Internet is rising retail channel but attracting consumers can be difficult: Mintel

By Katie Nichol

- Last updated on GMT

Related tags: Facial skin care, Retailing, Mintel

Although the internet is an expanding retail channel in the US it can be difficult to entice consumers into making an initial purchase, according to market research company Mintel.

Mintel’s ‘Beauty Retail US’ report revealed that mass merchandise retailers are the dominant sales channel in the country, with at least 50 percent of survey respondents using them to purchase cosmetics and facial skin care products.

In contrast, far fewer purchase these products online, with close to one in ten survey respondents opting for this particular sales channel.

“It’s important to understand that only a fraction of cosmetics are purchased online (roughly 5 percent),” ​Mintel analyst Kat Fay told CosmeticsDesign.com USA.

Attracting initial trial is difficult

According to Fay, those who purchase cosmetics online are likely to be repeat purchasers, and the challenge for online retailers lies in attracting a first-time consumer.

“Attracting initial trial is difficult because most women sample products prior to purchase,” ​she said.

“Although the internet can be great for product research (price comparison for example) it’s not likely to be the end purchase destination,” ​she added.

However, Fay noted that companies can attract consumers and increase online sales through the use of buying incentives such as loyalty programs or free shipping.

In addition, the report also highlighted that many brands are harnessing the potential of the internet through the use of new product Tweets and online-only sweepstakes in a bid to increase sales and brand awareness.

Mass merchandise retail dominates

The enduring popularity of mass merchandise retailers is undoubtedly linked to reduced consumer spend during the recession, and, as Mintel notes, mass stores depend on their low price points for much of their business.

According to Mintel, some of these stores have extended their beauty offerings to attract budget-conscious women; for example, Walmart’s ‘Project Impact’ has seen the retailer widen its beauty care aisles and unlock cases in which higher-priced brands are kept to increase their accessibility.

Drug stores are also a popular retail channel, with 42 percent of women purchasing color cosmetics through them and 36 percent purchasing facial skin care. Offering high recognition mass brands at affordable prices, some retail chains are changing the in-store experience to reflect the prestige market.

Mintel identified Walgreens as an example, as the drug store chain’s adverts feature beauty consultants to show consumers they can get expert advice in-store. Similarly, CVS Caremark’s Beauty 360 in-store format boasts makeovers, manicures and facials in order to mimic a salon experience.

Related topics: Brand Innovation, Market Trends

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