Super Premium Beauty and Personal Care in Australia

PROSPECTS

Multiple factors underpin expansion of super premium beauty and personal care

Super premium beauty and personal care showed an improved performance in terms of total current value sales growth in 2019, while volume growth rates for most product categories were also up on 2018. Multiple factors contributed to these results, not least the increasing consumer preference for luxury spending with a strong sensory experience component.

Interest in products made with natural functional ingredients continues to rise

Together with the fact that super premium beauty and personal care brands command high prices, rising health-consciousness and access to a wealth of information from online sources are leading consumers in Australia to pay closer attention to the ingredients found in such products. As they become more knowledgeable, consumers increasingly favour brands made with natural and organic ingredients, especially those claiming to have functional properties and offer multiple benefits.

Sustainability and ethical concerns come to the fore

As is the case across luxury goods in Australia, environmental and ethical concerns are increasingly informing consumer choices and the competitive strategies of manufacturers in super premium beauty and personal care. L’Oréal’s Lancôme is among the brands that has been most proactive in addressing such concerns in recent years.

COMPETITIVE LANDSCAPE

Luxury brand owners aggrieved by Amazon’s grey market sourcing

2019 saw Amazon significantly expand its beauty and personal care offer in Australia with the addition of more than 200 luxury brands to its local platform, including leading global names such as Elizabeth Arden, Lancôme, Yves Saint Laurent and Estée Lauder. Amazon sources many of these brands on the grey market via unauthorised third-party distributors, and the prices it charges for them vary greatly – in some cases substantially higher, in others much lower – from those charged by their official online stores and by authorised store-based sellers such as Mecca, Sephora, Myer and David Jones.

Mecca leads the way in meeting demand for experiential beauty shopping

As specialist retailers of super premium beauty and personal care products expand their networks in Australia, they are increasingly focused on offering consumers more engaging and immersive in-store experiences. For example, in late 2017 Mecca opened a new concept store at Westfield Bondi Junction that includes a “Beauty Play Bar”, where consumers can experiment with the latest products and make-up application techniques.

Digital security measures likely to intensify in wake of Sephora data breach

LVMH-owned Sephora began offering the online instalment payment service Afterpay in its Australian outlets in 2018, and its main competitor Mecca followed suit in 2019. This service is primarily used by millennials, the core target group for both retailers.

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