Private Label Personal Care: Does the shift in consumers’ shopping habits

in developed economies mean major brands face a revitalized competition?

Report Code: CS0021IS

Publication Date: June 2015

SAMPLE PAGES

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TABLE OF CONTENTS

Executive Summary • Introduction to the report format • Summary of the key steps to successfully target and position private label personal care for growth and brand development

Introduction and summary methodology

• Drivers and inhibitors in the private label personal care market • Summary methodology • Country coverage • Definitions • Canadean’s consumer trend framework

Overview of the private label Personal Care market • Identifying established and key growth markets of private label Personal Care • Understanding the key users of private label Personal Care, including age, gender and regional comparisons

Development of private label

• Introduction and explanation of the Private label five stage maturity model • Introduction to the 8 steps to help personal care manufacturers to move up the maturity curve

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TABLE OF CONTENTS

8 steps to grow private label Personal Care For each step the report explores the current state of the market, how to further private label personal care usage through capitalizing on the trend, and how brands can look to defend against strengthening private label competition

• Grow Trust in Private Label • Speak to the Savvy Shopper • Target the Evolution of Male Grooming • Meet the Needs of Aging Populations • Optimize for Shopping Online • Build Service into Hypermarkets and Supermarkets • Provide for the Whole Personal Care Usage Spectrum • Build a Unique Brand with Bloggers

Methodology and appendix

• Global survey methodology • Market data methodology • Consumer data methodology • About Canadean

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LIST OF FIGURES

List of figures • Figure 1: Private label maturity model introduction • Figure 2: Consumer side drivers and inhibitors of private label personal care growth and uptake • Figure 3: The value share (US$) of categories within private label Personal Care • Figure 4: CAGR of the private label Personal Care market, by country, 2010-2013 • Figure 5: Private Label as a percentage of the market, by category, 2010 and 2013 • Figure 6: Consumption of private label split by age group and category, 2013 • Figure 7: Private Label consumption by gender and category, 2013 • Figure 8: Consumption of private label split by age group and country, 2013 • Figure 9: Private label Personal Care consumption in volume (million units) by gender, 2013 • Figure 10: Private label Personal Care consumption in volume (million units) by urban/rural, 2013 • Figure 11: Private label Personal Care consumption by leisure hours, 2013 • Figure 12: The five stage private label maturity model • Figure 13: The five stage private label maturity model and its impact on national brand market share • Figure 14: The influence of the Trust trend in 2015 • Figure 15: Consumers who keep a look-out for new products, by region, 2015 • Figure 16: Consumer perceptions of grocery products with heritage, 2015

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LIST OF FIGURES

List of figures (cont.) • Figure 17: Influence of the value trend, 2013 • Figure 18: Men’s satisfaction with their personal appearance, by country, 2015 • Figure 19: Respondents who say that a Personal Care product’s ability to offer maximum results is important to them, 2015 • Figure 20: Population of over 65s, 2015-2025 • Figure 21: Importance of a known and trusted brand in personal care, UK & US, 2015 • Figure 22: Consumers who stated to have a broadband internet connection at their home in 2015 • Figure 23: The number of consumers who indicate that they have shopped online for groceries, in 2015 • Figure 24: Cosmetics & toiletries sales by retail channel, 2014 • Figure 25: Consumer confidence about their ability to spend on non-essentials, 2015 • Figure 26: Consumers who indicate that looking their best is important to them, 2015 • Figure 27: The number of consumers who agreed that they like to buy personal care products that are reflective of their attitudes and opinions in life, in 2015

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LIST OF TABLES

List of tables • Table 1: Private label personal care category values and CAGRs, 2010, 2013 • Table 2: Over and under consumption of private label personal care by age group, 2013 • Table 3: Number of times per year men use personal care products in France, Germany, Italy, Spain, and the UK, 2013

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Reasons to buy this report

Private Label Personal Care: Does the shift in consumers’ shopping habits in developed economies mean major brands face a revitalized competition? is a detailed consumer insight report, exploring the advancement of private labels in developed economies. The report breaks down 8 key trends that when targeted effectively, can further mature private label in the personal care market.

Future outlook The report provides insight to highlight the "so what?" implications behind the data, and analysis of how the need states of consumers within the personal care market will evolve in the short-to-medium term future. The recommended actions and analysis throughout the report will allow manufacturers to align their research and development and marketing strategy with the stand out trends influencing consumer behavior.

Sized market opportunities Canadean’s market data and country/category comparisons allow for markets and opportunities to be sized as a measure of potential profitability. Detailed private label figures also allow for market penetration to be quantified, revealing targeting opportunities for private label manufactures and key areas for defense strategies for brands.

Understand the key trends shaping consumer behavior Canadean’s unique consumer data, developed from extensive consumption surveys and consumer group tracking, quantifies the influence of 20 consumption motivations across the market. This, paired with Canadean’s extensive 2015 Attitudes & Behaviors survey carried out in 50 countries, together grant a confident and thorough understanding of consumer behavior.

Find out who uses what, and why This report identifies the key consumer demographic groups driving the consumption of private label personal care products based on demographic profiles in developed economies. Consumer analysis and case studies provide insight into the private label personal care market and clear opportunities for new product developments are explored.

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While sales of private label groceries grow across developed economies, private label personal care products tend to lag behind food and drinks in popularity and penetration rates. Canadean has identified eight steps manufacturers and retailers can take to improve consumer perceptions of private label products, increase penetration rates, and branch out into new product categories. Private label architecture and brand strategy follows a five stage maturity model. Retailers and manufacturers should asses where they stand in this maturity model on a category by category basis; this will determine which steps they should take to increase penetration, grow sales, and mature into a more profitable stage.

Executive Summary: Private Label manufacturers can take eight steps to grow sales of personal care products and improve the maturity of the market

Value Good, better, best

Diversification Consolidation & re-organization

Brand building

Pri

vate

lab

el p

en

etra

tio

n

Time

1) Grow trust in Private Label

2) Speak to the Savvy Shopper

3) Target the evolution of Male

Grooming

4) Meet the needs of Aging Populations

5) Optimize for Online Shopping

6) Build service into Hypermarkets &

Supermarkets

7) Provide for the Whole Personal Care

Usage Spectrum

8) Build a unique brand with Bloggers

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Step 2: Speak to the Savvy Shopper A growing brigade of savvy shoppers are increasingly demanding in their quest for a quality product at a competitive price. Private labels are in the ideal position to target this consumer group through creating the experience that consumers desire at a competitive price.

Step 1: Grow Trust in Private Label To capitalize on and further encourage growing trust, manufacturers should further expand their product ranges and create higher quality products that have an appeal that reaches beyond that of the best value. Trust can be furthered by producing high quality products and conveying this to consumers which underpins further growth in other areas.

Step 4: Meet the needs of Aging Populations The population across developed economies is aging, and while many brands are continuing to target young and on-trend consumers, there is a growing opportunity to target the older generations. Private labels meeting their age-specific needs will therefore prove successful and profitable.

Step 3: Target the evolution of Male Grooming The male grooming market is still in its infancy, allowing private labels to gain a relatively early foothold in the market and establish themselves as a key brand. Offering low prices and clearly meeting the gender-specific needs of men will allow private labels to capture this market.

Accelerating trust in private label and speaking to savvy shoppers will help private label personal care mature beyond the "Good, better, best" stage

More explicit targeting of two demographic groups, men and older consumers, will help private label personal care increase penetration at the “Diversification" stage

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Targeting bloggers means retailers can further build unique personal care brands, increasing private label penetration at the “Brand building” stage

Step 5: Optimize for Online Shopping Private labels must capitalize on their natural advantages in the online shopping arena in order to compete. Established online retail platforms of the label owners provide the ideal sales mechanism with a strong reputation, many site visitors, and a secure payment process. Packaging suitable for the deliveries will also be key.

Step 6: Build service into Hypermarkets & Supermarkets The convenience of shopping for Personal Care products alongside grocery shopping appeals to consumers, however a focus on service and the shopping environment is essential to boost sales of premium products. Full beauty ranges will also encourage additional Personal Care spending alongside the grocery shop.

Step 7: Provide for the Whole Personal Care Usage Spectrum Private labels, aided by increased trust, are in a superior position to target consumers with an extensive list of essential Personal Care items, as they can offer value and quality simultaneously. A large product portfolio will also be necessary in order to cater to the expanding Personal Care needs of developed economies.

Online shopping, building service, and broadening the range of personal care essentials will enable private label Personal Care to advance beyond "Consolidation and Re-organization"

Step 8: Build a unique brand with Bloggers The popularity of beauty bloggers is increasing, and this is rapidly altering how manufacturers communicate with their consumers, as well as how consumers are influenced. Building a relationship with established beauty bloggers can help private labels to brand build and reach premium territory.

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Private labels shouldn’t be subtle about their price advantages when talking to Savvy Shoppers

Show that value is more than just price – it’s getting the experience you want without

paying too much

Savvy shoppers feel pride in getting the best deal, and are turning to a wider variety of methods to get this, be it shopping online, looking for coupons, or only buying a product when it’s on promotion. Private labels need to talk more directly to savvy shoppers and not assume that they’ll buy your product purely for its low price. Meanwhile, brands can also take steps to show that they offer the best deal.

Move from offering just value, to value-added

Give consumers a product and price to brag about

Offer exclusive innovations and new launches

Use exclusive packaging to reinforce the notion of a superior product

Establish partnerships with popular and on-trend brands

Private Labels should… Brands should…

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Private label products account for a significant proportion of the Feminine Hygiene category, whilst the fastest growth is in Fragrances

Private label penetration is highest amongst essential Personal Care items

The popularity of private label Feminine Hygiene products is highest, mostly due to their essential nature. Growth is highest in the Fragrances market, with consumers seeking their desired image at an affordable price point.

Private Label as a percentage of the market, by category, 2010 and 2013

2010 2013

Market 2010 Value Million US$

2013 Value Million US$

CAGR 2010-2013

Feminine Hygiene XX XX XX

Fragrances XX XX XX

Haircare XX XX XX

Make-Up XX XX XX

Male Toiletries XX XX XX

Oral Hygiene XX XX XX

Personal Hygiene XX XX XX

Skincare XX XX XX

Suncare XX XX XX

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Private label brands have the opportunity to be more innovative and experimental as trust in them grows

Investment in R&D is the next stage for private labels looking to establish themselves in the market

Many private label brands have previously restricted themselves to being copy-cat or me-too brands; now trust in them is at a high, they are able to separate themselves from this image and embark upon being a brand in their own right. This growing level of trust in private labels grants them the opportunity to be more forth right and experimental, possibly even being the first among brands to launch new innovations into the personal care market. However, such a strategy would mean investing heavily in research and development, a cost usually kept to a minimum by private labels, and particularly those operating a ‘me-too’ strategy. However, as consumers are further disillusioned with brands and their trust in private labels grows, this is potentially an investment worth the risk. Although staying ahead of the brands means operating like a brand, private labels benefit from the support network of the label owner. Securing the best retail positions and low-cost in-store marketing can all help to push a new innovation whilst also keeping costs down and prices competitive.

XX% of global consumers often or always keep a lookout for new cosmetics and toiletries products on retailers' aisles

Consumers in Latin America and the Middle East & Africa are the most likely to be looking out for new cosmetics and toiletries, which those in Eastern Europe may take more encouragement to try a new product.

0% 10% 20% 30% 40% 50% 60%

Developed Asia-Pacific

Western Europe

North America

Eastern Europe

Middle East & Africa

Emerging Asia-Pacfic

Latin America

I always keep a lookout for new products

I often keep a lookout for new products

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Men can be increasingly targeted with specialist male personal care products, at competitive price points

Private labels must target men with effective and affordable products to gain a foothold in the market.

As competition in the work place and job insecurity remain present in developed markets, as well as a growing acceptance of male grooming, the target audience of men purchasing multiple Personal Care products will grow. Similarly, the Western trend for male fashion will increase in significance and influence, this further underlines the importance of private label manufacturers gaining a foothold in the developing male Personal Care market. Men will continue to seek out good value, as not only is their rising spending on Personal Care an increased cost to them, but they are generally price sensitive and budget aware. Again, this highlights an opportunity for private label producers who are able to meet the demands of men, but at a more cost effective end price than brands can. Private labels that successfully gain a foothold in the male Personal Care market at this stage are likely to grow in prominence and significance. There is a huge difference in the Personal Care consumption of men and women, and as this gap narrows, there will be many opportunities for growth.

Value

Good, better,

best

Diversification

Consolidation & re-

organization

Brand building

Time

Pri

vate

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en

etr

atio

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In order to gain an early presence in the targeting of men, marketers must diversify their ranges so that some products appeal directly to the gender specific needs of men. Masculine packaging and scents, as well as a clearly defined men’s range will be important in becoming primary suppliers of men’s Personal Care.

The five stage private label maturity model

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Prices will remain high for premium products as consumers look to treat themselves

Brands can opt to retreat to premium ground or go head to head in the defense of private label success

As the lower costs associated with private label launches allow them to capitalize on the low budget Personal Care market, brands must explore alternative, higher margin ventures. Personal Care items, although a necessity, are also popular treating items. Consumers feel entitled and cannot resist treating themselves from time to time. When they are treating themselves, consumers are far less sensitive to price and are more likely to opt for a premium and indulgent option. Targeting the premium beauty and treating market not only provides brands with space from the rising private label successes, but also grants room for higher margins, as consumers expect to pay a premium for an indulgent product and experience. Alternatively, there are also opportunities for large manufacturers to expand their ranges to include budget options that will compete directly with private label alternatives. The introduction of low cost ranges using simple formulations and packaging allow brands to remain competitive across the market, ensuring that their brand name remains prominent across the industry.

I find it perfectly

acceptable to spend time

and money on maximizing my personal appearance

UK consumers either agree or strongly agree

XX%

I find it perfectly

acceptable to spend time

and money on maximizing my personal appearance

US consumers either agree or strongly agree

XX%

Consumers across the world look to maximize appearance, and are not afraid to spend money and

time in achieving maximum results

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