UK - Consumer indulgence

SPC finds that a feel good factor amongst consumers produces growth in the UK C&T market

Sales of cosmetics and toiletries in the UK generally enjoyed another successful year in the UK in 2005, recording growth of nearly 4% in current value terms over 2004. Although there were a number of products that contributed to this increase, the overriding theme was the demand for more premium products. Cosmetics and toiletries continue to represent a lifestyle choice and are often purchased to make consumers feel good about themselves. Consumers are therefore purchasing indulgence, which has become evident not only in the rise of premium brands but also in the masstige trend that has helped to increase unit prices overall. This saw growth not only for cosmetics and toiletries with a premium positioning but at prices between premium and mass.

The indulgence factor also played a role in the return of a three-step beauty regime of facial cleanser, toner and moisturiser in skin care, which contributed most to the growth in absolute terms. Growth in skin care was also aided by face masks and similar specialist products, which consumers are learning to appreciate due to the increasing popularity of spas and beauty salons.

Other factors are also cited for the overall increase. “A key factor in this growth is attributable to eye products, particularly mascara,” says Mark Hartin, md of Markwins International. “Major trends during 2005 were the use of bold colour round the eyes, especially shades of purple, green and peacock blues. In contrast, these looks were often accompanied by comparatively subdued colours used on the lips. The least successful category was nail products, down 3% year on year. This was driven largely by the increasing popularity of French Manicured nails.”

Product development

As ever in the C&T market, new product development was fundamental to sales development in 2005. Consumers are increasingly looking for additional benefits and manufacturers are working hard to meet these demands in all areas of their businesses. This is partially responsible for the trend towards multifunctional products, with product launches such as a foundation/concealer with skin-benefiting ingredients and SPF12 from the likes of Estée Lauder. These products can justify premium prices, while keeping cannibalisation of the marketplace to a minimum.

Men's grooming products continue to be another major opportunity for manufacturers to realise value gains. With sales up an estimated 6% in value terms, it is expected to be among the biggest contributors to the overall sales increase in cosmetics and toiletries. Usage penetration of cosmetics and toiletries is still a lot lower among British men than among their female counterparts however. Consequently, it achieved higher than average growth as men began to use a wider range of products in their personal care regime.

The shave market is often seen as the key to the men's market in that it can be used to introduce additional grooming steps to men. The UK market is polarising into two players - the challenger brand, King of Shaves and the dominant Gillette. King of Shaves puts its market share at approximately 13%, which the brand is hoping to boost after its TV advertising campaign featuring England footballer John Terry has concluded. Gillette's market share is at an all time high of 56%. Nivea has had nine months of decline, and L'Oréal's Men Expert range has managed sales of about £700k at retail after a year and a half (Gillette's sales are £35m whilst King of Shaves' sales are £7m). Industry insiders speculate that Nivea is being distracted by L'Oréal in its core men's market.

Challenger brand

What tatics will a challenger brand like King of Shaves employ to challenge the hegemony of an established market leader such as Gillette in the UK? “King of Shaves is launching the world's first Skinvestment - skin care in shaving - range in September, featuring two patented skin care/protection technologies deployed across a capsule range of six products expected to retail at super-premium mass price points, per Gillette's upcoming Fusion hardware,” says Will King, md King of Shaves. “We also introduced a pH neutral shave cream earlier this year, AlphaCream ALS and we're poised to debut new shaving products next year, including improved versions of the mainstay shaving oils and AlphaGel shaving gels. The future must be to converge shaving with skincare to improve the shaving experience.”

A company with a strong history of innovation, King of Shaves can be characterised as progressive in terms of marketing as it attempts to expand the men's market. “Building word of mouth via the press and internet is key, as are the sampling offers from shave.com,” says King. “King of Shaves has recently taken on a media relations manager to work with its two PR agencies to further grow magazine understanding of what the brand is doing in shave software.” The company is also introducing new skin care products in September, including a pre-shave Primer (based on its Prime, Shave, Protect regimen) and an AAA (Anti-Aging-Action) men's moisturiser. It has also overhauled the packaging style of its XCD range.

Distribution solution

The ongoing battle over dis-tribution between pharmacies/drugstores and supermarkets/hypermarkets led to a poor performance for more commoditised cosmetics and toiletries. Price competition led to the poor performance of bath and shower products, in particular, which has declined by just over 1% in current value from 2004-05. This is believed to have occurred as a result of the greater availability of bath and shower products in mainstream supermarkets and a lack of new premium product development. Bath and shower products and, to a lesser extent, depilatories and baby care were dragged into price cutting and promotional offers during the review period.

In the meantime, sun care benefited from an end to the supermarket price war that previously constrained it and realised impressive current value growth in 2005. Self-tanning performed particularly well as people like to look healthy and tanned before reaching the beach and maintain this appearence after their holiday.

Colour cosmetics managed to escape pricing promotions largely through limited edition offers. However, colour cosmetics are in general less prone to pricing pressures due to their more upscale distribution channels such as department stores.

Cosmetics and toiletries catering for the individual and for specific needs are a key trend. Skin care innovation is concentrating on different products for different types of skin, different parts of the face and also on different ages. Estée Lauder launched Perfectionist Correcting Concentrate for Lip Lines, while Procter & Gamble launched Olay Regenerist Eye Lighting Serum, which targets women concerned about the primary signs of eye ageing. Hair care also followed this trend and Unilever's Sunsilk launched a range for blondes, brunettes and red heads. Meanwhile, to complete his range John Frieda launched Radiant Red in February 2005. He is also proposing to grow the market by introducing a new retail category for hair - colour glaze.

A polarisation of trends is identified as occurring, with growth in products with natural extracts and also cosmetics and toiletries for those who want to battle the forces of time with high science. The much media-hyped StriVectin released an eye care product to complement its range, whilst Origins, which bases its products on plant extracts, launched a more natural option to microdermabrasion with Modern Friction, which uses rice starch as its active ingredient.

The appliance of science boosted average unit prices for many products in hair care, skin care and oral hygiene, with manufacturers developing products with ever greater claims. Advertising through the year continually employed a potent mix of science and celebrity to introduce the latest concepts to an audience who appears convinced that scientific formulas can make their lives, skin condition and teeth even better than last year's product launches could.

Bucking the trend is Duchy Originals, which made an appearance in Waitrose supermarkets in March 2005. The brand introduced a range of body wash/shower gel as well as organic bar soap based on natural plant extracts and aromatherapy essential oils. The benefits of natural fragrances are claimed to induce certain moods, with the lavender variant to soothe and calm, rose and mandarin to uplift, rejuvenate and cleanse and bergamot and lime to revitalise and refresh.

Home and away

The UK C&T market has seen the emergence of a variety of home beauty treatments for all parts of the body. Treatments that were previously only available in the salon became available to all, due to manufacturers' innovations. Within L'Oréal Groupe's companies, Lancôme launched its Resurface Peel, a glycolic peel kit for home use, and L'Oréal Dermo-Expertise released ReFinish Micro-Dermabrasion Kit, which offers ReFinish Micro-Dermabrasion, Resurfacing Exfoliator and ReFinish Post-Treatment Optimising Moisturiser SPF15. Even private label Boots No7 launched a micro-dermabrasion for use at home. This extension into high science products also added value to nourishers/anti-agers. Home pampering also extended into a plethora of masks for the face and hair. Meanwhile, self-tanning application paddles enabled consumers to apply self-tanning to their own backs and other indulgences included foot spa and body scrub products.

So what challenges are prevalent in the UK market? Markwins' Hartin comments: “The UK is one of the most developed cosmetic markets in the world, but the biggest challenge in today's business environment has to be that of timing. UK buyers often purchase products a year in advance of them arriving in store, so it requires great foresight to both predict and keep on top of fashion and trends. In fact, it could be argued that as a result of the modern day buying cycle, trends are determined by manufacturers rather than consumers.

Scenting success

The fragrance sector is valued at £711.7m and is expected to grow only 12.4% by the year 2010. Some in the industry feel that the room for growth in terms of penetration means that a higher increase is achievable if changes are made. Such changes will require commitment from the companies.

"The key issue in the current market is that penetration is low,” explains fragrance consultant John Ayres. “The various reports tend to agree that the penetration of fine fragrance used as part of a daily routine is around 50%. This obviously means there is a big opportunity for expansion in terms of both reaching more people and the frequency with which they use fragrance.”

The way in which fragrance is applied and used is highlighted as an area of particular concern for the women's sector. The concept of a 'fragrance wardrobe' suggests the use of various fragrances for different occasions. The concept of 'fragrance layering' implies the choice of matching body care products that complement the chosen premium fragrance, in order to enhance the fragrance effect and feelings of personal confidence and well-being. But research findings indicate that these concepts have no meaning for most fragrance users, and there is even a lack of knowledge on the basic use of a fragrance spray product and how it should be applied. This contrasts starkly with the colour cosmetics sector where training and information are widely available.

“The market must move from push marketing to relationship marketing,” says Ayres. “Fragrances should be described in terms of emotions and feelings instead of default description like excellent or striking. The role of consultants must move to focus on helping people find their ideal fragrance. There are two relevant models. One is the colour cosmetics market where there are constantly hundreds of new products that consumers are confident that their highly trained consultant can guide them through. The other is the wine market which went through a paradigm shift by opening up the origins of the product in terms of history and location. This idea of telling stories is the way forward for fragrance.”