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How Europe Stays Beautiful in a Recession

Health & beauty proved to be one of the more resilient retail sectors across Europe during the recession, as retailers quickly implemented strategies to entice consumers to keep spending, says independent retail analyst Verdict.

BRANDS

How Europe Stays Beautiful in a Recession

Health & beauty proved to be one of the more resilient retail sectors across Europe during the recession, as retailers quickly implemented strategies to entice consumers to keep spending, says independent retail analyst Verdict.

Despite a slight market decline of 0.7%, consumers across Europe still spent €129bn across health and beauty products in 2009, helped by robust growth in Central and Eastern Europe, such as in Poland, where the share of total health & beauty expenditure ha
s risen from 3.0% in 2004 to an estimated 4.1% in 2009.
 
Natalia Grabov, retail analyst at Verdict, comments: “Health and beauty retailers across the continent were able to maintain healthy sales figures by reacting quickly to changing market conditions and consumer sentiment.
 
“As an example, purchasing behaviour evolved during the downturn. There was a bigger uptake of private label and own brand products, as financially strained consumers traded down to cheaper items. Health & beauty specialists spotted this and responded quickly by focusing on extending and launching new and exclusive product lines. As well as being a key point of difference from competitors' offers, private label and exclusive ranges also generated higher margins.”
 
Verdict holds up Boots as a perfect case in point. Over the past five years, Boots focused heavily on its own brands, investing in both product development and marketing. This proved worthwhile, and contributed significantly to operating profit margin growth. Moreover, this has provided the retailer with a point of difference over its competitors, with intense media coverage and customer footfall generated by one of its well recognised own brand products, No7 Protect & Perfect serum.
 
 
“Other tactics health and beauty retailers have implemented to maintain sales value in Europe include extending entry-level ranges and providing additional services to support and complement their core retail channel during the downturn to give customers an extra reason to visit their stores. By adding health and wellbeing services, for example retailers were able to significantly improve their health credentials, and many of these services also generated additional revenues”

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