Retailers predict online sales to increase 10 per cent over Christmas; Asia poised to become L'Oréal's biggest regional market; Aussie retailers lag behind on same-day shipping; and Gillette and Henkel extend into the natural market.
Retailers predict online sales to increase 10 per cent over Christmas
The Australian Retailers Association (ARA), in collaboration with Neto and Hitwise, predicts that online shopping for gifts will jump considerably over the Christmas period. Online shopping accounts for over $23 billion annually in Australia, and the ARA and Neto, the retail and wholesale management platform, expect even more consumers to use online platforms to get in early and avoid the rush that occurs during the lead-up to Christmas, says Russell Zimmermann, Executive Director of the ARA.
As we wait for the figures to come in for Black Friday and Cyber Monday, Hitwise, the conumer insight specialist, predicts they will be 20 per cent higher year-on-year. Deloitte's Retailers' Christmas Survey 2018 is equally bullish, pointing out that 79 per cent of local retailers forecast online sales to increase by 10 per cent over the festive season.
Over the last year, online retailing has experienced a 30 per cent uplift compared to 2017. Beauty and cosmetic purchases are the fourth most popular item bought online and sales increased 29.4 per cent last year. The core demographic of Aussie e-commerce beauty shoppers is 18 to 39 years old. Buy-now-pay-later (BNPL) services like Afterpay have become game changers in online beauty purchasing. One in 10 online beauty purchases in Australia are bought using BNPL, suggesting this has become a popular way to buy prestige brands.
Asia poised to become L'Oréal's biggest regional market
Sifting through the financial results of the major beauty players isn't a matter of just tracking sales figures. They are often key indicators of where a multinational's future lies. As we reported recently, L'Oréal posted its best quarterly sales in 10 years for Q3 2018. The main takeaway, though, was that Asia is poised to take over from Western Europe as L'Oréal's biggest regional market.
Western Europe remained L'Oréal's number one market by a whisker in terms of the titan's global scope. Revenues for the quarter declined by 0.7 per cent to 1.86 billion euros (AUD$2.91 billion). By contrast strong growth in Asia pushed net sales to 1.79 billion euros (AUD$2.8 billion) – only 61.7 million euros (AUD$96.6 million) less.
Prestige brands such as Lancôme and SkinCeuticals reported robust growth in Asia, says Aleksandrina Yotova, consumer analyst at GlobalData. "Digitalisation will play an important role in attracting Asian customers", she says. "With the acquisition of Canadian AR beauty company, ModiFace, earlier in 2018, L'Oréal's digital acceleration has stepped up, outrunning competitors Estée Lauder and Sephora, who have counted on ModiFace in the past for AR beauty apps development".
Aussie retailers lag behind on same-day shipping
When most people buy something, they want it now. But according to a study from the Pacific Consulting Group and Australia Post, only 15 per cent of businesses offer same-day shipping and 40 per cent still don't have an express shipping option.
Speed of shipping is a big driver for sales through e-commerce merchants, says Bob Black, COO of Australia Post. Currently, standard shipping is the most common delivery method in Australia. Just over half – 55 per cent – of websites offer more than one option in terms of shipping speed and 50 per cent offer free shipping when customers spend over a certain amount. The average price for standard shipping is $7.95, followed by $10.99 for express and $14.90 for the one-in-seven that offer same-day shipping.
To deal with the surge in online shopping over the past 12 months, Australia Post is investing a further $300 million into its delivery network, mainly in NSW, Victoria and Queensland. What we currently call express shipping will become standard for e-commerce over the next five years, adds Black.
Gillette and Henkel extend into the natural market
Sometimes it's a good strategy and sometimes it isn't. Yet multinationals are continuing to push into the natural beauty and grooming space. L'Oréal's lacklustre experience with The Body Shop didn't stop the French giant from buying the German brand, Logocos Naturkosmetik, earlier this year and a new Garnier organic range will make its global debut in Western Europe in the first half of 2019.
According to Ecovia Intelligence, global retail sales of natural and organic skincare and cosmetics reached US$10.2 billion in 2017. But acceptance is a major challenge for multinationals, says the market research firm, because many consumers shun "green" products from large corporations. Acquisitions have been the main way large players have extended into the lucrative sector, but over the past year or so several have developed their own brands.
Unilever launched Love Beauty Planet, its first entirely new brand for 20 years, in the US and the UK this year. Henkel, the maker of Schwarzkopf, has followed suit with the release of Nature Box in the US. The vegan brand features five collections based on cold-pressed oils such as coconut, avocado, almond and macadamia nut. Free from the usual suspect nasties, the range has 22 products – 11 for hair and 11 for body. The ingredients will be sustainably sourced through international development organisations such as Solidaridad.
Many men are also seeking out naturally-based personal care. P&G has announced Gillette will launch an “alternative” shave gel and cream in the first half of 2019. To be called Pure by Gillette, the products are aimed at men with sensitive skin and will contain aloe leaf juice and peppermint oil.
Snippets from the Wires
- Perfect Corp, the beauty tech innovator that works with more than 200 brands including Estée Lauder and YSL Beauté, has launched the latest version of its YouCam Makeup App. Described as the next phase in the evolution of digital beauty, the Beauty 3.0 claims to produce a more personalised and accurate try-on customer experience than its forerunner, the Beauty 2.0, that launched in 2015.
- Dior's cosmetics and fragrance division threw down the gauntlet to competitors by becoming the first luxury beauty brand to sell through WeChat livestream. Creative director, Peter Philips, fronted an hour-long segment on China's largest social media app. Three million visitors logged on for makeup tips and tutorials.
- Shiseido is firmly pushing its Made in Japan cred. The multinational has appointed Naomi Osaka, the first Japanese tennis player to win a Grand Slam title, as an ambassador for its bareMinerals makeup and Anessa sunscreen brand.
