Pharmacy chains the big winners as 1 in 4 Australian women buy health and beauty products online; huge sales jump from Aesop helps Natura reach revenues of US$3.54 billion; Beiersdorf lifts investment to fend off niche brands; and blockbuster result for online luxury fashion retailer Farfetch.
Pharmacy chains the big winners as 1 in 4 Australian women buy health and beauty products online
Over 5.3 million Australian women buy cosmetics and skincare in an average six month period, says Roy Morgan Research – up from 4.8 million in 2014. There have been slight declines in the market shares of major retail channels over the past four years – supermarkets (down 1% to 23%), department stores (down 3% to 13%) and discount department stores (down 3% to 9%). But online sales are up 8 per cent to 26 per cent over the average three month period as 1 in 4 beauty buyers made the switch to e-commerce.
The big winners have been the major pharmacy chains. A huge 42 per cent of women buy cosmetics and skincare from pharmacies – in-store or online – over an average six month period, says Michele Levine, CEO, Roy Morgan. “Over 21 per cent of women who buy cosmetics have bought from Priceline/Priceline Pharmacy and nearly 15 per cent have bought from Chemist Warehouse – clearly the two market leaders. Chemist Warehouse even bills itself as "Australia's Cheapest Online Pharmacy".
Huge sales jump from Aesop helps Natura reach revenues of US$3.54 billion
Until Natura & Co acquired Australia's Aesop in 2013 and The Body Shop from L'Oréal in 2017, the bulk of the Brazilian natural beauty giant's revenues came from its home country. The buyouts created a large global footprint for Natura and today 54 per cent of sales are in international markets, mainly other parts of South America, the UK and the US. The company has announced a 13.5 per cent increase in consolidated sales for 2018 to US$3.54 billion, in addition to plans for Asian expansion.
According to Roberto Marques, Executive Chairman, all three iconic brands contributed to the outstanding performance. Net revenues for The Body Shop rose 11.2 per cent in Q4 and the financial quarter saw the core Natura brand grow 15.7 per cent to US$715.7 million. Aesop also achieved powerhouse results with sales surging 43.9 per cent in Q4 and 50.6 per cent for the full year.
Beiersdorf lifts investment to fend off niche brands
Storied cosmetic and skincare brands, especially in the consumer goods category, have been hard hit by competition from niche brands. Shares in Beiersdorf, the maker of Nivea and La Prairie, plunged 10 per cent last week as the multinational revealed that its margins are on track to fall this year. New CEO, Stefan De Loecker, told analysts that mass market labels were facing increased competition from small, disruptive brands as consumers seek out more natural ingredients and personalised products and services.
Niche brands have captured 40 per cent of the European skincare market, says De Loecker, and over 75 per cent of Beiersdorf's sales come from mass brands such as Nivea and Eucerin. In a bid to claw back market share, the German multinational will invest US$91 million a year in its consumer business, in addition to increased spending on innovation and digitisation. Expanding into new markets and driving online sales to 10 per cent of total sales are the two main strategic priorities going forward. Beiersdorf expects group sales to grow 3 to 5 per cent in 2019, down from 5.4 per cent in 2018.
Blockbuster result for online luxury fashion retailer Farfetch
Over the next decade, the global luxury market is expected to reach US$500 billion. Online sales will potentially grow to represent an incremental US$100 billion opportunity, says Jose Neves, Founder and CEO, of Farfetch, the e-commerce luxury fashion platform. With a market valuation of US$5.8 billion, the UK-based company successfully completed an IPO (initial public offering) last September and made several key acquisitions.
Luxury brands may have been slow on the uptake with online sales but they have rapidly made up for lost time. Gross merchandise value at Farfetch grew 55.5 per cent in 2018 to reach US$1.4 billion. Revenues increased 54.6 per cent in Q4 to US$195.5 million on 945,200 orders – an increase of 57.5 per cent on the same period in 2017.
Farfetch is collaborating with JD.com to create "the Premier Luxury Gateway to China", through Toplife, the Chinese online titan's luxury portal, and Farfetch's China edition. Last year also saw the launch of Farfetch Access, an upmarket loyalty program with benefits such as personal styling, discounts on repeat purchases and first dibs on insider sales.
Snippets from the Wires
- Auckland International Airport has reported a total retail income of US$110.8 million for the second half of 2018. The gateway's duty-free passenger spend increased 10.4 per cent over the period, strongly fuelled by cosmetics, skincare and Kiwi-made health and well-being products. Chinese passenger numbers have shot up significantly and the airport will launch a trial WeChat shopping mall over the next few weeks.
- A new report from Edge by Ascential in the US has two main takeaways for the Australian market. Amazon and Chinese online giant, JD.com, are expected to experience double-digit growth in health and beauty sales over the next five years. Just as Priceline and Chemist Warehouse are key players on the Australian beauty scene, drugstore majors such as Walgreens and CVS in the US dominate the health and beauty sector, accounting for 64 per cent of the top 10 specialists' sales in 2018.
- Discountboutique.com.au is the official Australian stockist of Wet n Wild, the LA-based budget makeup brand. The company recently rolled out an ath-beauty cosmetic range and has launched its first vegan, rose-inspired skincare lineup.
- Kate Morris, Founder of Adore Beauty, has snagged the number two slot on Internet Retailing's prestigious Top 50 People in E-Commerce 2019 report.
