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Dr. Peter Pfeiffer, Partner and Managing Director

Berlin, 13 June 2013Präsentation BVDVA Kongress

Beauty and the Beast – Eine Studie zum Online-Kauf von Beauty & Personal Care Produkten

A.T. Kearney Study

A.T. Kearney 10/05.2013/44935d/5aY4trQkkR00RllnkG 2

Technology

A.T. Kearney overview

Source: A.T. Kearney

Tradition – 87 Years of successful corporate impact; founded 1926 in Chicago

Revenues – Approximately US$1 billion; 90% repeat business

Global Footprint – 57 offices in 39 countries, over 2,100 consultants

Marquee Clients – Works with all leading players across a wide range of industries

Operations

Immediate Impact, Growing Advantage

Strategy

Organization &Transformation

A.T. Kearney is a leading global management consulting firm,focused on delivering high impact results


• Digital will change the world

• A.T. Kearney’s e-commerce Beauty & Personal Care survey

• Consequences for Beauty & Personal Care manufacturer and retailer

Agenda


E-commerce and their underlying technologies are advancingand accelerating

Estimate for 2015 …

Over 1 billionmobile-only internet users

Over 3 billioninternet users

Source: ITU Statistics; Cisco, A.T. Kearney analysis

1.85 billionsocial media users

1 trillionThings on the internet

4.8 zeta bytesof cloud data traffic

Information based industries are the first to be disrupted; they won’t be the last

… drives waves ofdigital disruption

B2C

B2B2C

B2B

...


About 137 mn people in UK, Germany and France now shopvia e-commerce, the market is expected to grow 12% annually

1. Purchase within last 12 monthsSource: Forrester Inc., Eurostat

Number of Shoppers(mn, 2006 – 2012)1

+9%

FR

DE

UK

2012

137

25%

41%

35%

2011

131

26%

40%

34%

2010

126

28%

39%

33%

2009

115

25%

40%

36%

2008

104

25%

42%

34%

2007

97

22%

44%

34%

2006

82

17%

49%

34%

82%

% of Internetusers who

shop online

77%

69%

Sales(€ bn, 2010 – 2016)

+12%

FR

DE

UK

104

2016

125

21%

32%

47%

47%

2015

114

21%

32%

2014

21%

32%

47%

2013

93

21%

32%

48%

2012

82

20%

32%

48%

2011

72

20%

32%

48%

2010

63

20%

32%

49%

E-commerce in UK, Germany and France


E-commerce in Germany continued its boom in 2012 and isexpected to do so in 2013

Source: bvh (Bundesverband des Deutschen Versandhandels), Pressemitteilungen 12.2. und 16.5. 2013

Full year 2012

All online segments(€ bn)

Drugstore articles, cosmetics, fragrances(€ mil.)

450

500

950

TotalE-/M-Commerce

Traditional,i.e. mail

order

E-/M-Commerceto 2011: +67%

for Q1 ‘13: (€ 305 mn)

26

239

TotalM-CommerceE-CommerceTraditional,i.e. mail

order

12

E-/M-Commerceto 2011: +27%

for Q1 ‘13: +37%


Beauty & Personal Care e-commerce is a ~ €1.8 billionsegment and growing 4 times faster than the overall category

1. Includes for example toys and games, home care, consumer healthcare, consumer appliances, DIY and gardeningSource: Euromonitor International

Retail Sales by key sector(% of total sales, 2011)

28%

5%

15% 10%

15%

23%Other1

Beauty andPersonal Care 2%

Housewares andHome Furnishings

Consumer Electronics Food and Drink

MediaProducts

Apparel

Total sales: €68.1 Billion

+11%

FR

DE

UK

2011

1.7

43%

19%

38%

2010

45%

37%

18%

1.5

2009

17%

46%

2008

37%

48%

1.4

37%

15%

1.6

2007

1.1

2012

36%

21%

43%

1.8

47%

15%

38%

2006

1.0

50%

15%

35%

Beauty & Personal Care sales(€ bn, 2006-2012 CAGR)

+3%Retail sales

5%

3%

6%

% of retailsales,2012

Beauty & Personal Care e-commerce sales

Online sales




• Why do they buy

• What do they buy

• Where do they buy


Agenda


Personal care consumers in Germany that buy online areprimarily motivated by finding better prices and convenience

Motivation for browsing¹(% of online Beauty & Personal Care shoppers)(n = 395²)

75%

60%

Price Comparisons

51%

To find out what’s new

38%

Find productsI use regularly

35%

Promotions andspecial offers

30%

Peer reviews

Makeover ideas

3%

12%

Other³

Research celebrityendorsements

Motivation for buying(% of online Beauty & Personal Care shoppers)(n = 395²)

1. Several response choices possible; 2. Sample size varies according to number of responses for specific question3. Includes, e.g. “To find information on ingredients” and “To receive samples to test products”4. Includes, e.g. “It is a change to the usual in-store shopping” and “I don’t have always time to go to the store to do my shopping”Source: A.T. Kearney Survey of Online Beauty & Personal Care Shoppers UK, Germany and France, Oct-Dec 2012

9%

10%

21%

25%

33%

Better informed purchasedecision possible

Products not availableat local stores Other4

Convenience

Like to exploreon the web

Better prices online

2%

Why do they buy


German survey participants rated site security, ability to findbest price and specific products as most important

Most important attributes(% of online Beauty & Personal Care shoppers)(n = 395¹)

8% 9% 10% 12% 10%14%

23% 24%26%

31%32%

30%

36%

36% 40% 41%42%

47% 44% 50%50%

43%48%

44%36%

35% 42%

28%54% 53% 52% 48%42% 41% 39%

33% 31%25% 23% 22% 17% 15% 11%

25%13%16%11%8%1%0%0%2% 7%7%

Loyaltypoints

Peerreviews

Newproducts

4%

Freesamples

2%

In-storeevent

information

Producttips

3%

Ease ofnavigation

In-storepick-up/return

Quickdelivery

1%

Specialpromotions

3%

Findingmy

favouritebrands

2%

Freeshipping

Findingspecific

products

Best priceSitesecurity

1. Sample size varies according to number of responses for specific questionSource: A.T. Kearney Survey of Online Beauty & Personal Care Shoppers UK, Germany and France, Oct-Dec 2012

Not importantNot significantSomewhat importantVery important

Interestingly, free samplesdo not rank high overall

Why do they buy Survey question: What is most important to you whenshopping for Beauty & Personal Care products online?


Women generally valued most online shopping attributes morefrequently than men

Top five attributes selected by gender(% of female and male shoppers who ranked an attribute as Very Important) (n = 395¹)

Freeshipping

58% 56%

Finding myfavouritebrands

53%

Best priceFindingspecificproducts

45%

Site security

60%

• Overall, 56-60% of Women surveyed rated the top 3 attributes as important, while only 47-51% of Men did

• Overall, top five attributes consistent for Women and Men

• However, Best Price ranks only third for Women, whereas for Men it is the most important attribute

47% 45%51%

48%

Freeshipping

Finding myfavouritebrands

Best price Findingspecificproducts

Site security

39%

Female Male


Why do they buy Survey question: What is most important toyou when shopping for B&PC products online?


> 46 year old shoppersvalued core attributesmore frequently thanother age groups with sitesecurity and findingspecific products beingthe highest ranked

Across all age groups, site security and finding the best pricewere among the top 3 highest ranked attributes

Findingspecific

products

38%

Sitesecurity

44%46%54%

Bestprice

Quickdelivery

Freeshipping

35%

Top five attributes selected by age(% of shoppers by age group who ranked an attribute as very important) (n = 395¹)

26-45 46+

52% 50%53%

42%48%

Specialpromo-tions

Findingspecific

products

Freeshipping

Sitesecurity

Bestprice

64% 63%55% 54%

48%

Sitesecurity

Freeshipping

Findingspecific

products

Findingmy

favouritebrands

Bestprice

26-45 year old shoppers mostfrequently valued best price,site security and free shipping.Similar to the other groups,informative attributes (e.g. peerreviews, products tips) werenot highly valued overall


< 25 year old shoppersmost frequently valuedfinding the best price.Other attributes werevalued less frequentlycompared to other agegroups

Why do they buy

18-25

Survey question: What is most important toyou when shopping for B&PC products online?


15% 18%34% 26%

38%23% 24%32% 32%

24% 39%27%40%

42%38% 35%

30% 23% 24%28% 21% 15% 15% 12% 12% 11%

13%9%Never

Rarely

Sometimes

Frequently

Nail careToolsColorcosmeticsHair carePersonal careSkin careFragrances

German shoppers are active in all categories with Fragrancesand Skin Care purchased most frequently

Frequency of purchases by sub-category(% of online Beauty & Personal Care shoppers) (n = 395¹)

I buy fragrancesonline becauseI can find better

prices and alarger productselection thanin local stores

In thewords ofconsumers

I get goodprices for skin

care online andcannot buy my

favoriteproducts inlocal stores

The productselection and

prices forpersonal careproducts aresometimes

better online

It don’t buy haircare products

online as itdoes not pay off

due to thedelivery charge

I prefer to buycosmetics in

drugstores as Ican examinethem beforepurchasing

I don’t buy toolsonline as I can

buy themcheaper in my

local store

I don’t buy nailcare online as I

prefer to seethem first


What do they buy Survey question: What types of beauty pro-ducts do you buy online? Please tell us why


21%31%

19%38% 38%

18% 17%23%

17%22%

20% 27%41% 45%38% 36% 42%

28%26%

24% 23% 18% 17% 17% 13% 9%

16%17%

Fragrances

Never

Rarely

Sometimes

Frequently

ToolsPersonal care Nail careColorcosmeticsSkin care Hair care

Fragrances and Skin Care are the most frequently purchasedonline beauty and personal care categories in Europe

Frequency of purchases by sub-category

Price is themain reason

why I buyfragrances

online.Sometimes I

find items up to50% cheaper

I buy shampooonline becausethe prices are

moreinteresting than

in stores

I buy cosmeticsonline due to

the largeselection and

the good valuefor moneyproductsavailable

I buy bio soaponline because

it is moreconvenient andcheaper than in

stores

I buy nail polishonline because

I like theselection of

different coloursthat is available

Personal caretools are easilyavailable on thehigh street andsupermarkets

Color Cosmeticsranked 2nd in France

Note: Several response choices possible, sample size varies according to number of responses for specific questionSource: A.T. Kearney Survey of Online Beauty & Personal Care Shoppers UK, Germany and France (1,340 respondents), Oct-Dec 2012

What do they buy Survey question: What types of beauty pro-ducts do you buy online? Please tell us why

In thewords ofconsumers

I get goodprices for skin

care online andcannot buy my

favoriteproducts inlocal stores


For the three countries in Europe, Amazon and Yves Rocherwere most frequently named online shopping destinations

4%5%

8%

10%

14%

16%

26%

Other

Speciality beauty retailers

Major drugstore

Online retailers

Major department stores

Supermarkets

Brand direct

eBay.co.uk

Boots.com

Amazon.co.uk

11%

3%3%

6%

7%

10%

10%

11%

12%

41%

Other

Brand direct

Drugstores

Rossmann.de

Douglas.de

eBay.de

Yves-Rocher.de

Amazon.de

4%

4%5%

6%

10%

8%

11%

11%

12%

32%

Other

Brand direct

Online retailers

Speciality beauty retailers

Amazon.fr

Sephora.fr

Vente-privee.com

ccbparis.fr

yvesrocher.fr

Note: Several response choices possible, sample size varies according to number of responses for specific questionSource: A.T. Kearney Survey of Online Beauty & Personal Care Shoppers UK, Germany and France (1,340 respondents), Oct-Dec 2012

Where do they buy

Top online destinations

Survey question: What is your most favorite onlinedestination for Beauty & Personal Care shopping?


Amazon was ranked as the top online channel for Beauty andPersonal Care Products by all countries, except for France

Top online destinations(n=1,842¹)

Other

Speciality beautyretailers

Major drugstore

Online retailers

Major departmentstores

Supermarkets

Brand direct

eBay.co.uk

Boots.com

Amazon.co.uk

11%

3%3%

4%5%

8%

10%

14%

16%

26%

Other

Brand direct

Drugstores

Rossmann.de

Douglas.de

eBay.de

Yves-Rocher.de

Amazon.de

6%4%7%

10%

10%

11%

12%

41%

Other

Brand direct

Online retailers

Speciality beautyretailers

Amazon.fr

Sephora.fr

Vente-privee.com

ccbparis.fr

yvesrocher.fr

4%5%

6%

10%

8%

11%

11%

12%

32%

7%

10%

Drugstore.com

Majordepartment

stores

Other

11%

8%

6%

13%

Majordrugstores

Brand direct

Sephora.com

eBay

Amazon.com

18%

28%

1. UK, DE, FR: n=1340; US: n=502, Sample size varies according to number of responses for specific questionSource: A.T. Kearney Survey of Online Shoppers, UK, Germany and France, Oct-Dec 2012; A.T. Kearney Survey of Online Shoppers, US, April 2012

Where do they buy Survey question: What is your most favorite onlinedestination for Beauty & Personal Care shopping?


46% of the high income shoppers ranked Amazon as their toponline channel for beauty and personal care products

High income group(% of online Beauty & Personal Care shopperswith annual income >€51k), (n = 94¹)

3%5%

6%

10%

6%

14%

9%

46%

Supermarkets

1%

Online retailersSpeciality beauty retailers

Drugstore

Brand direct(19 brands

surveyed)

dm.de

ebay.de

Douglas.de

Amazon.de


3%

3%

10%

13%

29%

10%

26%

Brands4friends.de3%

ebay.de

dm.de

Douglas.deAmazon.de

Yves-Rocher.de

Karstadt.deDocmorris.de

3%Rossmann.de

Where do they buy

Age 56+(% of online Beauty & Personal Care shoppersabove 55 years old), (n = 31¹)

Survey question: What is your most favorite onlinedestination for Beauty & Personal Care shopping?


I order from thissite since many

years

Key attributes were consistently cited as the top reasons forwhy consumers preferred to shop on these websites

Where and why do they buy

Beauty & Personal Care consumers are more inclined to shop at these onlinedestinations because …

Amazon is quick, reliable, hasgood prices, a good productselection and is easy to use

Product selection, pricing,quick delivery, ease ofuse

Source: A.T. Kearney Survey of Online Beauty & Personal Care Shoppers UK, Germany and France, Oct-Dec 2012

I buy almost everything from Amazon,as I never hat problems with the site

and payment is easy

Specific products, trust inbrand, pricing

I know theproducts and

value the offers

Yves Rocher has natural productsof good quality, and which I don’t

get somewhere else

Pricing, product selectionebay has a large selection of

branded products to way cheaperprices

ebay has everything with the bestprices

Product selection, pricing,free samples

I like Douglas because it hasall the important brands and

a great customer service

It has a largeselection offragrances

It has nice productswith good prices andmany free samples

Product selection, pricing,ease of use

It is easy to navigate, has very low prices, a lowdelivery charge, and a good product selection

with excellent quality

I can get all theproducts I need for low

prices

Survey question: Please tell us why you prefer theonline destinations where you most frequently shop

amazon

Yves Rocher

ebay

myDouglas

Rossmannonline





Agenda


Beauty & Personal Care products are in the digital battle filed

Digital maturity by product family(11 major European countries average)

1. Percentage of consumer who search the product on line before buying 2. Percentage of consumer who buy more than 25% of this family of product on lineSource: Experian 2011, A.T. Kearney

Gone to digital– omni-channel

Digital battle field

Still in store

Main triggers foronline shift:

• Price• Selection• Convenience• Trust

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Re

se

arc

hed

on

lin

e1

Purchased online2

Computers

DVD / VideosBooks

Video games

Electronics

Beauty products

Clothing

Furniture

Home decorationOffice supplies

Grocery


In the digital battle field traditional offline companies must learnfrom online businesses

DNA attributes Native Digitals Traditional firms

Technology as corporatebackbone

Truly customer centric

Agility

Organizational flexibility

Openness & forwardthinking

Safety & security

Native Digital vs. offline firms DNA


DNA match (low – high)

Example

A.T. Kearney 10/05.2013/44935d/5aY4trQkkR00RllnkG 22Source: A.T. Kearney

Traditional firms need to review their business model by under-standing consumer needs and the impact of digital disruptors

Digital business model

Consumer Needs

Digital Value Chain

Feedback &Support

Product &ServiceLife-Cycle

Purchase &Payment

ServiceOffering

Digital Life &Advertising

RetailSales

Marketing &Sales

Manufac-turing

ProductDevelopment

R&DRetail After

Sales &Service

Digital DisruptorsClassical Value Chain

A.T. Kearney 10/05.2013/44935d/5aY4trQkkR00RllnkG 23Source: A.T. Kearney

Opportunities will arise in many areas but might lookthreatening from a retailer perspective

Consumer needs

Next: all touch points totally transparent to the customer and structuredaccording to “learned individual preferences”

Guideme

Helpme

Bookme

Inviteme

Coachme

Serviceme

Pleaseme

Surpriseme

Connectme

etc.


A.T. Kearney’s European Beauty & Personal care study

Key messages

Online channel sales growing 4x faster than overall market

Online shopping experience is generally poor & shoppers are conditioned tolook for “basic” website features

Shoppers are increasingly multi-channel – there will be no pure offline orpure online shoppers in the future

As the dominant online retailer, Amazon will increase its impact on Beauty &Personal Care market



Online channel sales growing 4x faster than overall market

Implications

• Define specific online channel strategy includinge.g. defined role for online channel, specific onlineproduct assortment, online promotion strategy,etc.

• Strengthen relationships with online players,e.g. through direct relationships and joint businessplanning

• Set up dedicated online channel managemente.g. dedicated KAM for online partners

• Adjust commercial management to multi-channelworld, e.g. with differentiated pricing, terms &conditions for offline vs. online

• Consider own branded online store to createdirect relationships with consumers and shoppers

Manufacturers need specific onlinechannel strategies to take advantage ofgrowth

• Complement offline store with online store tomeet shoppers wherever they want to shop

• Define roles and differentiated valuepropositions for each channel to approachmore shopper types and behaviors…

• …e.g. online can offer a broad selection anddetailed information, while physical stores mustbecome a “destination”, where the focus will beon experience and value-added services

• Create m-commerce sites to accommodatesmaller and varying screen sizes of mobiledevices (e.g. tablets, mobile phones)

• Be truly “channel agnostic” and eliminateinternal channel conflict

Offline retailers need to “go multi-channel” unless they want to remain in astagnant or shrinking market

1


… and more implications in remaining key messages


A.T. Kearney’s European Beauty & Personal care study

Executive summary

ImplicationsKey messages

Online channel sales growing 4xfaster than overall market

• Manufacturers need specific online channel strategies totake advantage of growth

• Offline retailers need to “go multi-channel” unless they wantto remain in a stagnant or shrinking market

Online shopping experience is genera-lly poor & shoppers are conditioned tolook for “basic” website features

• For manufacturers, online PoS is the next big opportunity forshopper marketing to improve shopper experience

• Retailers need to upgrade their websites if they want tocompete based on any thing other than price

Shoppers are increasingly multi-channel – there will be no pure offlineor pure online shoppers in the future

• Manufacturers need to ensure brand consistency acrosschannels (e.g. same, high-quality images used)

• Retailers need to offer a consistent multi-channelshopping experience

As the dominant online retailer,Amazon will increase its impact onBeauty & Personal Care market

• Manufacturers should improve international commercialmanagement since Amazon already operates Pan-European

• Retailers need to develop strategies to differentiate theironline sites from Amazon


… more implications in the long version of our e-commerce study


A summary: long time agopeople danced at concerts, …

Source: KBPC May 2013, 123RF.com (left), amadarose.co.uk (right)

1990’s 2010’s

… now they video, click, share,tweet, …

... and the journey has just started


Vielen Dank für Ihre Aufmerksamkeit

[email protected]

+49 175 2659 580 (mobil)

Documents

Beauty and the Beast – Eine Studie zum Online- Kauf von ...€¦ · security Best price 64% 63% 55% 54% 48% Site security Free shipping Finding specific products Finding my favourite