The beauty category has historically been dominated by brands large and small, but private label products have often been seen as irrelevant. But the contribution of private labels to high street giants such as Boots and Superdrug's strong Christmas sales is changing that narrative.
Retail Week explores the reasons behind the rise in private label sales, the changes in consumer behavior that are driving this growth, and the tipping point in consumers' minds even as inflation rates are finally slowly slowing down. Find out if it exceeds.
Guaranteed sales growth
One reason the beauty sector has remained resilient despite the cost of living crisis is that private label sales are gradually increasing.
Own-label brands such as Boots No7 and Superdrug's Studio London saw a 15% increase in sales in the 52 weeks to 24 December 2023, leading to the overall beauty market, according to data revealed by Kantar FMCG Health & Beauty. exceeded.
This is significantly higher than the total beauty market and competitive brand product sales of 9.4% and 8.1%, respectively.
Matt Maxwell, health and beauty business unit director at Kantar Worldpanel UK, said: “Across health and beauty, own brands performed very well in 2023, with sales up 15% compared to Brands accounted for 8.1%.”
“This was driven by both Boots and Superdrug's own brand make-up ranges, with the former boosted by the release of No7 Future Renew, the retailer's best-selling skincare range of 2023. .”
Boots, the UK's largest health and beauty retailer, said: Especially private label skin care and health care. 'No7's sales increased by 13% in the last quarter.
Superdrug reported a 10% year-on-year increase in sales of its own brands ahead of Christmas. Studio London became the fastest growing and largest private label product, driving 20% year-on-year sales growth and his 9.1% volume growth in the cosmetics category.
Pure-play retailer THG, which owns beauty platforms Lookfantastic and Cult Beauty in the UK, praised its strong performance, with beauty sales up 2.6% with “best performance” from THG own brands Perricone MD and ESPA. ended the fourth quarter.
bridging the quality gap
The 'lipstick effect' has helped the beauty industry emerge and remain resilient during times of economic uncertainty. This was especially evident during the 2007 global economic crisis, when sales of ever-affordable lipsticks increased while other sectors suffered from recession.
But this time, with private label beauty products outpacing the larger beauty market and brands, could this be the start of a new lipstick effect?
Until the recent financial crisis, the beauty industry was a brand-driven space, dominated by traditional companies such as Estée Lauder and L'Oréal, and more recently, innovative celebrity brands such as Rare Beauty and Trinny London .
But Tash van Boxel, a retail analyst at GlobalData, said consumer behavior toward private label labels has changed in recent years primarily because these products are becoming more pocket-friendly in a saturated beauty market. He said it was because it had become a thing.
Van Boxel said: “Beauty is pretty saturated at the moment. There are so many products, especially in skin care and makeup products, that are very similar in terms of ingredients, especially for consumers who don't know the exact ingredients.” . [these] thing.
“The differentiating factor will be price. And if the budget is pretty tight, people will go for the lower price if they don't see a difference in quality.”
While much of the early success of private label labels can be attributed to their low price points, retailers have also made significant investments to offer the best quality possible within these price points. Ta.
Van Boxel said: “Many retailers have invested in making their private label products so good that consumers can't tell the difference between a mid-priced product and a private label product.”
In April last year, Boots launched its No7 Future Renew range, billing it as the brand's “biggest cosmetic science innovation ever”, scientifically tested to reverse the signs of skin damage.
endurance
The ongoing cost of living crisis is driving a shift in consumer attitudes toward private label labels across retail categories, including food and clothing, as grocery retailers highlight the contribution of premium private label products in their latest results. I am.
However, with inflation expected to ease over the next 12 months, will private label brands continue to grow exponentially, or will consumers revert to their old spending habits as purchasing power increases?
Van Boxel said: “I think the success of private label brands will continue over the next few years. Inflation is coming down, but that doesn't mean prices are coming down.
“Consumers will continue to have to pay higher prices for makeup and skin care.
“And there's still room for private label to grow and expand within private label. Consumers who initially switched to private label to save money realized there was quality there too, and I might try other products in the range.”
While the initial shift to private label items may be a direct result of rising prices and inflation, the category has carved out a new space in a saturated beauty market, with even more room for growth heading into 2024. It has become. .