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Report Outlines Beauty Spending in EU
Posted: August 22, 2008
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"In contrast, the most successful U.K. specialists are often pharmacy-focused, which can make international expansion tricky due to local regulations over pharmacy ownership," said Ratcliffe.
A.S. Watson's rise has been dramatic. From a market share of just 1.2% in 2002, A.S. Watsonhas expanded through a series of acquisitions to take an estimated 5.3% of the EU health and beauty market in 2007. A.S. Watson now has 10 chains in the EU: Marionnaud, Superdrug, Kruidvat, Ici Paris XL, Savers, Trekpleister, Drogas, The Perfume Shop, Watson’s and Rossmann.
Schlecker, in third place with an estimated market share of 4.3%, has the largest amount of store space. With over 14,000 stores Schlecker has more than double the number of A.S. Watson and more than five times that of second-placed rival Alliance Boots. Though its stores are typically small compared to those of other major retailers, this massive network gives it the largest amount of floorspace by a significant margin. However, it also has the least productive space due to its value positioning and the cannibalization of sales due to an over-intensive store network in its core domestic market of Germany where, according to the retailer, customers can find a Schlecker outlet every three kilometers. (Table 2)
The 12 new members of the EU are attracting major investment from the likes of Douglas and dm-drogerie markt because of their high growth rates and future growth potential. With stiff competition in the mature EU markets and weak consumer confidence likely to limit spending growth in the short term, there is much to be gained from geographical diversification into these smaller markets.
Verdict Research examined retail sales of health & beauty products across the 27 countries of the European Union for its latest report, and found that Romania, Estonia and Latvia have seen the fastest growth—albeit from small bases.