Shoppers sacrifice health and beauty products in tough times, new IRI report finds

Hair, skin and other personal care products are sacrificed in favour of more essential products like food in tough economic times, while shoppers want to waste less, purchase products that last longer and only buy what they need.  That’s according to a new report looking at the Personal Care market across six Western European countries and the US launched today by global market and shopper intelligence firm IRI.

The report, ‘Personal Care Poised to Benefit from its Unique Relationship with Shoppers’, reveals that personal care has been more heavily impacted since the recession than any other FMCG category. Overall value sales growth across Europe fell by -0.2% by Q4 2013 to just below 28 billion Euros, while volume sales were flat (+0.1% in 2013).

Yet, despite the global financial crisis that has heavily impacted growth, there are still encouraging growth opportunities in personal care. The report highlights recent innovations in the sector, including new products with links to natural ingredients, which saw pure organic cosmetics grow in countries like Germany for example. The sector also saw innovation in the mature oral care segment with the launch of P&G’s Oral B, as well as developments in both oil-based hair care and whitening toothpaste products.

The report stresses the need for further innovation in the personal care market to continue to drive growth in both value and volume sales. It urges manufacturers to respond to emerging trends like demand for salon-quality products in the home, such as hair dyes and nail kits, and convenience products offering 2-in-1 or 3-in-1 benefits, for example sun protection, moisturizer and anti-aging properties.

“While some countries like the UK and US will move out of recession this year, we expect to see shoppers remaining cautious especially in personal care purchases,” says to Emily Mayer, business unit director IRI. “Many of us have changed our shopping habits over recent years and realised that we can do without certain health and beauty products, or we are prepared to trade down as food shopping becomes a priority.”

According to IRI, this makes it increasingly difficult for retailers to justify prices rises.  Prices fell by -0.3% across Europe, falling in all segments except hair care, oral care, shaving and hair removal products and sun preparations.  The report also reveals that trade promotions on personal care products are at an all-time high – with deodorants and sun preps the most heavily promoted products in Europe – but that these deals no longer excite shoppers and are not driving the volume sales that they used to.

Mayer said: “With consumers now seeing personal care products as non-essential items, it means that companies need to be more creative in finding new ways to seduce the shopper and respond to their demands. The personal care category is unique in the FMCG world because products evoke strong emotional responses and retain loyal customers year after year.

“Innovation is the lifeblood of any category and in personal care new products that excite consumers will help drive sales and boost margins for both retailers and manufacturers.  While promotions are still important and especially so for a successful new product launch, companies need to find a balance in their investment, as too much money spent on trade promotions means less money for research and development and real innovation across the market.”

Other report highlights:

  • Prices fell by -0.3% across Europe, but increased in the UK, France and the US
  • Hair care, skin cleansing, shaving and hair removal and sun care product volumes declined across Europe, while in the US only skin care and colour cosmetics grew in volume
  • Personal care saw 0.9% increase in volume on promotion
  • On average, every third product is sold on deal with levels increasing in all countries except for Spain and the US.  The UK has the highest volume on deal at 56.4% (up 0.5%)
  • Deodorants and sun preps are the most heavily promoted products with more than 43% volume on deal in Europe and 57.3% in the US. Colour cosmetics remain the least promoted across all countries surveyed