1.2 million women buy cosmetics at Priceline; Ulta Beauty eyes international expansion; private equity firm acquires majority stake in Korean beauty manufacturer; and online sales jumped 24 per cent in 2018, reports AusPost.
1.2 million women buy cosmetics at Priceline
Percentages only reveal so much, it's the raw numbers that count. According to Roy Morgan Research, the number of women buying cosmetics at Priceline has doubled over the past four years – from 620,000 to 1.2 million. That's nearly one-in-four consumers (23.3%) and a massive increase from 12.8 per cent in 2014.
Not only is Priceline enjoying its fifth straight year of growth, says Michele Levine, CEO of Roy Morgan, success is strongly fuelled by a hard core base of 18 to 24 year olds and growing online sales. "Staggeringly, 41.5 per cent of 18 to 24 year old women who purchased a cosmetic product in an average six months purchase a cosmetic product from Priceline. It's not hard to see why Priceline has captured so much of the cosmetic market, in particular that of 18 to 24 year olds. Value for money is considered important by 68 per cent of 18 to 24 year olds".
Supermarkets have also increased their market share to 24.9 per cent after a small slump in recent years. The two supermarket titans – Coles and Woolworths – have both increased the number of customers buying cosmetics since 2014. Coles has also attracted more younger customers, says Roy Morgan.
Over five million Australian women regularly buy cosmetics, says the researcher. But as Priceline and the leading supermarkets have captured close to 50 per cent of the market, fewer women patronise the major department stores and discount department stores.
Ulta Beauty eyes international expansion
When beauty buyers and executives head to the US, a visit to Ulta Beauty is top of their to-do lists. The company motto says it all – All Things Beauty, All in One Place. Nicknamed the Home Depot for women, Ulta Beauty is the largest specialist beauty chain in the US with 1196 stores in all 50 US states.
The business continues to go from strength-to-strength and Ulta has reported a net sales increase of 12.9 per cent for Q1 2019 to US$1.74 billion – up from US$1.54 billion for the same period in 2018. Ulta plans to open 80 new stores across the US, refresh 270 existing stores and remodel an additional 20 locations by the end of the year. Estimates for e-commerce growth in the same timeframe are a bullish 20 per cent to 30 per cent.
According to CEO Mary Dillon – “Our first step in becoming a global beauty retailer will be to prepare to launch operations in Canada". Official confirmation of rumours following the company's retention of Canadian retail real estate expert, Sam Winberg of Retail CND, to scout for possible locations. Ulta extended e-commerce operations to Canada in 2017 and is expected to open its first store next year. Ulta will be an aggressive competitor to home-grown chains like Shoppers Drug Mart with over 1300 stores across Canada.
Private equity firm acquires majority stake in Korean beauty manufacturer
South Korea is the global hotspot of fast beauty and leading cosmetic manufacturers can take a new product from concept to shelf in little more than 12 weeks. The country's three largest contract cosmetic manufacturers – Cosmax, Korea Kolmar and Cosmecca – have all been approached by foreign investors looking to acquire minority stakes over the past few years. The reason? To fast track access to the US$53.5 billion Chinese market.
Korea's top contractors not only make products for Korean indies and the nation's largest cosmetic makers such as AmorePacific, they also manufacture for many multinational players. Founded in 1964, Hwa Sung Cosmetics provides turnkey solutions in colour cosmetics from formulas to packaging. With particular expertise in eye products from liquid type eyebrow pencils to gel liners, the company also makes lip colours and foundations and is a supplier to Estée Lauder, Shiseido, Anastasia Beverly Hills and more.
Affirma Capital, a spin-off of Standard Chartered Private Equity, has acquired a majority stake in Hwa Sung Cosmetics for an undisclosed sum. When Unilever acquired Carver Korea in 2017 for US$2.67 billion, the multinational strengthened its position in two of the world's top beauty markets – China and South Korea. L'Oréal bought Nanda in 2018, following the company's 3CE brand tripling sales in China.
Online sales jumped 24 per cent in 2018, reports AusPost
Retailers from pure play e-commerce businesses to bricks-and-mortar companies looking to boost omnichannel growth eagerly await Australia Post's annual Australian Online Shopping Report. In 2018, 73 per cent of Aussie households – 7.6 million – shopped online. Sales increased 24 per cent to AUD$27.5 billion by contrast to 2017.
Consumers are fairly evenly divided with the devices they use for online purchasing, according to the report. Laptops claimed the number one position (32.8 per cent), followed by desktop (27.3 per cent) and smartphones (26%). But mobile purchasing showed the fastest growth at 28 per cent.
Online shopping ranks as a leisure activity. The peak shopping time, according to Australia Post, takes place at the end of the working day, spilling into after the evening meal time slot – from 7pm to 9.59 pm. Marketplaces such as Amazon, Kogan and eBay dominate Australian online sales.
The number of online purchases has been increasing 31 per cent year-on-year. Over 15 per cent of annual online expenditure takes place in the run-up to Christmas, says Australia Post. The peak for the period in 2018 was the Black Friday and Cyber Monday sales when sales growth spiked 28 per cent by contrast to 2017.
Snippets from the Wires
- According to a new report from McKinsey & Company, Chinese luxury spending will double to 1.2 trillion renminbi (US$173.61 billion) by 2025. Chinese Millennials are expected to fuel revenues, delivering 65 per cent of total global luxury spending growth over the period.
- Over the past five years there has been a gradual decline in alcohol consumption in Australia, reports Roy Morgan Research. In the average four week period, 67.5 per cent of Aussies aged 18 or over enjoy a tipple. There's a big gender divide, though. Men still drink twice as much as women – 66.6 per cent compared to 33.4 per cent. Wine is the number one drink preferred by women (48.2%), followed by beer (18.3%), spirits (15.2%), ready-to-drink packaged beverages (7.5%), cider (5.8%) and liqueurs (2%).
- Back in the 1920s, Jean Patou was the first designer to introduce monogrammed initials and created the world's most expensive perfume – Joy. In September last year, LVMH, the world's largest luxury goods group, acquired a majority stake in the iconic fashion label and hired Guillaume Henry (ex Nina Ricci, Givenchy and Carven) as the new creative director. Re-branded as Patou, the first ready-to-wear collection will debut in Paris in September The company has a huge fragrance library, including Sublime, 1000 and the still popular Joy. There have been several attempts to revive the fragrance business over the past few years, but LVMH's renewed interest in its own fragrances and other best-selling designer fragrance franchises could lead to a more concerted effort under the new name.
