UK online sales slowing, beauty remains a key driver

Buying health and beauty products online is now the norm, and online sales are bucking the slowdown in consumer spending. What is driving people to buy beauty products online?

From Amazon’s Subscribe & Save to Birchbox, there are plenty of formats to suit different tastes and price points. The online channel hits a sweet spot of convenience and value for money, and gives retailers the opportunity to target shoppers very precisely with direct marketing and promotions.

The fact that a more suitable product or a better price is just a click away drives manufacturers and retailers to target ever more precisely.

And as discretionary spending becomes increasingly squeezed by inflation in the UK, value will only become more important. Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), noted that where people are willing to spend on non-food items, they are “largely concentrated on value-lines”.

This has been evidenced in the US where consumers have moved away from Gillette to subscription upstarts like Dollar Shave Club, prompting the Procter & Gamble razor giant to shave as much of 20% off its lines.

The success of The Ordinary skincare range highlights a similar price-value gap in beauty. The Ordinary aims to commoditise well proven but typically overpriced beauty ingredients – such as retinol and hyaluronic acid – by selling them unscented and in no-frills packaging at a fraction of their usual price. It is reminiscent of easyJet’s breakthrough in the airline industry and within two weeks of launching, victoriahealth.com co-founder Gill Sinclair said 30,000 products had been sold.

Announcing sluggish online retail growth in May, the British Retail Consortium (BRC) and KPMG described beauty as a “rising star”. Year-on-year growth for online non-food sales was at the lowest point since the BRC began monitoring them in December 2012, down 4.3% compared to 13.7% a year earlier.

The BRC blamed a lack of consumer confidence for the slowdown, and Friday’s election result will do nothing to alleviate the mood.