Health and beauty e-commerce will grow more than three times faster than in-store retailing over the next five years As the COVID-19 crisis, long closures and closures of department store and shopping malls are resetting shopping habits, according to a new report from Edge by Ascential, the research and analysis arm of department stores. data, Edge Retail Insight .
Double-digit growth for online shopping
In total, the health, beauty and personal care retail category will add US $ 305 billion in global sales between 2021 and 2026 to US $ 1.34 trillion, according to the report’s authors forecast. Reflecting a broader shift towards online shopping – a trend accelerated by the pandemic – just more than 50% of this growth will come from e-commerce.
According to Edge Retail Insight Online category sales will have a compound annual growth rate (CAGR) of 12.1% between 2021 and 2026, far exceeding the 3.3% CAGR growth rate for in-store sales. The move to the Internet in this category is embodied in Edge Retail Insight figures showing that Walmart’s store network only adds 3% CAGR growth between 2021 and 2025, compared to 13.6% CAGR growth of Walmart dot-com sales during the same period. As a result, online shopping will account for nearly 30% (26.8%) of the category’s global sales by 2026, up from a fifth in 2021.
“Items that were once purchased in stores are not only becoming available online, but in an increasingly mobile age, brands are rapidly experimenting with innovative digital technologies to engage customers remotely, such as using augmented reality to enable customers to try on lipstick virtually and by getting involved in seasonal events and live streaming opportunities increasingly offered by digital market giants like Alibaba, Amazon, JD.com as well as the platform- Chinese form of fast-growing group purchasing Pinduoduo (PDD), which – with an expected CAGR of 17% between 2021 and 2026 – will lead the category’s growth over the next five years,Said Deren Baker, CEO of Edge by Ascential.
The continued inexorable increase in market ecosystems means that brands operating in the health and beauty space must focus on understanding how to optimize their growth levers in this channel. “To compete in a new world of retail, brands need to leverage market-specific buyer engagement strategies and ensure they have strong execution strategies and flexible supply chain to meet short delivery times and respond to unexpected increases in customer demand,», Added Boulanger.
Asian players register the highest growth rates
While Amazon and Alibaba are expected to experience rapid growth between 2021 and 2026, with 14.2% CAGR and 12.4% CAGR respectively, the highest growth rates are expected in Asia. Six-year-old Chinese mobile app, according to Edge by Ascential Pinduo, which announced late last year that it had 788.4 million users in 2020, ahead of Alibaba’s 779 million, will grow at a CAGR of 17.1% through 2026, while South East Asia Shopee is expected to grow at a CAGR of 16.8%.
Pinduoduo and Shopee both operate innovative models focused on social engagement and mobile experiences. Shopee is also expanding its cross-border operations in Latin America, while Pinduoduo continues to push its highly successful group purchasing approach to drive more engagement with its users.
“The lucrative health and beauty e-commerce opportunity has not been lost on some of the dominant strengths in the category today. In July, French beauty chain Sephora, owned by LVMH, which has one of the world’s largest beauty store networks, entered the UK market with the takeover of e-commerce company Feelunique. , while in April, US investment firm Carlyle bought Beautycounter, a digital brand of ‘clean’ cosmetics and skin care, in a deal worth $ 1 billion,Said Florence Wright, senior analyst at Edge by Ascential and author of the report.
To cope with changing consumer buying habits, brands in the health, beauty and personal care industry need more than ever to adopt an omnichannel approach and utilize all digital touchpoints to maximize value. engagement and increase sales.