The total value of the UK toiletries market is an impressive £4.46bn a year, according to research by Taylor Nelson Sofres (TNS). Furthermore, the year to October 31 saw the market grow by £141m (3.1 per cent) year on year. The beauty market is thriving too – figures from the same period show a 9.4 per cent increase in spending.
But that is not the only startling change in the health and beauty sector. Cast your mind back to where you last bought skincare, shampoo or pharmaceutical products. Was it at an independent chemist? A department store? Your local branch of Boots or Superdrug? Or was it, as is now the case for many consumers, at the supermarket? The truth is that high street stores no longer have the monopoly on these products – superstores are doing increasingly well in the health and beauty sector. Indeed, TNS figures show the top five toiletries outlets are Boots, Tesco, Sainsbury’s, Superdrug and Asda, in that order.
Recent research from marketing information consultancy Spectra backs up this finding. Director Rob Corrie summarises: “The startling thing is not just that increasing numbers of respondents are buying toiletries at their main grocery store, but that so many of these shoppers are spending so much.”
Nonetheless, some supermarkets are performing better than others. Corrie continues: “Asda has shown particularly impressive results, with 46.3 per cent of regular customers spending over £11 a month on toiletries. That is in keeping with the chain’s profile – Asda is perceived as a one-stop-shop, so it’s less of a leap for its customers to make. Equally, Marks & Spencer shoppers have the highest monthly spend at the top end of the market – 5.4 per cent of customers that use the store as their main grocery outlet spend over £31 a month on toiletries. This is not just because M&S’s health and beauty range is good – it has also captured the gift and luxury end of the market, not just at Christmas, like some of the other multiples, but all year round.”
Money for old soap
With the average adult spending £99 a year on toiletries and £62 on beauty products, according to TNS, it is not surprising that retailers are keen for a share. But how are supermarkets, once seen as traditional grocery outlets, driving sales in this category? The answer often lies in point of purchase (PoP) strategies that put them into direct competition with specialist health and beauty outlets.
Gregg Sendell, client services director of marketing communications agency Toast, explains: “Step inside any branch of Boots or Superdrug and you can’t fail to notice a raft of two-for-one offers. The major supermarkets are simply following their example, placing significant emphasis on increasing sales through PoP and pricing initiatives. Whereas in the past, supermarket health and beauty aisles featured row after row of shampoo bottles without any branding, on or off the shelf, this has changed. Larger brands such as L’OrÃ©al are driving sales through on-shelf branding and PoP activity.
“You only have to look at how beer, wines and spirits are positioned to see how initiatives like this can boost sales. Heavy promotion in stores is a tried and tested method of driving shoppers to the category.”
Retailers are waking up to the fact that in-store promotions are as important as external communications, and are investing in in-depth analysis of PoP activity to extract the best possible results. Campaigns are evaluated using focus groups and checkout data, and supermarkets are becoming more adept at maximising their shopfloor communications as a result.
But in-store promotion is not the only reason for growth: factors such as consumer demand have played a part. In an increasingly fast-moving, time-pressured environment, it is not surprising that consumers often wish to make most of their purchases in a single shop. In response, more and more supermarkets are adopting a holistic approach, expanding not just into health and beauty, but into books, home entertainment and clothes.
SiebertHead planning and development director Simon Sholl says: “The supermarkets have been steadily ratcheting up their offer. Over the past ten years, stocking policies have been getting broader and moving towards premium products. Psychologically, consumers have come to see supermarkets as more appropriate environments in which to buy diverse, upscale products – for instance, Sainsbury’s now sells financial services, Tesco Finest is a runaway success.
“Moreover, consumers are becoming accustomed to the ‘store within a store’ concept – in several outlets, Sainsbury’s has allowed Boots to manage its health and beauty aisles.”
Mark Dickens, a partner at design and planning strategist Astound, points out: “Many supermarkets are located in huge out-of-town retail parks, whereas traditional health and beauty retailers such as Boots and Superdrug are based on the high street. It’s easy and convenient for customers doing a weekly supermarket shop to pick up health and beauty goods at the same time.”
But Dickens believes that cost and choice are additional factors in the supermarkets’ favour: “Supermarkets can make substantial margins on health and beauty goods. They can buy in huge volumes at low prices, and pass these savings on to customers. Furthermore, supermarkets based on large retail sites have space to expand their range, so their customers can enjoy a greater selection.”
Mark Ransom, director of Antone, a company specialising in PoP for the health and beauty sector, argues: “The brand values and pricing of health and beauty products stocked by supermarkets need to sit comfortably in a cost-driven environment. It’s true that mid-range products have succeeded in supermarkets, but I don’t believe that luxury health and beauty brands will ever appear in grocer’s.
“Brand values and image are vital to the top cosmetics houses and PoP plays a major role by creating a suitable environment. Specialist shops and department stores set aside large areas to display these products to their best advantage, creating consultancy and treatment areas as well as shelving to display the items. Such a large area would be unjustifiable to a supermarket, where every inch of floor-space counts. Equally, the high pricing and profit margins of luxury health and beauty products would not be sustainable in the supermarket environment. The whole buying process conflicts with the supermarket ethos. Consultation is a very important part of cosmetics sales and customers would feel uncomfortable with the lack of privacy and time-pressured atmosphere.”
Corrie agrees: “There is an upper limit to the time a customer will willingly spend in a supermarket. A woman shopping in Boots or Superdrug is often taking a few moments for herself; she is more self-centred than the same woman shopping at Sainsbury’s or Tesco, who will have a different mindset: her family, food. Too much browsing – and PoP that encourages this – may engender feelings of guilt.”
Supermarkets have to strike a fine balance, so how far can they go into the specialists’ traditional territory? Coutts Retail Communications managing director Nigel Stern believes there’s virtually no limit. His clients include Asda, Safeway and L’OrÃ©al, so he has experience on both sides of the fence.
Soap and expectation
He says: “You’ve only got to look at how Boots is repositioning itself, with Wellbeing and so forth, to know it feels the pressure. While commodity health and beauty products such as razors, cotton wool and shampoo have long been selling well in supermarkets, we are now seeing a subtle shift at the luxury end. Grocers are beginning to realise they have to emulate the more sophisticated benefits of shopping at a department store.
“Slowly but surely, supermarkets are trying to create a browsable environment. If customers can be persuaded to stay longer in a category, it stands to reason they will spend more.”
So how, precisely, is this done? Stern continues: “We make the health and beauty section look and feel different from the rest of the store. We might use a softer finish – plastic shelving instead of steel, for instance. At Asda, we put in curved fixtures to give a more ‘feminine’ feel. Then we might lower the ceilings to create intimacy, while simultaneously giving brighter illumination – this mirrors the department store experience – so customers can see colours more accurately. It all adds to a feeling of pampering.”
So does what does Stern see happening in the future? “Market research shows that people want advice, so I believe we’ll see more touch-screen technology in supermarkets. It won’t be long before we’ll have assistants on hand, sponsored by the brands as opposed to the retailer. It may be that grocers will never own the premium brands, but I’m convinced that soon they will own the middle ground.”