Dr. Peter Pfeiffer, Partner and Managing Director
Berlin, 11 June 2013Presentation
Beauty and the Beast - Wie VerbraucherBeauty & Personal Care Produkte online kaufen
A.T. Kearney Study
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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
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• Digital will change the world
• A.T. Kearney’s e-commerce Beauty & Personal Care survey
• Consequences for Beauty & Personal Care manufacturer and retailer
Agenda
A.T. Kearney 10/05.2013/44935d/5aY4trQkkR00RllnkG 4
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
...
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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
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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%
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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
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• Digital will change the world
• A.T. Kearney’s e-commerce Beauty & Personal Care survey
• Why do they buy
• What do they buy
• Where do they buy
• Consequences for Beauty & Personal Care manufacturer and retailer
Agenda
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Beauty & Personal Care consumers in Germany that buy onlineare primarily 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
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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?
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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
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
Why do they buy Survey question: What is most important toyou when shopping for B&PC products online?
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> 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
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
< 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?
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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
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
What do they buy Survey question: What types of beauty pro-ducts do you buy online? Please tell us why
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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 & 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
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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 for B&PC(n=1,340¹)
Survey question: What is your most favorite onlinedestination for Beauty & Personal Care shopping?
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Amazon was ranked as the top online channel for Beauty andPersonal Care Products by all countries, except for France
Top online destinations for B&PC(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?
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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
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
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?
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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
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• Digital will change the world
• A.T. Kearney’s e-commerce Beauty & Personal Care survey
• Consequences for Beauty & Personal Care manufacturer and retailer
Agenda
A.T. Kearney 10/05.2013/44935d/5aY4trQkkR00RllnkG 20
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
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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
Source: A.T. Kearney
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 10/05.2013/44935d/5aY4trQkkR00RllnkG 24
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
Source: A.T. Kearney
A.T. Kearney 10/05.2013/44935d/5aY4trQkkR00RllnkG 25
Online channel sales growing 4x faster than overall market
Implications
• Define specific online channel strategyincluding e.g. defined role for online channel,specific online product assortment, onlinepromotion strategy, etc.
• Strengthen relationships with onlineplayers, e.g. through direct relationships andjoint business planning
• Set up dedicated online channelmanagement e.g. dedicated KAM for onlinepartners
• Adjust commercial management to multi-channel world, e.g. with differentiated pricing,terms & conditions for offline vs. online
• Consider own branded online store to createdirect relationships with consumers andshoppers
Manufacturers need specific onlinechannel strategies to take advantage ofgrowth
• Complement offline store with online storeto meet 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 storesmust become a “destination”, where thefocus will be on experience and value-addedservices
• 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
Source: A.T. Kearney
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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
Source: A.T. Kearney
… more implications in the long version of our e-commerce study
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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
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