Health and Beauty Retailing - UK - March 2008

Table of Contents

• Issues in the Market
• Main themes
• Definitions
• Abbreviations
• Market in Brief
• The future
• Market sizes, performance and structure
• Channels of distribution
  • Figure 1: UK health and beauty market, channels of distribution, 2006
• Market leaders
• Consumer behaviour
• Internal Market Environment
• Price tactics
• Creating points of difference
• Loyalty
• Customer service
• MediSpa treatments
• Market repositioning
• Own brands
• Trading up
• Product innovation
• Pharmacy consolidation
• Healthcare focus
• Prescription drugs and pharmacy remuneration
• Prescription charges
• NHS receipts
• The reimbursement element
  • Figure 2: England: Prescriptions -- number dispensed and net ingredient cost, 1998-07
• OTC medicines
• Broader Market Environment
• Key points -- negative
• Key points -- positive
• 2007 -- a year of 2 halves!
• Pre-Northern Rock...
• Post-Northern Rock...
• Growing, greying population
  • Figure 3: UK: Population trends, 2002-12
  • Figure 4: UK: Population forecasts, by age band, 2007-12
• Population implications
• The baby boomers
• Increasingly affluent consumer
  • Figure 5: Forecast adult population trends, by socio-economic group, % change 2002-12
• Consumer spending
  • Figure 6: PDI and consumer expenditure, at current and constant 2002 prices, 2002-12
• Consumer implications for the health and beauty market
• Interest rates ...
• ...and consumer prices
  • Figure 7: UK: Consumer prices, percentage change year on year, 2001-07
• Consumer price implications for the health and beauty market
• The Market in Context
• Key points
• Health and beauty holds up well
  • Figure 8: UK: Consumer spending on selected categories, 2002-06
• Price deflation in beauty market
  • Figure 9: UK: Consumer spending growth on the beauty market by value and volume, 2003-07
• Resilience in the health market
  • Figure 10: UK: Consumer spending growth on the health market, 2003-07
• Product breakdown
• Perfumes, cosmetics and toiletries
  • Figure 11: UK: Sales of cosmetics, fragrances and toiletries by category, 2002, 2004 and 2006
  • Figure 12: UK: Relative sales importance of categories vs Western Europe, 2006
• Pharmaceutical products
  • Figure 13: UK: Pharmaceuticals market, product breakdown, 2002-06
  • Figure 14: UK: Self medication market breakdown, 2006
• Strengths and Weaknesses in the Market
• Strengths
• Weaknesses
• Channels of Distribution
• Key Points
• Specialists dominate
  • Figure 15: UK health and beauty market, channels of distribution, 2006
• Grocery retailers
• Department stores and other mixed goods retailers
• Direct sellers
  • Figure 16: UK: Health and beauty market, leading direct sellers, 2006
• Sector Size and Forecast
• Key points -- future
• Key points -- past
• Future
• Retail sales forecasts
  • Figure 17: UK: Health and beauty retailers' sales, 2002-12
• Past
  • Figure 18: UK: All health and beauty retailers, all-inclusive sales by sub-sector, 2002-06
• Health and beauty specialists lose market share
  • Figure 19: UK: Health and beauty specialists* as a % of health and beauty market**, 2002-07
• Outlet and enterprise data
• Enterprises
  • Figure 20: UK: Health and beauty retailers, number of enterprises, by sub-sector, 2001-05
• Outlets
• Figure 21: UK: Health and beauty retailers, number of outlets by sub-sector, 2001-05
• The Consumer -- Toiletries
• Key points
• Trend data
  • Figure 22: Source of toiletries purchased, percentage change 2002-07
• Supermarkets continue to win ground
• Health and beauty specialists losing
• The Body Shop challenged on its core territory
• Masstige pressures department stores
• Where they shopped
  • Figure 23: Source of toiletries purchased, November 2007
• Who shops where?
  • Figure 24: Market positioning of major retailers selling toiletries by age and affluence, November 2007
• Supermarket sweep
• The affluent and old prefer Boots
• Superdrug -- all about youth
• Toiletries -- Detailed Consumer Demographics
  • Figure 25: Source of toiletries purchased by demographic sub-group, November 2007
  • Figure 26: Source of toiletries purchased in the last three months, by demographic sub-group, November 2007
• The Consumer -- Beauty Products
• Key Points
• Trend data
  • Figure 27: Source of beauty products purchased, 2002-07
• Supermarkets steam ahead
• Price cuts and own-brand boost Boots' lead
• Green trend hits The Body Shop
• Avon efforts show little result
• Opportunities for M&S?
• Where they shopped
  • Figure 28: Source of cosmetics, skincare products or perfumes/fragrances in the last 12 months, November 2007
• Who shops where?
  • Figure 29: Market positioning of major retailers selling beauty products, by age and affluence, November 2007
• Men still shy of beauty?
• Supermarkets win with men
• Male environment
• A beautiful habit gets dropped with age
• Like day and night? The market leaders
• Avon calling
• Mum' s the word
• Tesco & Asda -- for families
• Beauty -- Detailed Consumer Demographics
  • Figure 30: Source of cosmetics, skincare products or perfumes/fragrances in the last 12 months, by demographic sub-group, November 2007
• The Consumer -- OTC Products
• Key points
• Trend data
  • Figure 31: Source of purchase of medicines or healthcare products, such as cough medicines, tablets or ointments, but not including products on prescription, in the last 6 months, 2002-07
• Supermarket expansion gains ground
• Lloyds and Co-op on the acquisition path
• Boots must lose?
• Where they shopped
  • Figure 32: Source of purchase of medicines or healthcare products, such as cough medicines, tablets or ointments, but not including products on prescription, in the last 6 months, November 2007
• Who shops where?
  • Figure 33: Market positioning of major retailers selling OTC by age and affluence, November 2007
• Men aren' t buying it
• The young and old get it free
• Families hungry for health
• Local independents surprisingly strong
• OTC -- Detailed Consumer Demographics
  • Figure 34: Source of purchase of medicines or healthcare products, such as cough medicines, tablets or ointments, but not including products on prescription, in the last 6 months, by demographic sub-group, November 2007
  • Figure 35: Source of purchase of medicines or healthcare products, such as cough medicines, tablets or ointments, but not including products on prescription, in the last 6 months, by demographic sub-group, November 2007
• Retail Competitor Analysis
• Key points
• Leading specialists
  • Figure 46: UK: Leading health and beauty specialists, 2006
• Market shares
  • Figure 47: UK: Leading specialists' market shares, 2006
  • Figure 48: UK: Leading specialists' market shares, 2006
• Evaluation
  • Figure 49: UK: Health and beauty specialists, evaluation, 2008
• Alliance Boots
  • Figure 50: Alliance Boots: Share of UK health and beauty specialists' sales, 2002-06
  • Figure 51: Alliance Boots: Share of European health and beauty specialists' sales, 2002-06
• Strategic evaluation
• Lowering prices and boosting value perceptions
• The bottom line?
• Rebadging UK community pharmacies
• Distributing Boots own brands in continental Europe
• Background
• Financial performance
  • Figure 52: Alliance Boots: Group pro forma financial performance, 2005/06-2006/07
• Retail division -- 2006/07 performance
  • Figure 53: Alliance Boots: Retail division pro forma financial performance, 2005/06-2006/07
• 2007/08
• Store portfolio
• Historic numbers
• Expansion picks up again
  • Figure 54: Alliance Boots: UK and rest of Europe company owned outlet numbers, 2006/07
• Rebranding Community Pharmacy
• Overseas concessions
  • Figure 55: Alliance Boots: Overseas concession numbers by country, January 2008
• Retail offering
• International
• Market positioning
• Brands
• Pricing
• Product offer
  • Figure 56: Alliance Boots: UK retail division sales mix by major product category, 2006/07
• Customer services
• Advertising and marketing
• e-commerce and home shopping
  • Figure 57: Alliance Boots: UK online retail sales, 2004/05-2006/07
• A.S. Watson (UK)
• Strategic evaluation
• Promising investment
• The benefits of size
• Expansion?
• Group
• Background
  • Figure 58: A.S.Watson: European health and beauty chains, 2006
• Financial performance
  • Figure 59: A.S.Watson: Year-on-year growth at European health & beauty business, 2003-06
• Store portfolio
  • Figure 60: A.S.Watson: Group health & beauty outlets in Europe, 2002-07
• Group e-commerce
  • Figure 61: A.S. Watson: European online presence, 2008
• UK
  • Figure 62: A.S.Watson: Sales as share of health & beauty specialists' sales in the UK, 2002-06
• Background
• Financial performance
  • Figure 63: A.S. Watson: UK operations' financial performance, 2002-06
• Store portfolio
  • Figure 64: A.S. Watson: UK operations' outlets, 2002-07
• Retail offering
  • Figure 65: A.S. Watson: Superdrug own brands, at February 2008
• The Body Shop
  • Figure 66: The Body Shop: Share of UK health and beauty specialists' sales, 2002-06
• Strategic evaluation
• Background
• Financial performance
  • Figure 67: The Body Shop: Financial performance, 2001/02-05/06
• Store portfolio
• Group outlet data
  • Figure 68: The Body Shop: Outlet data, 2001/02-05/06
• European store numbers
  • Figure 69: The Body Shop: European outlet numbers, 2001/02-2005/06
• European company-owned stores
  • Figure 70: The Body Shop: Company-owned outlets, 2001/02-2005/06
• Shop refits
• Retail offering
• Market positioning
• Brands
• Pricing
• Product offer
• Advertising and marketing
• Loyalty card
• e-commerce and other home shopping
• Celesio
  • Figure 71: Celesio (UK): Share of UK health and beauty specialists' sales, 2002-06
  • Figure 72: Celesio: Share of European health and beauty specialists' sales, 2002-06
• Strategic evaluation
• Background
• Financial performance
  • Figure 73: Celesio Retail: Financial performance, 2002-06
  • Figure 74: Celesio Retail: Sales by country, 2002-06
  • Figure 75: Celesio Retail: Sales and outlet growth by country, 2005-06
  • Figure 76: Celesio Retail: Q1-Q3 sales by country, 2006 and 2007
• Store portfolio
  • Figure 77: Celesio Retail: Outlet data, 2002-Q3 2007
• Retail offering
• Market positioning
• Product offer
• Brands
• Pricing
• Customer services
• Advertising and marketing
• e-commerce
• Co-op Pharmacy
  • Figure 78: Co-op Pharmacy: Sales as share of health & beauty retailers in UK, 2002-06
• Background
• Financial performance
  • Figure 79: Co-op Pharmacy: Group financial performance, 2002-06
• Store portfolio
  • Figure 80: Co-op Pharmacy: Outlet data, 2002-07
• Retail offering
• Market positioning
• Brands
• Product offer
• e-commerce and home shopping
• L Rowland
  • Figure 81: L Rowland: Sales as share of health & beauty specialists' sales in UK, 2002-06
• Background
• Financial performance
  • Figure 82: L Rowland & Co (Retail) Ltd: Group financial performance, 2002-06
• Store portfolio
  • Figure 83: L Rowland & Co (Retail) Ltd: Outlet data, 2002-06
• Retail offering
• Retail Advertising and Promotion
• Spending trends
• Ups and downs
  • Figure 84: UK: Advertising expenditure on health and beauty by select retailers, 2003-07
• Spend to sales
  • Figure 85: UK: Advertising expenditure on health and beauty products as % of sales, by select retailers, 2003-06
• Spend by top ten categories
  • Figure 86: UK: Select retailers' advertising expenditure by top ten categories, 2003-07
• Spend by healthcare and beauty
  • Figure 87: UK: Select retailers' advertising expenditure by health and beauty, 2003-07
• 2007 advertising spend
  • Figure 88: UK: Advertising expenditure on health and beauty by retailer, 2007
• 2007 advertising themes