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Blurring the Boundaries: Shifts in Beauty Retailing

By: Carrie Lennard, Euromonitor International
Posted: November 12, 2010

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German beauty specialist retailer Douglas began retailing a range of private label beauty products in January 2010. German consumers are notoriously price-conscious, and the move was aimed at winning back customers who had moved away from 'premium' beauty stores during the recession. The retailer has said its goal is to make roughly 20% of its income from private label products by the end of 2012.

Many mass retailers have expanded their beauty ranges to attract consumers who had cut down on shopping elsewhere. U.K. retailers Asda and Tesco have both recently stepped up their presence in the beauty category, particularly in discretionary categories such as color cosmetics and fragrances, as these were segments that were hit hardest by the lower footfall in higher-end channels and were previously underrepresented in supermarket outlets. Tesco opened a beauty 'shop in shop' in its Extra stores, and shortly thereafter also a dedicated area selling fragrances, while Asda also expanded its range of scents.

The U.S.-based hypermarket Target has adjusted its product range in 2010 in response to the higher footfall through the retailing channel. It has begun selling more upmarket beauty brands such as the premium-priced color cosmetics range Pixi. As U.S. consumers neglected 'premium' retail channels during the recession and beyond, this was a valuable way for the brand to continue to be able to reach consumers.

Some Premium Beauty Brands Target Mass Channels

Many brand owners used to selling their products in higher-end channels have been reluctant to simply sell their products in mass channels for fear of devaluing their brand image. One such brand that has taken that step was the color cosmetics brand Hard Candy, which recently took the decision to stop selling the range through the perfumery Sephora, and instead switched to selling it in the U.S. hypermarket chain WalMart. In addition, the brand also lowered the price of the range when it made the transition. The range continues to sell well through WalMart so the tactic seems to have paid off (Editor's note: more information on WalMart's impact is available through a study conducted by The Benchmarking Company).

In targeting the Chinese market, Shiseido launched its DQ brand in March 2010 in Chinese drugstores. This marks a definite shift away from the company's strategy in most developed markets where its brands are primarily premium and retail through 'premium' channels like department stores. Although sales of premium beauty and personal care products are thriving in China and disposable incomes are on the rise, consumers in China are still relatively poor when compared with their counterparts in Japan. Shiseido's mass channel focus will have far greater appeal to a wider consumer base than it would otherwise have done retailing through premium channels.