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Beauty Specialist Retailers Highlight Expertise to Remain Relevant in a Competitive World

By: Daniel Latev, Global Head of Retailing Research, Euromonitor International
Posted: June 7, 2012, from the August 2012 issue of GCI Magazine.

In a number of product areas, specialist retailers are losing share to mass merchandisers and Internet retailers, according to Euromonitor International. Retailers focusing on apparel, alcoholic drinks and electronics and appliances have lost their once-dominant positions in their industries, ceding ground to newer retailers or technologies.

Beauty Bucks the Trend

However, bucking this trend have been beauty specialist retailers such as Sephora and The Body Shop, among others, which have found a niche and strategies that have enabled them to compete, drive footfall at their stores and continue to prosper, despite the aggressive marketplace in which they operate.

On a global basis, between 2006 and 2011, beauty specialist retailers generated an additional $16.7 billion in sales and accounted for almost one-fifth of new beauty and personal care sales. This positive performance was broadly similar in all regions of the world, but the channel saw its greatest success in Eastern Europe, where it accounted for almost a third of all additional sales generated between 2006 and 2011, and the Middle East and Africa where it accounted for a 22% share of additional sales.

This sales growth has been achieved in spite of the expanding retail footprint of hypermarkets and supermarkets and the increasing influence of showrooming, which is seeing greater numbers of consumers finding products in one retailer’s store, researching prices over the Internet or via a mobile phone, and then buying the items elsewhere at a cheaper price.

Specific Strategies

So, what strategies are beauty specialist retailers employing in 2012 to be successful? Beauty specialists have been responding to changing consumer shopping patterns and the global recession—which have together boosted the fortunes of mass merchandisers and Internet retailers—by investing in their stores and adding to their product mix, especially in relation to private label ranges and the variety of services offered, while also looking to improve their online presence. Together, these various strands have enabled specialists to promote a stronger story to encourage new consumers to shop there, while fostering deeper levels of loyalty from committed shoppers.