETAILERS FORMALISE STRATEGIES TO FIGHT BACK
© Euromonitor International
14
PREMIUM RETAILERS FORMALISE STRATEGIES TO FIGHT BACK
SUPER PREMIUM DEPARTMENT STORES AVOID CREDIT CRUNCH PAIN
-45.0
-30.0
-15.0
0.0
15.0
30.0
2005-6 2006-7 2007-8 2008-9 2009-10
% y
-o-y
gro
wth
Russia
GUM
Bolshoy Gostiny Dvor
Total department stores channel
-10.0
0.0
10.0
20.0
30.0
2005-6 2006-7 2007-8 2008-9 2009-10
% y
-o-y
gro
wth
United Kingdom
Harrods
Liberty
Fortnum & Mason
Total department stores channel
© Euromonitor International
15JOHN LEWIS LAUNCHES IN-STORE BEAUTY SPA CONCEPT
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
0
5
10
15
20
25
30
2006 2007 2008 2009 2010
Gro
ss s
ale
s (
GB
£)
Sto
re n
um
bers
Store numbers Gross sales
PREMIUM RETAILERS FORMALISE STRATEGIES TO FIGHT BACK
© Euromonitor International
16DEPARTMENT STORES IN EMERGING MARKETS
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2005 2006 2007 2008 2009 2010
Sh
are
of
Sale
s (
%)
China India
PREMIUM RETAILERS FORMALISE STRATEGIES TO FIGHT BACK
© Euromonitor International
17
Introduction
Premium retailers formalise strategies to fight back
Beauty specialists find their niche
Parapharmacies and drugstores gain share
Internet retailing comes into its own
The future for distribution of beauty and personal care products
HOW RETAILING CHANGES ARE AFFECTING THE DISTRIBUTION OF BEAUTY AND PERSONAL GOODS
© Euromonitor International
18WHAT IS A BEAUTY SPECIALIST RETAILER?
Beauty specialist:
Chained or independent retail outlets
Primary focus on selling cosmetics and toiletries, beauty accessories, fragrances or a combination of these
BEAUTY SPECIALISTS FIND THEIR NICHE
© Euromonitor International
19SPECIALISTS GAIN SHARE OF SALES
0.0
10.0
20.0
30.0
40.0
50.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Sh
are
of
Sa
les
Asia Pacific Eastern Europe Latin America
Middle East and Africa Western Europe
BEAUTY SPECIALISTS FIND THEIR NICHE
© Euromonitor International
20SEPHORA’S PRESENCE AND SALES GROW
BEAUTY SPECIALISTS FIND THEIR NICHE
2010 sales:
• More than US$1.0 billion
• Between US$500 million an US$1.0 billion
• Up to US$500 million
• New market entry
© Euromonitor International
21SASA INTERNATIONAL POINTS THE WAY IN ASIA PACIFIC
BEAUTY SPECIALISTS FIND THEIR NICHE
© Euromonitor International
22
Introduction
Premium retailers formalise strategies to fight back
Beauty specialists find their niche
Parapharmacies and drugstores gain share
Internet retailing comes into its own
The future for distribution of beauty and personal care products
HOW RETAILING CHANGES ARE AFFECTING THE DISTRIBUTION OF BEAUTY AND PERSONAL GOODS
© Euromonitor International
23WHAT IS A PARAPHARMACIES/DRUGSTORES?
Parapharmacies/drugstores:
Mainly OTC healthcare, cosmetics and toiletries, disposable paper products, household care products and other general merchandise
May offer prescription-bound medicines under the supervision of a pharmacist.
PARAPHARMACIES AND DRUGSTORES GAIN SHARE
© Euromonitor International
24PARAPHARMACIES/DRUGSTORES BOOSTED BY DOWNTURN
Beauty Specialist Retailers
Parapharmacies/Drugstores
Department Stores
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
-2.0 0.0 2.0 4.0 6.0 8.0 10.0
2010-1
5 C
AG
R %
2007-09 CAGR %
PARAPHARMACIES AND DRUGSTORES GAIN SHARE
© Euromonitor International
25GROWTH OF CHANNEL IS GLOBAL
Asia Pacific
Eastern Europe
Latin America
Middle East and Africa
North America
Western Europe
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
0.0 5.0 10.0 15.0 20.0 25.0
Sto
re g
row
th 2
005-1
0 C
AG
R %
Sales growth 2005-10 CAGR %
PARAPHARMACIES AND DRUGSTORES GAIN SHARE
© Euromonitor International
26SUPERDRUG INNOVATES: STORE-WITHIN-A-STORE
PARAPHARMACIES AND DRUGSTORES GAIN SHARE
© Euromonitor International
27PARAPHARMACIES/DRUGSTORES UBIQUITOUS IN US
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Nu
mb
er
of
sto
res
PARAPHARMACIES AND DRUGSTORES GAIN SHARE
© Euromonitor International
28
Introduction
Premium retailers formalise strategies to fight back
Beauty specialists find their niche
Parapharmacies and drugstores gain share
Internet retailing comes into its own
The future for distribution of beauty and personal care products
HOW RETAILING CHANGES ARE AFFECTING THE DISTRIBUTION OF BEAUTY AND PERSONAL GOODS
© Euromonitor International
29INTERNET RETAILING GENERATES CONSUMER INTEREST
INTERNET RETAILING COMES INTO ITS OWN
2%
2%
4%4%4%
1%
0%
© Euromonitor International
30INTERNET OVERCOMES CONSUMER CONFLICT
ConvenienceAssurance over quality
INTRODUCTION
© Euromonitor International
31INTERNET ENABLES BRANDS TO SPEAK TO CONSUMERS…
INTERNET RETAILING COMES INTO ITS OWN
© Euromonitor International
32…AND ENABLES RETAILERS TO SELL INTERNATIONALLY
INTERNET RETAILING COMES INTO ITS OWN
© Euromonitor International
33
Introduction
Modern grocery retailing rises in importance
Premium retailers try to fight back
Specialists find their niche and grow
Non-store retailing comes into its own
The future for distribution of beauty and personal care products
HOW RETAILING CHANGES ARE AFFECTING THE DISTRIBUTION OF BEAUTY AND PERSONAL GOODS
© Euromonitor International
34ECONOMIC BACKDROP REMAINS UNCERTAIN
THE FUTURE FOR DISTRIBUTION OF BEAUTY AND PERSONAL CARE PRODUCTS
© Euromonitor International
35CONSUMERS TO CONTINUE TO LOOK FOR VALUE
Price
Quality
Brand
Connection with consumer
THE FUTURE FOR DISTRIBUTION OF BEAUTY AND PERSONAL CARE PRODUCTS
© Euromonitor International
36OUTLOOK REMAINS GOOD FOR CHANNELS THAT INNOVATE
Beauty Specialist Retailers
Parapharmacies/Drugstores
Department Stores
Internet Retailing
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
-5.0 0.0 5.0 10.0 15.0 20.0 25.0
2010-1
5 C
AG
R %
Valu
e S
ale
s
2005-10 CAGR % Value Sales
THE FUTURE FOR DISTRIBUTION OF BEAUTY AND PERSONAL CARE PRODUCTS
© Euromonitor International
37
THANK YOU FOR LISTENING
Jon Wright | Head of Retailing Research