The UK health and beauty market is forecast to grow 16.5% until 2023, according to GlobalData, a leading data and analytics company. And where consumers are shopping for these products is changing: The three UK market leaders, Boots, Tesco, and Sainsbury’s, are losing share as discounters, department stores, general merchandisers, and clothing specialists all focus on growing their health and beauty sales.
To remain competitive, the current leading retailers in the category will need to utilize their loyalty programs and ensure that prices and offers are enticing.
“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,” says Charlotte Pearce, retail analyst at GlobalData. “As many health and 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.”
Leaning on loyalty
This pattern is expected to continue, as consumers’ disposable income will be limited throughout 2018, according to GlobalData. To remain competitive, the current leading retailers in the category will need to utilize their loyalty programs and ensure that prices and offers are enticing to keep their customers from turning to discounters, Pearce advises.
Upper midmarket and premium cosmetics sales are also undergoing a shift, as brands such as Fenty Beauty attract younger consumers who have previously steered toward drugstore brands, 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,” Pearce says. “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.”
Some department stores, however, have found success in launching limited-edition collections or securing brand or product exclusives, Pearce says, and “will continue to benefit from increased footfall as a result of this.”
Taking a new approach
To benefit from these changing market dynamics, market leaders such as Boots will need to shift their approach to health and beauty, Pearce concludes.
“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,” Pearch says. “As Glossier only has an online presence in the UK, it is an emergent brand that Boots could stock in its stores and online to attract younger shoppers. Glossier has more accessible price points than more premium and designer brands, such as Dior and Chanel, and would encourage younger customers to trade up from the likes of Rimmel and NYX, and support Boots’ growth within skincare and cosmetics—two of the fastest growing categories out to 2023.”