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Beauty Retailing - UK - January 2011

Beauty retailing is an innovative and dynamic market. But its structure is very different to a number of large non-food categories such as clothing, electricals and DIY where specialist retailers dominate. In beauty retailing non-specialists play a particularly important role too.

  • A third of all adults did not change their shopping habits for beauty products in 2010, but a picture emerges of a more cautious and less loyal shopper - one in four spent less in this category last year, one in five shopped around more to compare prices and fewer shoppers stuck to trusted retailers than they had the year before.
  • The family shopper was still constrained but some in the pre/no family demographic increased their spending and treating which chimes with the recovery in sales at the higher end of the market.
  • In seeking out greater value, more consumers opted for deals and special offers (around 7 million have bought alot more special offers) than own brands or trading down to cheaper stores.
  • Boots is the most popular retailer of beauty products in the UK, according to our research it has gained more than 2 million net new customers in the last year and its Advantage loyalty card is a key sales driver.
  • Nevertheless a third of all adults are still prepared to pay extra for good quality fragrances more than those for skincare (23%) or cosmetics (21%).
  • One in five adults shop from different retailers depending on which type of beauty/grooming products they are looking for, there must be an opportunity here for retailers to incentivise customers to shop in the one place.

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Table of contents

  1. Issues in the Market

      • Main themes
        • Definitions
          • Sources
            • Abbreviations
            • Future Opportunities

                • Trend: No More Mainstream
                  • Trend: Re-teching the Past
                  • Market in Brief

                    • Spending on personal care set to outperform all retail sales
                      • Consumer context
                        • Mixed results from the specialists
                          • Channels of distribution – department stores lose out in 2009 but bounce back in 2010
                          • Internal Market Environment

                            • Key points
                              • Consumers continue to seek value
                                • Own brands
                                  • Buying loyalty
                                    • Extra beauty spending a low priority
                                        • Figure 1: Trends in what extra money is spent on, November 2009 and November 2010
                                      • Online
                                        • In-store innovation
                                        • Broader Market Environment

                                          • Key points
                                            • Implications for beauty retailers
                                            • Competitive Context

                                              • Key points
                                                • Personal care spending returns to growth in 2010
                                                    • Figure 2: UK: Consumer spending on selected categories, 2005-10
                                                  • Spending breakdown
                                                    • Figure 3: UK: Consumer spending on personal care, by major category, 2009
                                                  • A volatile picture for beauty inflation
                                                      • Figure 4: UK: Consumer prices inflation for selected categories, Jan 2009-Nov 2010
                                                  • Strengths and Weaknesses in the Market

                                                    • Strengths
                                                      • Weaknesses
                                                      • Who’s Innovating

                                                        • Online innovation
                                                          • Popping up in the UK
                                                            • Sampling
                                                              • In-store technology
                                                                • Beauty on a budget
                                                                  • In-store spas
                                                                    • Experiences
                                                                    • Sector Size and Market Forecast

                                                                      • Key points
                                                                        • Economic and consumer outlook
                                                                          • Beauty retailers’ prospects
                                                                            • Market size forecasts
                                                                                • Figure 5: Personal care spending forecast confidence range, 2005-015
                                                                                • Figure 6: Personal care* market value forecast, best and worst case data, 2005-15
                                                                              • Sector sales
                                                                                • Figure 7: UK: Estimated total health and beauty retailers’ sales, 2005-09
                                                                              • Cosmetics/toiletries specialists lose share
                                                                                • Figure 8: UK: Beauty specialists* and Boots** as a % of the personal care market, 2005-09
                                                                              • Outlet and enterprise data
                                                                                • Enterprises
                                                                                  • Figure 9: UK: Health and beauty retailers, number of enterprises, by sub-sector, 2004-08
                                                                                • Outlets
                                                                                  • Figure 10: UK: Retail outlets by sector, 2004-08
                                                                              • Channels of Distribution

                                                                                • Key points
                                                                                  • Boots gained most ground in 2009
                                                                                    • Figure 11: UK beauty and toiletries market, channels of distribution, 2009
                                                                                  • Grocery retailers
                                                                                    • Health and beauty specialists
                                                                                      • Boots
                                                                                        • Department stores and other mixed goods retailers
                                                                                          • Non-store – a mixed picture
                                                                                            • Figure 12: UK: Beauty market, leading direct sellers, 2010
                                                                                          • Online channel grows rapidly driven by the multi-channel players
                                                                                            • But the pureplay segment is particularly innovative
                                                                                            • Retail Competitor Analysis

                                                                                              • Key points
                                                                                                • Technical note
                                                                                                  • Leading specialists
                                                                                                    • The market leaders shine
                                                                                                      • The Body Shop fails to impress
                                                                                                        • Mixed performances from smaller players
                                                                                                          • Figure 13: UK: Leading beauty specialists, 2009/10
                                                                                                        • Market shares
                                                                                                          • Figure 14: UK: Leading specialists’ market shares, 2008 and 2009
                                                                                                      • Retail Advertising and Promotion

                                                                                                        • Key points
                                                                                                          • Beauty advertising expenditure declines
                                                                                                              • Figure 15: Leading retailers’ advertising spending, cosmetics and toiletries, 2006-09
                                                                                                            • Spending relative to turnover
                                                                                                                • Figure 16: Selected retailers’ advertising spending, as % of sales, 2005-09
                                                                                                              • Spending by media
                                                                                                                  • Figure 17: Leading beauty retailers’ spending on toiletries and cosmetics advertising, by media, 2009
                                                                                                                • Advertising content
                                                                                                                • Brand Elements

                                                                                                                  • Brand map
                                                                                                                      • Figure 18: Attitudes towards and visitation of beauty retail brands, December 2010
                                                                                                                    • Brand attitudes
                                                                                                                      • Figure 19: Attitudes, by beauty retail brand, December 2010
                                                                                                                    • Brand personality
                                                                                                                      • Figure 20: Beauty retail brand personality – macro image, December 2010
                                                                                                                      • Figure 21: Beauty retail brand personality – micro image, December 2010
                                                                                                                    • Correspondence analysis
                                                                                                                      • Brand experience
                                                                                                                        • Figure 22: Beauty retail brand visitation, December 2010
                                                                                                                        • Figure 23: Satisfaction with various beauty retail brands, February 2010
                                                                                                                        • Figure 24: Consideration of beauty retail brands, December 2010
                                                                                                                        • Figure 25: Consumer perceptions of current beauty retail brand performance, December 2010
                                                                                                                        • Figure 26: Beauty retail brand recommendation – Net Promoter Score, December 2010
                                                                                                                      • Brand index
                                                                                                                        • Figure 27: Beauty retail brand index, December 2010
                                                                                                                        • Figure 28: Beauty retail brand index vs. recommendation, December 2010
                                                                                                                      • Target group analysis
                                                                                                                        • Figure 29: Target groups, December 2010
                                                                                                                        • Figure 30: Beauty retail brand usage, by target groups, December 2010
                                                                                                                      • Group One – The Conformists
                                                                                                                        • Group Two – Simply the Best
                                                                                                                          • Group Three – Shelf Stalkers
                                                                                                                            • Group Four – Habitual Shoppers
                                                                                                                              • Group Five – The Individualists
                                                                                                                              • The Consumer – Where They Buy Beauty Products

                                                                                                                                  • Key points
                                                                                                                                      • Figure 31: Where they bought beauty products in the last 12 months, November 2010
                                                                                                                                    • Changing allegiance
                                                                                                                                      • A higher proportion of Tesco shoppers buy into beauty
                                                                                                                                        • Superdrug gains customers and market share
                                                                                                                                          • Boots still comfortably leading the pack
                                                                                                                                            • Internet making inroads
                                                                                                                                              • Department stores lose some ground
                                                                                                                                                  • Figure 32: where they bought beauty products in the last 12 months, November 2009 and 2010
                                                                                                                                                • Retailer market positioning
                                                                                                                                                    • Figure 33: UK: market positioning of leading retailers/channels, November 2010
                                                                                                                                                  • Repertoire – Boots customer loyalty strengthens further
                                                                                                                                                      • Figure 34: Beauty cosmetics, skincare products or fragrances/aftershaves bought from, by repertoire of beauty cosmetics, skincare products or fragrances/aftershaves bought from, November 2010
                                                                                                                                                  • The Consumer – How They Shop for Beauty Products

                                                                                                                                                      • Key points
                                                                                                                                                        • Shopping habits 2010
                                                                                                                                                            • Figure 35: The way they shop for beauty products, November 2010
                                                                                                                                                          • 2010 compared to 2009
                                                                                                                                                              • Figure 36: The way they shop for beauty products, November 2009 and 2010
                                                                                                                                                            • Patterns of behaviour by age and affluence
                                                                                                                                                                • Figure 37: how they shop for beauty, by age and affluence, November 2010
                                                                                                                                                            • The Consumer – Attitudes to Beauty Shopping

                                                                                                                                                                • Key points
                                                                                                                                                                    • Figure 38: Attitudes to beauty shopping, November 2010
                                                                                                                                                                  • The gender divide
                                                                                                                                                                      • Figure 39: Attitudes to beauty shopping, November 2010
                                                                                                                                                                    • Target groups
                                                                                                                                                                        • Figure 40: Beauty target groups, November 2010
                                                                                                                                                                        • Figure 41: Attitudes towards beauty purchasing, by target groups, November 2010
                                                                                                                                                                      • Group 1: The Price Aware (22%)
                                                                                                                                                                        • Who are The Price Aware?
                                                                                                                                                                          • Group 2: The Quality Led (19%)
                                                                                                                                                                            • Who are The Quality Led?
                                                                                                                                                                              • Group 3: The Enthusiasts (11%)
                                                                                                                                                                                • Who are The Enthusiasts?
                                                                                                                                                                                  • Group 4: The Indifferent (48%)
                                                                                                                                                                                    • Who are The Indifferent?
                                                                                                                                                                                      • Where people shop by typology
                                                                                                                                                                                          • Figure 42: Where they bought beauty products, by consumer target group, November 2010
                                                                                                                                                                                      • Boots UK

                                                                                                                                                                                          • Figure 43: Boots UK: Sales as share of health and beauty retailers’ sales, 2005-09
                                                                                                                                                                                        • Strategic evaluation
                                                                                                                                                                                          • Group strategy
                                                                                                                                                                                            • Beauty plays second fiddle
                                                                                                                                                                                              • Extending the own brand reach
                                                                                                                                                                                                • Customer loyalty a key battleground
                                                                                                                                                                                                  • Forming strategic partnerships
                                                                                                                                                                                                    • Convincing market leader
                                                                                                                                                                                                      • Recent history
                                                                                                                                                                                                        • Financial performance
                                                                                                                                                                                                          • Group context
                                                                                                                                                                                                            • UK health and beauty division
                                                                                                                                                                                                              • Figure 44: Alliance Boots UK Health and Beauty Division: Financial performance, 2006-10
                                                                                                                                                                                                            • First half 2010/11
                                                                                                                                                                                                              • Store portfolio
                                                                                                                                                                                                                • Figure 45: Alliance Boots UK Health and Beauty Division: Outlet data, 2006-10
                                                                                                                                                                                                              • Retail offering
                                                                                                                                                                                                                • e-commerce
                                                                                                                                                                                                                • A.S. Watson (UK)

                                                                                                                                                                                                                    • Figure 46: AS Watson UK: Sales as share of UK health and beauty retailers’ sales, 2005-09
                                                                                                                                                                                                                    • Figure 47: Superdrug: Sales as share of UK health and beauty retailers’ sales, 2005-09
                                                                                                                                                                                                                    • Figure 48: Savers Health & Beauty: Sales as share of UK health and beauty retailers’ sales, 2005-09
                                                                                                                                                                                                                    • Figure 49: The Perfume Shop: Sales as share of UK health and beauty retailers’ sales, 2005-09
                                                                                                                                                                                                                  • Strategic evaluation
                                                                                                                                                                                                                    • Recent history
                                                                                                                                                                                                                      • Financial performance
                                                                                                                                                                                                                        • The Perfume Shop continues its strong performance
                                                                                                                                                                                                                          • Figure 50: AS Watson UK: Financial performance, 2005-09
                                                                                                                                                                                                                        • Store portfolio
                                                                                                                                                                                                                          • Figure 51: AS Watson UK: Outlet data, 2005-09
                                                                                                                                                                                                                        • Retail offering
                                                                                                                                                                                                                          • Superdrug focusing on beauty
                                                                                                                                                                                                                            • Savers’ wider offer
                                                                                                                                                                                                                              • The Perfume Shop’s successful niche
                                                                                                                                                                                                                                • Advertising
                                                                                                                                                                                                                                • Lush

                                                                                                                                                                                                                                    • Figure 52: Lush Retail Ltd: Sales as share of UK health and beauty retailers’ sales, 2005-2008
                                                                                                                                                                                                                                  • Strategic evaluation
                                                                                                                                                                                                                                    • Struggling, but growing
                                                                                                                                                                                                                                      • The cost of a clear conscience
                                                                                                                                                                                                                                        • Spreading the risk
                                                                                                                                                                                                                                          • Recent history
                                                                                                                                                                                                                                            • Financial performance
                                                                                                                                                                                                                                              • Figure 53: Lush Retail Ltd: Financial performance, 2005-09
                                                                                                                                                                                                                                            • Store portfolio
                                                                                                                                                                                                                                              • Figure 54: Lush Retail Ltd: Outlet data, 2005-09
                                                                                                                                                                                                                                            • Retail offering
                                                                                                                                                                                                                                              • e-commerce
                                                                                                                                                                                                                                              • Space NK

                                                                                                                                                                                                                                                  • Figure 55: Space NK Ltd: Sales as share of health and beauty retailers’ sales, 2005-09
                                                                                                                                                                                                                                                • Strategic evaluation
                                                                                                                                                                                                                                                  • Recent history
                                                                                                                                                                                                                                                    • Financial performance
                                                                                                                                                                                                                                                      • Figure 56: Space NK: Group financial performance, 2006-10
                                                                                                                                                                                                                                                    • Store portfolio
                                                                                                                                                                                                                                                      • Figure 57: Space NK: Outlet data, 2006-10
                                                                                                                                                                                                                                                    • Retail offering
                                                                                                                                                                                                                                                      • E-commerce
                                                                                                                                                                                                                                                      • The Body Shop

                                                                                                                                                                                                                                                          • Figure 58: The Body Shop UK & Republic of Ireland: Estimated sales as share of UK health and beauty retailers’ sales, 2005-09
                                                                                                                                                                                                                                                        • Strategic evaluation
                                                                                                                                                                                                                                                          • Recent history
                                                                                                                                                                                                                                                            • Financial performance
                                                                                                                                                                                                                                                                • Figure 59: The Body Shop (UK & RoI): Group financial performance, 2005-09
                                                                                                                                                                                                                                                              • Store portfolio
                                                                                                                                                                                                                                                                  • Figure 60: The Body Shop UK: Outlet data, 2005-09
                                                                                                                                                                                                                                                                • Retail offering
                                                                                                                                                                                                                                                                  • Market positioning
                                                                                                                                                                                                                                                                    • E-commerce and home shopping
                                                                                                                                                                                                                                                                    • Appendix – Broader Market Environment

                                                                                                                                                                                                                                                                      • Population
                                                                                                                                                                                                                                                                        • Figure 61: Europe Top 5: Population breakdown, by age group, 2005
                                                                                                                                                                                                                                                                        • Figure 62: Europe Top 5: Population breakdown, by age group, 2010
                                                                                                                                                                                                                                                                        • Figure 63: Europe Top 5: Population breakdown, by age group, 2015
                                                                                                                                                                                                                                                                        • Figure 64: Europe Top 5: Population breakdown, by age group, 2020
                                                                                                                                                                                                                                                                      • GDP
                                                                                                                                                                                                                                                                        • Figure 65: Europe Top 5: GDP (in current prices) 2000- Q3 2010
                                                                                                                                                                                                                                                                        • Figure 66: Europe top 5: GDP growth rates (in constant prices), 2000- Q3 2010
                                                                                                                                                                                                                                                                      • Consumer spending
                                                                                                                                                                                                                                                                        • Figure 67: Europe Top 5: Consumer spending (in current prices) 2001-Q3 2010
                                                                                                                                                                                                                                                                        • Figure 68: Europe Top 5: Consumer spending growth rates (in constant prices) 2001-Q3 2010
                                                                                                                                                                                                                                                                      • Consumer prices
                                                                                                                                                                                                                                                                        • Figure 69: Europe Top 5: Consumer prices, 2001-Oct 2010
                                                                                                                                                                                                                                                                      • Unemployment
                                                                                                                                                                                                                                                                        • Figure 70: Europe Top 5: Average rate of unemployment, 2001-Q3 2010
                                                                                                                                                                                                                                                                      • Interest rates
                                                                                                                                                                                                                                                                        • Figure 71: UK and Eurozone: Interest rates, 2004-Q3 2010
                                                                                                                                                                                                                                                                      • Consumer confidence
                                                                                                                                                                                                                                                                        • Figure 72: Europe Top 5: Consumer confidence, March 2009-November 2010
                                                                                                                                                                                                                                                                    • Appendix – The Consumer – Where They Buy Beauty Products

                                                                                                                                                                                                                                                                        • Figure 73: Most popular where they bought beauty products in last 12 months, by demographics, November 2010
                                                                                                                                                                                                                                                                        • Figure 74: Next most popular where they bought beauty products in last 12 months, by demographics, November 2010
                                                                                                                                                                                                                                                                        • Figure 75: Other where they bought beauty products in last 12 months, by demographics, November 2010
                                                                                                                                                                                                                                                                        • Figure 76: Least popular where they bought beauty products in last 12 months, by demographics, November 2010
                                                                                                                                                                                                                                                                        • Figure 77: Repertoire of where they bought beauty products in last 12 months, by demographics, November 2010
                                                                                                                                                                                                                                                                    • Appendix – The Consumer – How They Shop for Beauty Products

                                                                                                                                                                                                                                                                        • Figure 78: Most popular how they shop for beauty, by demographics, November 2010
                                                                                                                                                                                                                                                                        • Figure 79: Next most popular how they shop for beauty, by demographics, November 2010
                                                                                                                                                                                                                                                                    • Appendix – The Consumer – Attitudes to Beauty Shopping

                                                                                                                                                                                                                                                                        • Figure 80: Most popular attitudes towards beauty purchasing, by demographics, November 2010
                                                                                                                                                                                                                                                                        • Figure 81: Next most popular attitudes towards beauty purchasing, by demographics, November 2010
                                                                                                                                                                                                                                                                        • Figure 82: Other attitudes towards beauty purchasing, by demographics, November 2010
                                                                                                                                                                                                                                                                        • Figure 83: Target groups, by demographics, November 2010

                                                                                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                                                                                    • Alliance Boots
                                                                                                                                                                                                                                                                    • Avon Cosmetics Ltd
                                                                                                                                                                                                                                                                    • British Retail Consortium
                                                                                                                                                                                                                                                                    • Crabtree & Evelyn Ltd
                                                                                                                                                                                                                                                                    • House of Fraser Plc
                                                                                                                                                                                                                                                                    • J. Sainsbury
                                                                                                                                                                                                                                                                    • John Lewis Plc (department store)
                                                                                                                                                                                                                                                                    • L'Occitane Ltd
                                                                                                                                                                                                                                                                    • L'Oréal (UK)
                                                                                                                                                                                                                                                                    • Lush Retail Ltd
                                                                                                                                                                                                                                                                    • Molton Brown
                                                                                                                                                                                                                                                                    • Office for National Statistics
                                                                                                                                                                                                                                                                    • Poundland Ltd
                                                                                                                                                                                                                                                                    • Procter & Gamble UK & Ireland
                                                                                                                                                                                                                                                                    • Space NK Ltd
                                                                                                                                                                                                                                                                    • Superdrug Stores Plc
                                                                                                                                                                                                                                                                    • Tesco Plc
                                                                                                                                                                                                                                                                    • The Body Shop - Retail Sales
                                                                                                                                                                                                                                                                    • The Perfume Shop Ltd
                                                                                                                                                                                                                                                                    • Waitrose
                                                                                                                                                                                                                                                                    • Wilkinson Hardware Stores Ltd
                                                                                                                                                                                                                                                                    • Wm Morrison Supermarkets

                                                                                                                                                                                                                                                                    Beauty Retailing - UK - January 2011

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