BW Confidential - Issue #1 - April 2010 - (Page 47)

Western Europe: UK credit: stock.xchng The come-back market? An end-of-the-year boost raises expectations for beauty in the UK T he recession hit the UK hard, although government figures at the end of last year showed the country may be turning back to growth. This also looks to be the case for beauty. The industry was encouraged by a positive Christmas trading period, and an improved performance at the end of the year managed to pull up the industry’s overall growth. Total beauty and personal sales were up by 2.5% to £9.63bn ($14.68bn), while the premium market saw an increase of 2.8% to £2.48 ($3.78bn), according to market research group Euromonitor. Fine fragrance sales in December grew by 0.4% in value according to research company GfK. However, the category continues to be heavily discounted, leading to an even more pronounced dichotomy between the high-end, high-priced lines and the rest of the market. For example, unit sales of fragrance in December were up by 6.8%, showing that consumers were buying cheaper products. GfK also reported that prices of women’s coffrets in the period tumbled by some 11%. Chains such as The Perfume Shop and Superdrug, both owned by Asian conglomerate AS Watson, played the price card to the full. Before Christmas Superdrug said that it had cut prices of fragrances to offer the best value on the High Street. In January, the retailer also launched a campaign featuring fragrances for under £10. Consumers are also increasingly looking for discounts on the internet, which is taking a growing share of the market—Euromonitor estimated that sales of fragrance on the web in the UK account for 8% of the market. Given the consumer’s focus on value and the fact that the market is saturated, Euromonitor predicts that fragrances will see a cumulative annual growth rate (CAGR) of only 1% between 2009 and 2013. Is the price right? Lower prices have also become a more important factor for British consumers when buying skincare. Industry consultant and author of the UK Premium Market Report Imogen Matthews comments: “Premium skincare has been hit by the phenomenal beauty and coming out with competitive price promotions on toiletries and other items, Boots has been forced to offer the consumer something extra either in terms of private label or in its services,” says Datamonitor senior retail analyst Sarah Peters. “It will need to continue to focus on improving service to differentiate itself.” Boots’ results show its efforts have paid off. Despite the recession, the retailer managed to post a 6.2% increase in health and beauty sales in its first half ending September 30, 2009. The value factor Boots received strong media attention with its No 7 Protect & Perfect serum and has been praised for the work it has done on its privatelabel offer growth of masstige brands, such as Boots Protect & Perfect and Olay Regenerist. Women are discovering that they can buy products off the shelf with the same product claims as ones that are twice the price.” Boots received strong media attention with its No 7 Protect & Perfect serum and has been praised for the work it has done on its private-label offer. The retailer has also worked on its in-store services. “With supermarkets increasing space in health and The market is not just about low prices though. Analysts say that consumers are willing to pay for products that have a real value and clear quality or point of difference and are not necessarily looking for a lowerpriced equivalent. This is the case in prestige make-up, where according to Matthews “must-have” limited-edition products are driving sales. She mentions strong success of Dior with its Cristal Boreal pendant and YSL’s “We Love Selfridges” limited edition makeup palette. Another positive in the make-up category is foundations, which are expected to grow this year. If there’s enough innovation, other prestige categories may also see better growth in 2010. n UK total beauty & personal care sales 2009: £9.63bn ($14.68bn), +2.54% vs 2008 Premium beauty sales: £2.48bn ($3.78bn), +2.8% vs 2008 Source: Euromonitor April 2010 - N°1 - BW Confidential 47

Table of Contents for the Digital Edition of BW Confidential - Issue #1 - April 2010

Update - Brand and retail recap
Take note - Market facts, figures and trends
Launches - The latest fragrance, skincare and make-up launches
Best of BW - Market highlights
Interview - Sephora international & development md Olivier Schaeffer
Insight: make-up - Category overview
 - Industry viewpoint
 - Trends
Wellness report - Overview
 - Industry roundtable
 - Spa case studies
Travel retail - Europe: little chance of a rebound
Market watch: Western Europe - Regional analysis
 - Germany
 - France
 - UK
 - Spain
 - Italy
Radar - Six up-and-coming beauty brands
Packaging special -  Industry analysis
 - Innovation
Last word - UBS analyst Nik Modi's outlook for 2010

BW Confidential - Issue #1 - April 2010