Cosmetics: pharmacies have the real power

More women are buying cosmetics from pharmacies, which are the “real power players” in the market, new research shows

Discount department stores have been the biggest losers, and pharmacies the winners, over the last 10 years in a changing cosmetics market.

The overall proportion of Australian women buying cosmetics in an average six months has remained stable, barely shifting from 51.5% to 50.5% in the 10 years studied.

The sector has seen new players like Sephora enter the market and a rise in online shopping for makeup since 2006, Roy Morgan Research says… and yet pharmacy has increased its reach from 15.1% to 19.1% (of all women, not just those who purchased cosmetics in the last six months) over that time.

Roy Morgan Research says that its data shows the “real power players” in the cosmetics sector are pharmacies, attracting more cosmetics customers than any other kind of store.

Discount department stores’ share dropped from 7.1% to 4.7% over that time, while the “other” category, which comprises speciality stores such as Sephora and standalone MECCA stores, lost ground, from 9.6% to 7.7%.

The most popular pharmacy for cosmetics by far was Priceline, the research showed, though it did not distinguish between Priceline stores and Priceline Pharmacies. Some 840,000 Australian women made their last makeup purchase at a Priceline store.

The women most likely to purchase cosmetics from Priceline are the “Metrotech” demographic of young socially active, cashed-up women. These women are also more likely than others to buy makeup from Chemist Warehouse.

“The Australian (not to mention global) beauty industry is a totally different beast to what it was just a decade ago,” says Roy Morgan Research CEO Michele Levine.

“Not only is there an increasing proliferation of niche brands specialising in everything from all-organic ingredients to specific products only—but social media has changed the way women interact with brands.

“Celebrities and other ‘influencers’ share their favourite make-up techniques and products via Instagram, how-to tutorials abound on YouTube, and the pressure to look good in selfies is an undeniable factor influencing younger women’s purchases.

“Add to this the rise of internet retailers such as Adore Beauty and, who offer the convenience of online shopping, frequently at discounted rates, and the landscape becomes even more competitive.”

Ms Levine says that against this shifting backdrop, pharmacies remain the most popular place for Aussie women to buy make-up, with nearly one in every five making their last cosmetics purchase at one.

“But like all retailers, they’ve had to adapt to the digital age to remain relevant: Priceline’s Instagram feed, for example, is heavily cosmetics-focused, while their website has a dedicated ‘Beauty School’ section containing videos and step-by-step lessons.”

Despite the impact digital and social media have had on the cosmetics sector, retailers still need to be aware of the growing consumer trend towards “retailtainment” rather than a simple transaction,” she warns.

“Once again, Priceline is leading the way, and offers free personalised consultations with their resident beauty advisors.

“But beauty superstores such as Sephora and MECCA, as well as department store concessions, also stand to benefit from this trend, being perfectly placed to fulfil their customers’ desire for an in-store ‘experience’ with make-up artists and hands-on product testing.”

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