According to a new report from the Kline Group, sales of cosmetics and toiletries through alternate channels have ‘exploded’, with the figures growing by a total of $1bn since the year 2005.
The group’s report, Beauty Retailing 2010, also highlights forecasts growth well into double digit rates for the channel in the coming years, as e-commerce and shopping networks continue to expand rapidly.
However, leading the way is the e-commerce segment, which the report says is which had an estimated CAGR of 25.4 percent between the years 2004 and 2010, while the shopping networks, headed up by brands such as QVC and HSN, delivered CAGR of nearly 20 percent during the same period.
Changing social patterns and working from home
Kline Group senior consumer products manager Karen Doskow believes that the changing social patterns, economic conditions and the move towards working from home have all contributed to these spectacular growth rates.
“Consumers are spending more time at home, either by virtue of unemployment, telecommuting, or merely a desire to save money by not going out so much,” said Doskow.
“Instead of running out to the store to buy their beauty products, they’re watching home shopping channels and infomercials to get the latest on new products.”
Doskow believes that mobile phone technologies and the internet are also encouraging consumers to be more proactive in their pricing comparisons, which is likely to drive marketers to provide value-based product offerings that stand up to the pricing test.
Drug stores reinvent themselves
Traditional drug stores are also forming a part of the growth in the alternative channels, with Doskow pinpointing this down to the fact that stores such as CVS and Walgreen’s have identified the fact that innovative and eye-catching cosmetic and personal care lines are often a good way of enticing consumers into the stores.
In line with this, leading players such as CVS and Rite Aid have both introduced improved customer loyalty programs, while simultaneously expanding the shelf space devoted to beauty products.
Ultimately, Doskow believes that the innovations which are being delivered by e-commerce, television shopping, mobile and drug store channels will ultimately make single-channel marketing less and less viable.