Channel Review in Beauty and Personal Care

Strategy Briefing

About This Report

Aug 2017

Despite the rapid growth of e-commerce over the last decade, store-based retailing continues to dominate the distribution landscape, accounting for 83% of global sales in beauty and personal care in 2016. The physical selling space is constantly being reinvented via in-store digital initiatives and by offering more holistic health and beauty services and consultations. But non-store retailing, dominated by the growth of internet retailing, is expanding faster.

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Channel Review in Beauty and Personal Care

Steady performance driven by premium beauty

Premium beauty continues to grow significantly faster, at 4% year-on-year, driven by high-value brands and the greater uptake of premium products. Shifts in consumer lifestyle, such as rising health awareness and ethical consumption of fmcg continue to drive category sophistication and value-added growth in global beauty.

Store-based retailing continues to dominate the landscape

Despite the rapid growth of e-commerce over the last decade, store-based retailing continues to dominate the distribution landscape, accounting for 83% of global sales in beauty and personal care in 2016. However, non-store retailing is expanding faster.

Specialist stores reinvent the shopping experience to maintain momentum

The physical selling space is constantly being reinvented via in-store digital initiatives and by offering more holistic health and beauty services and consultations. These initiatives are becoming mainstream across the range, from premium brands’ own label stand-alone boutiques to mass merchandising outlets.

Growth of internet retailing dominates distribution

The growth of internet retailing has been fuelled by the large range of products available online; by the wider choice in terms of prices, brands and delivery options. While some consumers visit stores to test products, many turn to websites to buy such products in order to take advantage of online offers and convenience.

Technology-enabled online beauty

Personalisation initiatives enable consumers to make even better purchasing decisions online than in a shop. Apps and online platforms have been developed to advise consumers both via trusted computerised algorithms and virtual communities, bloggers and vloggers to choose the products best-suited for them.

Introduction

Scope
Key findings

Industry Snapshot

Steady industry performance driven by premium beauty
Skin care continues to dominate beauty, colour cosmetics booms
Growth shifts: Mixed results in terms of slowdown and recovery

Channel Shifts

Steady expansion of non-store retailing in beauty
Significant category and regional differences in channel shifts
Digital initiatives drive the development of non-store platforms

Store-based Channels

Health and beauty specialists dominates and continues to expand
Category performance influences channel performance
Specialist stores reinvent the shopping experience to retain momentum
Status quo amongst the leading health and beauty specialists
Department stores suffers from a lack of differentiation
Association with high-end stores contributes to brand appeal
Modern grocery retailers dominates staple personal care categories
Modern grocery channels win on pricing
Private label trends follow industry shifts
Private label has its highest penetration in Western Europe
Infrastructure development fuels private label in emerging markets

Non-store Channels

Internet retailing rules non-store retailing
Choice and convenience drives consumers to internet retailing
Skin care shines online
Technology-enabled online beauty
Asia Pacific soars in internet retailing
Beauty platforms of internet conglomerates lead the way
Direct selling suffers in the digital age
Direct sellers need to reinvent their model for the digital age

Future Developments

Growth in beauty and personal care is on an upwards curve
Internet retailing maintains momentum
Key takeaways

Report definitions

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