Colin Hession, Consultant11.07.08
When Alliance Boots executive chairman Stephano Pessina reported his company’s first set of financial results as a private business this summer, he said the company had produced some excellent figures. Total revenue had increased by 6.3% and trading profit was up 20.1%. He went on to claim that the company was on an evolution that would create the world’s leading pharmacy-led health and beauty group. It certainly seems that the newly privatized Boots has all to play for, especially in its health and beauty division.
In continental Europe, the growth potential has to lie in acquisition. Given the likely freeing up of regulations which will at last permit the ownership of chain pharmacy (see Happi, July 2008), there will be lots of independent pharmacy owners anxious to swell their retirement funds by selling their businesses to would-be chain operators. This was certainly the case in Norway, when legislation changed in that country a few years ago and 75% of independent pharmacies were sold to chain operators overnight.
Regarding emerging markets, it would seem that Boots is looking for strategic partnerships, as instanced by its recent announcement concerning a joint venture with Reliance Industries in India.
But as far as North America goes, Boots is likely to stick with its policy of shops-within-shops, rather than take on the likes of CVS and Walgreens. In the short to medium term, this seems a logical way to go. Within Europe, Boots has been at the forefront of private label development in personal care, and has come up with a formidable range of “own brands,” led by the ubiquitous No.7. Private label development in the U.S., on the other hand, is still only at the stage of national brand equivalents, so Boots’ own “brands” would seem to have a market slot all to themselves. Until, that is, American retailers’ own brand development catches up—but either way, Boots’ lines clearly have a head start.
Almost all of Boots’ own brand retail products are developed in its own testing and customer evaluation facilities. Clearly, the pace of change has been stepped up, because we recently saw a consumer shelf strip for Boots’ anti-aging facial skin care product, Boots Time Delay, announcing a change of description. It read “Same great product in a new pack! Was: mature skin, redensifying, day cream. Now: mature, skin repair, day cream”…brand development as you watched! Boots Time Delay sells for $17.42 (at current exchange rates), compared with Olay Regenerist at $37.50 & L’Oréal’s DermaGenesis at $27.90.
But maybe there is still room for some improvement, back at the ranch. Within Boots health and beauty division, which accounts for some 38% of total corporate revenues, the UK stores only grew by 3.3%. Clearly, the big growth potential lies internationally and Mr. Pessina has made it very clear that he intends to build that side of the business. But the fact remains that the stores in the UK must represent the bedrock of the business, and one must say that these outlets still seem to be in somewhat of a state of flux. Although we have not seen the figures, we suspect that in an effort to differentiate its offerings from the likes of Tesco, etc., Boots has been overplaying the inclusion of new, niche lines. These often seem over-faced relative to high volume national brands. Indeed, they sometimes even seem to be grouped all together in a “dead” sales area. One example we recently came across was a somewhat bizarre range, called Soap and Glory, full of crude puns, including a lip pumping gloss called Mother Pucker, at an equally crude premium. One thing is clear, however. If criticism of Boots as a public company used to be that it was rather stuffy and slow moving, things have certainly moved on. It’s now all change on (nearly) every front.
Everywhere you look on European shelves these days, Beiersdorf’s Nivea Men seems to be growing in presence, display space and—significantly—product innovation. The company has visibly changed gears this past year in terms of marketing effort, not least with its increasing focus on the whole gamut of male grooming, from skin care to hair care. By contrast, Unilever seems to have been slow to press its advantage with Axe. As we commented earlier this year (see Happi May 2008), the company’s cautious entry into male body care with Vaseline Men, while a logical move, seemingly failed to leverage all the marketing experience gained with Axe, by not exploiting the bigger prize of male grooming generally.
But now—better late than never, some would say—Axe is to extend into hair care and launch a 9-SKU range of male hair products. In keeping with Axe’s young positioning, the products have some zany names, including De-Glue Shampoo Plus Scrub with rock crystals to remove product buildup, De-Poof Shampoo to deflate hair, Messy Look Paste, Spiked-up Look Putty & Shaggy Look Cream, etc. Starting in December, shampoos and conditioners will be priced at $4.99, styling aids at $6.99. Interestingly, it seems the company selected the U.S. as the lead country for the launch, perhaps in recognition that Europe tried some hair lines some years back but failed because they weren’t zany enough. Also, P&G’s launch of new Gillette male hair care is to start first in the U.S., and may have played a part in the decision, too…Either way, don’t expect the folks at L’Oréal to sit on their hands. They’ve done well with Men Expert skin care in the mass channel around the world. Watch this space for male hair care.
P&G’s UK website for Herbal Essences offers consumers samples of “new” Herbal Essences, in the current U.S. pack, so it looks like the brand is going to be restaged in UK, using the latest U.S. packaging. Presumably this will then be rolled throughout continental Europe, too. It will be interesting when it comes to Germany, since the new shape is reasonably close to Kao’s existing Guhl Farb Glanz shampoo…close, but not too close, probably. But it does underline how difficult it is to come up with new bottle shapes, which also satisfy all the requirements of Direct Product Profitability, etc. Alberto’s Tresemme, on the other hand, is taking a more simple approach, using standard round bottles but offering more-for-less. By all accounts, the strategy is working, with more and more shelf space devoted to this salon-type line. Clever move by Alberto, whose traditional VO5 is mired in promotional pricing, slugging it out in the middle of the mass market.
Finally, all of us in the personal care industry are keen to play our part in saving the planet, aren’t we? To say anything else is like expressing doubts about global warming at a party, and then wondering why no one is talking to you five minutes later. But saving the planet as a sales tactic, with Wal-Mart? Well, it obviously works for some, because we recently saw a new 7-SKU range of shampoo, shower gel, etc., in Asda (Wal-Mart’s UK operation) called Our Planet. The new line was from a Dubai-based company. The pack copy claimed natural extracts and reassuringly announced that the shower gel “melted away stress,” and ended with the compelling tag line “Our world is beautiful—let’s preserve it for our children.”
No wonder Asda-Wal-Mart decided to bypass its usual listing criteria and put it on the shelves straightaway, the least the retailer could do, surely…?
Colin Hession is managing director of Colin Hession Consulting, a specialist consultancy that focuses exclusively on personal care in Europe, in terms of marketing and commercial development.
In continental Europe, the growth potential has to lie in acquisition. Given the likely freeing up of regulations which will at last permit the ownership of chain pharmacy (see Happi, July 2008), there will be lots of independent pharmacy owners anxious to swell their retirement funds by selling their businesses to would-be chain operators. This was certainly the case in Norway, when legislation changed in that country a few years ago and 75% of independent pharmacies were sold to chain operators overnight.
Regarding emerging markets, it would seem that Boots is looking for strategic partnerships, as instanced by its recent announcement concerning a joint venture with Reliance Industries in India.
But as far as North America goes, Boots is likely to stick with its policy of shops-within-shops, rather than take on the likes of CVS and Walgreens. In the short to medium term, this seems a logical way to go. Within Europe, Boots has been at the forefront of private label development in personal care, and has come up with a formidable range of “own brands,” led by the ubiquitous No.7. Private label development in the U.S., on the other hand, is still only at the stage of national brand equivalents, so Boots’ own “brands” would seem to have a market slot all to themselves. Until, that is, American retailers’ own brand development catches up—but either way, Boots’ lines clearly have a head start.
Almost all of Boots’ own brand retail products are developed in its own testing and customer evaluation facilities. Clearly, the pace of change has been stepped up, because we recently saw a consumer shelf strip for Boots’ anti-aging facial skin care product, Boots Time Delay, announcing a change of description. It read “Same great product in a new pack! Was: mature skin, redensifying, day cream. Now: mature, skin repair, day cream”…brand development as you watched! Boots Time Delay sells for $17.42 (at current exchange rates), compared with Olay Regenerist at $37.50 & L’Oréal’s DermaGenesis at $27.90.
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Boots has been a leader in the private label personal care category. |
For Clearasil, a new lease of life under Reckitt Benckiser.
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Clearasil Revamped
Regarding Boots, it’s interesting to note Clearasil’s new lease on life, now that it belongs to Reckitt Benckiser. Somewhat ironic to see linear feet of Clearasil lined up on Boots’ shelves, looking a whole lot healthier than when it was owned by that particular retailer. Under Reckitt Benckiser’s stewardship, the brand seems heading back to its former (P&G) glory.Men’s Grooming Battles
Everywhere you look on European shelves these days, Beiersdorf’s Nivea Men seems to be growing in presence, display space and—significantly—product innovation. The company has visibly changed gears this past year in terms of marketing effort, not least with its increasing focus on the whole gamut of male grooming, from skin care to hair care. By contrast, Unilever seems to have been slow to press its advantage with Axe. As we commented earlier this year (see Happi May 2008), the company’s cautious entry into male body care with Vaseline Men, while a logical move, seemingly failed to leverage all the marketing experience gained with Axe, by not exploiting the bigger prize of male grooming generally.
But now—better late than never, some would say—Axe is to extend into hair care and launch a 9-SKU range of male hair products. In keeping with Axe’s young positioning, the products have some zany names, including De-Glue Shampoo Plus Scrub with rock crystals to remove product buildup, De-Poof Shampoo to deflate hair, Messy Look Paste, Spiked-up Look Putty & Shaggy Look Cream, etc. Starting in December, shampoos and conditioners will be priced at $4.99, styling aids at $6.99. Interestingly, it seems the company selected the U.S. as the lead country for the launch, perhaps in recognition that Europe tried some hair lines some years back but failed because they weren’t zany enough. Also, P&G’s launch of new Gillette male hair care is to start first in the U.S., and may have played a part in the decision, too…Either way, don’t expect the folks at L’Oréal to sit on their hands. They’ve done well with Men Expert skin care in the mass channel around the world. Watch this space for male hair care.
Shampoo Packaging
P&G’s UK website for Herbal Essences offers consumers samples of “new” Herbal Essences, in the current U.S. pack, so it looks like the brand is going to be restaged in UK, using the latest U.S. packaging. Presumably this will then be rolled throughout continental Europe, too. It will be interesting when it comes to Germany, since the new shape is reasonably close to Kao’s existing Guhl Farb Glanz shampoo…close, but not too close, probably. But it does underline how difficult it is to come up with new bottle shapes, which also satisfy all the requirements of Direct Product Profitability, etc. Alberto’s Tresemme, on the other hand, is taking a more simple approach, using standard round bottles but offering more-for-less. By all accounts, the strategy is working, with more and more shelf space devoted to this salon-type line. Clever move by Alberto, whose traditional VO5 is mired in promotional pricing, slugging it out in the middle of the mass market.
Saving the Planet
Finally, all of us in the personal care industry are keen to play our part in saving the planet, aren’t we? To say anything else is like expressing doubts about global warming at a party, and then wondering why no one is talking to you five minutes later. But saving the planet as a sales tactic, with Wal-Mart? Well, it obviously works for some, because we recently saw a new 7-SKU range of shampoo, shower gel, etc., in Asda (Wal-Mart’s UK operation) called Our Planet. The new line was from a Dubai-based company. The pack copy claimed natural extracts and reassuringly announced that the shower gel “melted away stress,” and ended with the compelling tag line “Our world is beautiful—let’s preserve it for our children.”
No wonder Asda-Wal-Mart decided to bypass its usual listing criteria and put it on the shelves straightaway, the least the retailer could do, surely…?
