In 2018, the sustained growth of health and beauty specialist retailers was due to the dynamic development of drugstores/parapharmacies. Driven by the convenience trend and the consumer shift to smaller, localised shopping, this channel attracted large players (including the new leader, Magnit, a prominent grocery player) and investment.
With such strong development for drugstores/parapharmacies, it is natural that the channel has attracted a lot of both small and large players – despite facing competition from modern grocery retailers and informal retailers. In the past, the competition was mostly spatial – retailers competed for locations with the highest pedestrian traffic and better coverage of residential areas.
Another factor which created competition between players in 2018 was the broadening of product offerings – in this year, Russian consumers showed a positive response to new product introductions in the market, and players were active in terms of taking advantage of this. As the channel continues to actively develop, it is likely that the competition to offer new products will become even more heated in the forecast period.
For the first time in many years, the value share leader changed in health and beauty specialist retailers – the new leader in 2018 was Magnit, which took the lead from Alkor & Co. Magnit is a large player in grocery retailers, holding large value shares in supermarkets and convenience stores with its Magnit brand, and recently actively expanded its new brand of drugstores, Magnit-kosmetik.
The long-standing channel leader Alkor & Co, operating the nationwide chain of beauty specialist retailers L’Etoile, lost its lead in health and beauty specialist retailers in 2018, falling to second place after Magnit. In 2018, it became increasingly omnichannel and integrated its online sales channels with its wide network of physical stores.
Whilst the development of drugstores/parapharmacies has been very dynamic, the larger channel of chemists/pharmacies has remained stable, with Rigla remaining the channel leader in value terms with its Rigla retail brand. Given the government regulation requiring a licence to sell over-the-counter medication (hard-to-obtain and very expensive), chemists have not felt significant pressure from the development of drugstores/parapharmacies, and continue to compete on price and access to favourable locations.
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