Online shopping to account for nearly 30% of global beauty sales by 2026
Pureplay ecommerce platforms Amazon, Alibaba and JD.com are already major players in the sector and are expected to grow 4 to 5 times faster than the dominant retailers such as Walgreens Boots Alliance and CVS Health by 2026. Following the acceleration recorded during the pandemic, online sales are set to account for almost a third of global health and beauty sales by 2026 (up from a fifth in 2021). China’s Pinduoduo and South East Asia’s Shopee will experience the fastest growth rates in the health, beauty and personal care category over the next five years.
Health and beauty ecommerce will grow more than three times faster than store-based retail over the next five years as the COVID-19 crisis, lengthy lockdowns and shuttered high street shops and shopping centres reset shopping habits, according to a new report from Edge by Ascential’s research and data insight arm, Edge Retail Insight [1].
Double digit growth for online shopping
Altogether, 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, the report’s authors forecast. Reflecting a wider shift to online shopping - a trend accelerated by the pandemic - just over 50% of that growth will come from ecommerce.
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 growth rate of 3.3% CAGR for store-based sales. The shift to online in this category is embodied in the Edge Retail Insight figures showing Walmart’s store network adding just 3% CAGR growth between 2021 and 2025, compared to 13.6% CAGR growth in Walmart’s dot com sales over the same time period. As a consequence, online shopping will account for nearly 30% (26.8%) of the global category sales by 2026, up from a fifth in 2021.
“Items that were once bought in-store are not only becoming available online, but in an increasingly mobile-first age, brands have been rapidly experimenting with innovative digital technologies to engage customers remotely, such as using augmented reality to allow customers to try on lipstick virtually and getting involved with seasonal events and shoppable livestreaming opportunities increasingly offered by digital marketplace giants like Alibaba, Amazon, JD.com as well as China’s fast-growing group-buying platform Pinduoduo (PDD), which - with an expected 17% CAGR between 2021 and 2026 - will lead growth in the category over the next five years,” said Deren Baker, CEO at Edge by Ascential.
The continued inexorable rise of marketplace ecosystems means brands operating in the health and beauty space must focus on understanding how to optimise their growth levers in this channel. “To compete in a new world of retail, brands must leverage marketplace-specific shopper engagement strategies as well as make sure they have strong fulfilment and flexible supply chain strategies to cater for short lead times and meet unexpected surges in customer demand,” added Baker. Read More
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