In this first of a two-part series, Imogen Matthews takes a look at the UK premium beauty market and assesses what is driving the current growth.
The UK premium beauty industry benefited, growing by 5.1% year on year to reach £2.3bn, according to The NPD Group.
Black Friday impacts on consumer spending habits
Throughout the long period of recession, UK premium beauty has been remarkably resilient, buoyed up by the all-important Christmas period, with as much as 49% of fragrance turnover occurring in November and December.
Pre-Christmas discounting has become a permanent feature amongst most of the major retailers, but in 2014 Black Friday became a reality for the first time.
Bryan Roberts, director of retail insights, Kantar Worldpanel, senses that many retailers were clambering on the bandwagon with existing stock, which will have had a dire impact on margins.
“It created a buzz among shoppers, but a number of retailers were poorly organised in terms of exploiting that interest,” he comments.
Richard Hyman, a leading UK retail analyst, richardtalksretail.com, goes further by saying that Black Friday was a disaster.
“The idea you bring those finite full-price Christmas sales forward to Black Friday at discounted prices is one of the craziest things I have seen in retail,” he argues.
Bidding war
Not everyone agrees, as the retailers outbid each other to entice customers with discounted offers from end of November.
The Fragrance Shop introduced Happy Hour flash sales in which it offered an extra 20% off everything for limited periods, as well as offering an extra 15% off all coffrets over the Black Friday period.
Pete King, managing director, The Fragrance Shop, maintains: “Black Friday well and truly cemented itself in the UK retail calendar this year in which we offered discounts across a range of fragrances and coffrets. Sales soared over this period, but our busiest trading day was Christmas Eve.”
Meanwhile, Debenhams, a leading UK department store retailer, which has come under much criticism for its heavy discounting in previous years, pulled back from extended periods of promotion in favour of shorter, more profitable bursts.
M&S ups the ante with premium niche beauty
Since 2012, Marks & Spencer has been building a presence on the high street with its M&S Beauty concessions, with 119 concept and 90 beauty lite concept stores.
The retailer is continually adding brands and enjoyed strong sales from Rituals, Burts Bees and Cowshed. REN is one of its top performing brands, with Rodial, Stila, Dr Hauschka and L’Occitane also high up the roster.
Louisa Maaldrink, beauty buyer, Marks & Spencer, comments: “We are one of the most trusted retailers in the UK and therefore have a huge opportunity to drive beauty for M&S. As we have almost 30% market share in lingerie, our main focus in 2015 is to convert these customers into beauty.”
Stay tuned for Part two of Imogen’s detailed look at the premium beauty market, when she will look at opportunities in online, as well as the premium make-up, skin care, and fragrance markets. A link to Part two is available here.