Record year for Total Beauty Network; Japanese beauty industry goes head-to-head with Korea; 31 per cent of Aussies confess to "showrooming" habit; and luxury goods giant Richemont bids $US3.42 billion for control of Yoox Net-A-Porter.
Record year for Total Beauty Network
Total Beauty Network (TBN) has become one of the Australian beauty industry's major successes. The parent company of Designer Brands, INIKA Organic, Raww Cosmetics and Colour by TBN enjoyed record sales growth of 28 per cent in 2017, staging its largest company conference ever earlier this month.
Star performer Designer Brands (DB), which sells more than two million products a year nationwide, enjoyed another year of double digit growth, adding its highest number of new pharmacy outlets last year. DB is consistently outperforming the general Australian cosmetic market with five times the average growth, says Tony Rechtman, CEO of TBN.
INIKA Organic experienced a phenomenal growth rate of 42 per cent last year across salon and health channels in Australia and global growth of 52 per cent. Tapped by Euromonitor International as a "key player in the organic cosmetic industry", INIKA will build on its success with the launch of new foundation shades and makeup kits in the first half of the year.
The budget prices and ethical appeal of Colour by TBN fuelled growth of 54 per cent in 2017. The entire range is now certified vegan, in addition to being certified cruelty-free. A highlight of this year's release calendar will be the launch of a new range of vegan lipsticks priced at $3.95.
Rechtman confidently believes that 2018 is shaping up to be one of the most important in TBN's 12 year history. The market reaction to the October launch of Raww Cosmetics, the superfood-infused skincare and makeup line, has been very strong. Many pharmacies around the country have reported 24 hour sell-through rates from the time the products hit the shelves.
Japanese beauty industry goes head-to-head with Korea
The Japanese cosmetic industry isn't sitting back and allowing South Korea to muscle in on traditional export markets. The Asian nation's most powerful beauty companies – Shiseido, Kose and Pola Orbis (the owner of Jurlique) – are all expected to announce record operating profits for 2017. Prestige skincare and fast-growing export sales have propelled Japan's annual cosmetic shipment production to a new record of $US14.7 billion.
Exports of South Korean cosmetics reached $US3.6 billion last year – a third of which went to China. But Japan's fightback has been vigorous, with exports increasing 40 per cent from January to November to $US3.09 billion. Shiseido will open two new factories near Tokyo and Osaka by the end of 2019 and Kose is ramping up production facilities. More than 6.4 million Chinese tourists visited Japan in 2016 and the Japanese have come up with a special word for their spending power – bakugai – literally "explosive buying". Cosmetics are near the top of their shopping lists, notably high-priced skincare.
31 per cent of Aussies confess to "showrooming" habit
Showrooming, the practice of consumers trying on clothes and products in-store and then trawling the Internet to find cheaper prices online, is every retailer's nightmare. The habit has has been around for years, but the upsurge in mobile shopping has given it renewed vigour. A new study from comparison site finder.com.au reveals that 31 per cent of Australians surveyed confessed to checking or trying out a garment in a store and then searching for a cheaper price elsewhere. Retailers are well aware that some shoppers are wasting their time, says Angus Kidman, editor-in-chief of finder.com.au, adding that Amazon is working on a control feature which blocks shoppers from visiting online rivals within a store.
The biggest difference from a MagnaGlobal survey on the same subject in 2012 is that more people back then said they thought the habit was unfair to retailers – 29 per cent – in contrast to only 16 per cent in the recent finder.com.au survey.
Beauty retailers and department stores also suffer from a beauty version of showrooming. Customers try on products in-store and look for discounted alternatives or a less expensive "dupe" once they have decided on a preferred shade. Social and traditional media are full of tips and recommendations on where to find a cheaper alternative of a fashion-forward or in-demand luxury lipstick, blush, eyeshadow and more for those who have Champagne tastes on a beer beauty budget.
Luxury goods giant Richemont bids $US3.42 billion for control of Yoox Net-A-Porter
Richemont, the world's second largest luxury goods group after LVMH, bought a majority stake in Net-A-Porter, for $AUD87 million in 2010. Five years later, the luxury online fashion site merged with the Italian Yoox Group, founded by Federico Marchetti to sell over-stocked or unsold fashion and accessories from major brands such as Giorgio Armani and Gucci.
Richemont retained 50 per cent of the shares of the combined company, but its voting rights were limited to 25 per cent. Marchetti continued to run the Yoox Net-A-Porter Group whose annual revenues total 1.82 billion euros ($AUD2.78 billion). But Richemont, owner of some of the most expensive luxury watch brands, including Vacheron Constantin, Cartier and Baume & Mercier, and fashion brands Chloe, Azzedine Alaia and Shanghai Tang want more control.
With annual revenues of 10.647 billion euros ($AUD16.3 billion), Richemont has made a bid of $US3.42 billion for the other 50 per cent of shares in Yoox Net-A-Porter to take full ownership. A strategic move to rev up its online presence, just as LVMH has done over the past couple of years.
Yoox already sells many of Richemont's prestige watch brands and a roll-call of luxury beauty brands, including Hourglass, Marc Jacobs Beauty, Aesop, Sunday Riley, By Terry and many more. It will continue to operate as a separate business for third party luxury brands. But, according to Johann Rupert, Chairman of Richemont: "We see a meaningful opportunity to strengthen Yoox Net-A-Porter Group's leading positioning in luxury e-commerce, growing the business in existing and new geographies, increasing product availability and range, and continuing to develop unparalleled services and content for today's highly discerning consumers".
Snippets from the wires
- Priceline's Sister Club is one of the most popular retail loyalty programs in Australia. Following last year's re-launch, membership has soared to over 7 million. Better yet, these highly-valued customers account for over 50 per cent of non-dispensary sales.
- The global travel retail market was valued at $US69.5 billion last year, with perfumes and cosmetics accounting for 30 per cent of total sales, reports Allied Market Research. Analysts predict that worldwide travel retail sales will reach $US125.1 billion by 2023 and perfumes and cosmetics will become the dominant category.
- More major beauty players are taking aim at Southeast Asia to accelerate growth. Vietnam, which has an underdeveloped beauty industry, has become a goldmine for South Korean, Japanese and European brands as sales of imported beauty products rose to $US6 billion in 2017.
- Johnson & Johnson has reported a 6.3 per cent increase in full-year sales for fiscal 2017 to $US76.5 billion. Sales of key skincare brands, including Aveeno, Neutrogena and Clean & Clear jumped 2.2 per cent to $US13.5 billion.
- Amazon's total beauty sales in the US escalated 41 per cent in 2017 to $US1.5 billion, says the online retail giant. Mass skin care sales were the number one category with sales of $US305 million. Germany was the fastest-growing European market with beauty sales up 53 per cent to 150 million euros ($AUD229.7 million). Cosmetic and personal care sales in the UK rose 22 per cent to £130 million ($AUD226.8 million). Fragrance was the top category in both European markets.
