FeelUnique boss Joel Palix spoke to Retail Week about seeking fresh investment, international expansion and why bricks and mortar is “a headache”.
You would be hard-pressed to find a retailer that has not had a tricky start to 2018. Between a deluge of CVAs, job cuts and freak weather conditions, it’s been a punishing start to the year for many.
However, FeelUnique seems to have neatly sidestepped many of the problems that have hindered other UK retailers.
“The Beast from the East was a bit of a bonzanza for us”
Joel Palix, FeelUnique
“The Beast from the East was a bit of a bonzanza for us,” says Palix cheerfully in the beauty etailer’s head office in central London, explaining that many housebound beauty shoppers chose to buy products online during the snow storm earlier in the year.
“Beauty has always been quite resilient,” he adds, attributing the market’s imperviousness to volatile consumer confidence to the lipstick effect, which posits that shoppers will buy themselves small luxury items such as a new lippie as a treat in tough economic times.
That reasoning, while accurate, does, however, underplay the success that FeelUnique has had in recent years.
The changing face of beauty retail has put FeelUnique in an advantageous position as an adept ecommerce player with an enviable range of brands and wide assortment of delivery options, which include a membership programme for next-day delivery and same-day delivery for London customers.
The business has been owned by private equity firm Palamon for over five years now and Palix says it has reached “break-even” – could the potential sale of the beauty etailer, which has been speculated about in recent months, be imminent?
“We are entering the window when it’s likely that there will be a sale or a new fund coming along from Palamon,” says Palix.
“It would be probably positive for the business because when Palamon invested it was a question of turning a UK business into a European leader.” He is happy that FeelUnique is well on the way to doing that.
“Now there is a real possibility for FeelUnique to become a worldwide name in e-retailing beauty, but that requires resources,” says Palix.
He explains that FeelUnique has ambitions to further expand internationally and potentially develop a private-label line.
“But doing that is another talent and investment, so I think the deeper pockets we have in terms of shareholders the better,” he says.
While Palix stresses he has “no announcements to make” regarding a possible sale of FeelUnique, he is confident the business has drummed up interest from private equity firms.
“There are quite a number of people who have been watching us because there aren’t many good targets in beauty ecommerce”
Joel Palix, FeelUnique
“There are quite a number of people who have been watching us because there aren’t many good targets in beauty ecommerce.
“I imagine all the private equity funds and investors in general, if they believe that beauty is the next category after fashion to invest in, then they have their eyes on us.”
The UK health and beauty market was worth £20.4bn last year with annual growth above all other non-food sectors during the period at 1.8%, according to Retail Economics.
Beauty may be more resilient than other sectors, but it is also undergoing change at an eyewatering rate.
GlobalData has forecast that the health and beauty sector is set to grow 16.5% by 2023, but that growth will come at the expense of market leaders Boots, Tesco and Sainsbury’s, all of which will lose market share to growing proliferation in the sector.
Boots is currently the health and beauty sector leader in terms of UK market share at 22.1%, followed by Tesco at 13.1%.
However, the rise of cult beauty brands such as Fenty Beauty and Glossier, as well as specialist players Holland & Barrett ramping up their beauty offering and fashion retailers developing own-brand cosmetics lines, are putting established market leaders under increased pressure.
Palix says the rapid change in the market has provided ample opportunity for growth for FeelUnique.
“The journey of new beauty brands has inverted itself – new brands are setting up direct to consumer, then going on platforms like FeelUnique,” he says.
“I’ve been told by new brand partners that they will only consider going into bricks and mortar once they have exhausted other options because it is a headache – that’s the exact word they have used.
“Brands have reorganised themselves to do fast beauty and really compress time to market, so traditional beauty retail needs to have some kind of fast track, but a different price structure. The way a department store operates is too costly for those indie brands.”
“There are plenty of shoppers there that are hungry for a well-qualified assortment of beauty products coming in from Europe, which is what we offer”
Joel Palix, FeelUnique
FeelUnique is also looking further afield to drive growth. The firm, which expanded into China in 2015, plans to ramp up its presence there and in Asia more widely.
“Maybe one day we’ll have a distribution centre [in China] to be closer to our customers, but more importantly we will set up a regional hub in Hong Kong with the idea of doing what we do successfully in China in other countries in Asia,” says Palix.
“There are plenty of shoppers there that are hungry for a well-qualified assortment of beauty products coming in from Europe, which is what we offer.”
At a time when many UK operators are ducking for cover, FeelUnique has got its game face on – and Palix is confident there’s plenty of opportunity to exploit.