Industry insights
Boots Current Position
A Consumer Insights report by Verdict, produced in 2008 revealed the following information about Boots' position in the personal care market:
Boots' share of shoppers:
| 2004 | 53% |
| 2008 | 50% |
Drivers of loyalty amongst Boots loyal shoppers - why they shop there
| Range of goods offered | 69% |
| Price (compared to rivals; offers etc) | 27% |
| Convenience (location etc) | 23% |
| Facilities | 11% |
| Quality | 11% |
| Service | 9% |
| Layout | 4% |
| Ambience | 4% |
Profile of all Boots personal care shoppers
| Male | 28% |
| Female | 72% |
| 15-24 | 14% |
| 25-34 | 20% |
| 25-44 | 18% |
| 45-54 | 14% |
| 55-64 | 16% |
| 65+ | 18% |
| AB | 25% |
| C1 | 36% |
| C2 | 17% |
| DE | 22% |
Children in household of main users of Boots for personal care
| 0-5 yrs | 16% |
| 6-9 yrs | 9% |
| 10-14 yrs | 11% |
| No children | 72% |
Retailers in other categories used by Boots main shoppers (i.e. where their most loyal customers go for other things):
| Personal Care | Boots | 100% |
| DIY | B&Q | 53% |
| Food | Tesco | 32% |
| Electricals | Curry's | 23% |
| Footwear | Clarks | 22% |
| Clothing | M&S | 22% |
| Homewares | John Lewis | 10% |
The competition: where people using Boots for main source of personal care shopping also shop:
| Superdrug | 23% |
| Tesco | 16% |
| Body Shop | 10% |
| Sainsbury's | 9% |
| Asda | 9% |
| Morrison | 6% |
| M&S | 5% |
| Debenhams | 4% |
Where Boots customers would rather go instead of using Boots as main source of personal care products:
| Superdrug | 22% |
| Asda | 11% |
| Tesco | 9% |
| Body Shop | 5% |
| Body Care | 5% |
The overall market
Research by Mintel in December 2007, contained some important findings for the overall health and beauty sector. Among the key findings were the following:
Companies and brands:
- Multinationals are getting bigger and more powerful.
- But niche brands are able to respond faster to market trends.
- 'Doctor' brands have created a niche for serious 'cosmeceutical' (products which combine cosmetics and pharmaceuticals) skincare.
- Large companies are raising their 'green' credentials with natural/organic ranges. But it is hard to get sufficient supplies of organic ingredients for the kind of production volumes required for big-selling brands.
'Lush' a niche competitor of Boots © Biz/ed images
Promotion trends:
- Advertising is traditionally only viable for the multinationals, especially in all-important TV ads.
- But, there is a significant move to the 'new media', based online, offering cheaper promotional activity, with greater scope for creativity via viral campaigns and free sites, such as YouTube and others offering user-generated content.
- Celebrity endorsements are widely used ('Because I'm worth it!') but evidence suggests that these leave most people 'cold'. Mintel's research suggests that consumers are more interested in what products claim to do, rather than who endorses them.
The 'Green' Effect:
- Ecology and the environment are increasingly priorities for women. This can override other factors such as celebrity endorsement and even product claims. This suggests that consumers will buy a product if it is 'green', even if they know it will not be as good as the alternatives.
- Majority of consumers take 'green' issues seriously on beauty products. 2/3rds of the 2000 questioned in Mintel survey were 'organics' fans. These consumers have a slight tendency towards shopping in department stores, Boots or online. They are typically women aged between 20-34 years, with children under 4 years of age.
The Future Shape of the Market
Verdict found that the health and beauty market in the UK was roughly evenly split between the supermarket grocers and the specialists in 2006. The specialists such as Boots, Superdrug, Lloyds Pharmacy, Body Shop and others accounted for around 40% of the sector. The grocers took around 44%.
Of the specialists, Boots were the market leader, with around 25% of their share, followed by Superdrug with over 7%, then Lloyds Pharmacy and Body Shop with between 1 and 2%.
In the supermarkets' share, the biggest player was Tesco, with nearly 20%, then Asda and Sainsbury, with between 8 and 9% each, followed by Morrisons with just over 5% of the grocers' total share.
The research takes the top ten segments of the health and beauty sector and analyses their prospects for growth between 2008 and 2011. Some of the highlights are outlined below:
Top Ten Segments:
| Health and Beauty Category | 2006 Value £bn | % Change 06-11 |
|---|---|---|
| Over-the-counter medicines | 2.1 | 12% |
| Babycare | 2.0 | 8% |
| Skincare | 1.8 | 36% |
| Other | 1.7 | 7% |
| Paper products | 1.7 | 12% |
| Haircare | 1.4 | 8% |
| Bathroom toiletries | 1.3 | 5% |
| Perfumes | 1.1 | 20% |
| Men's Toiletries | 1.9 | 33% |
| Dental Care | 0.7 | 20% |
Champneys occupies a luxury segment of the retail beauty market © Biz/ed images
Highlights:
Over-the-counter medicines
- Price competition encouraged by pharmacies in-store
- Wider availability in grocers
- Trend towards self-medication: consumers finding information online; encouragement from state to use pharmacy, rather than GP.
Babycare
- Higher average age for child-rearing means higher incomes and expenditure on baby products.
- Higher birth rate forecast from 2009.
- Higher prices on premium 'organic' products.
Skincare
- Growth of anti-ageing products.
- Consumers trading-up to get better results.
- Increased marketing spend to gain mass market.
Paper products
- Facewipes are a fast growing market.
- Higher population effects.
- Ageing population effects.
Haircare
- Consumers trading up and value end shrinking.
- Sales up of intensive and colour-added conditioners.
- Male-specific and minority ethnic-specific products.
Bathroom toiletries
- Falling popularity of traditional product categories such as bar soap and rising demand for convenience in more expensive gels and liquids.
- Greater innovation to drive growth.
- Price sensitive end of category.
Perfumes
- Supermarkets keeping prices down for mass market lines.
- Continued trading-up as premium brands sell more.
- Shorter product lifecycles and multiple product ownership.
Men's toiletries
- Changing attitudes, wider use of face products.
- Higher interest in more advanced, premium products.
- Supermarkets stocking more men's products.
Dental care
- Demand for better dental health.
- Price deflation but increased volume sales of electric toothbrushes.
- Willingness to invest in care of teeth and gums.