Organic growth is difficult to achieve, so some retailers are required to steal share from rivals or expand into new product sectors to grow.
With organic growth difficult to achieve, well-established clothing retailers are required to steal share from rivals or expand into new product sectors to grow.
H&M is therefore wise to be investing in re-launching its beauty range across 900 stores, particularly since gaps in the own-label cosmetics market remain and consumer willingness to buy non-branded items is forecast to rise.
H&M’s new beauty concept, due to launch in autumn 2015, will improve sales opportunities from its value-seeking customer base. With less own-brand competition in cosmetics compared to skincare and bathroom toiletries, H&M is able to create destination appeal in a new sector and encourage existing customers to cross-sector browse and make impulse purchases.
Launching a trend-led cosmetic offer will entice its shoppers to visit stores regularly, and despite small margins, the low average selling prices will drive high volumes from minimal instore space – benefiting sales densities which are forecast at £265 per sq ft in 2015 versus £480 at Primark.
Some 50.4% of consumers in the UK view private-label products as good alternatives to name brands, compared to the Datamonitor Consumer survey’s global average of 45.6%.
We expect that trend to grow as non-specialists like Primark, Topshop, Wilkinson and M&S continue to invest in broadening ranges, launching into new product areas and showcasing value for money and accessibility.
This will further threaten specialists such as Superdrug, Boots and The Body Shop – which have fallen victim to clothing retailers and general merchandisers over the last five years, and have all lost market share as a result.
While this announcement is welcomed, H&M is a late adopter when it comes to launching new concepts and its new beauty range is arriving years after that of Topshop, New Look, M&S and Primark.
The retailer has a lot of catching up to do and just launching a range of low-cost colourful cosmetic products won’t suffice. As we emerge out of the recession, Topshop and M&S are now moving the perception of their private label ranges from budget to value, by increasing sentiment toward their perceived quality and introducing more expensive, advanced ingredients in products.
With the UK cosmetics market forecast to grow by 27.3% in the five years to 2020, up from 15.8% in the previous five-year period, H&M must ensure its new beauty offer uses innovation and technology to enhance its products and gain a loyal customer following.
This will allow the retailer to become a game-changer in the value segment of the market – competing with Topshop and M&S, while adding value, will also differentiate its private-label ranges from value players like Primark and Wilko, which continue to focus on price.