The Hut Group needs own-brand and premium beauty edge to stay ‘ahead of rivals’: GlobalData
This week, The Hut Group (THG) reported a year-on-year uptick of 51% for fourth quarter (Q4) revenues – higher than the company’s previous guidance of 40-45% increases – pulling in €628.2m (£559.7m). Full-year 2020 revenues tallied up at €1.8bn (£1.61bn), with its beauty division representing €843.6m (£751.3m) of that total.
A ‘prime benefactor’ of online beauty shift
“THG has been a prime benefactor of the shift to online retailing, exacerbated by the closure of stores and changes in consumer interaction throughout the COVID-19 pandemic,” said Mahya Agorlou, retail analyst at data and analytics specialist GlobalData.
The e-commerce firm’s focus on technology had “stood it in good stead to react to the sudden change in shopping habits”, Agorlou said.
Last year, the global online health and beauty market grew 40.4% to reach an annual market size of €124.4bn ($151.4bn), she said, highlighting the category as a clear area of high growth.
“THG, however, has not been alone in identifying this area of high growth – competitors such as Beauty Bay, Cult Beauty and Feelunique all stock a similar portfolio of brands,” Agorlou said.
But because THG had been heavily invested in expanding its reach, such efforts had placed it “ahead of rivals”, she said.
The Hut Group’s ‘aggressive expansion strategy’ in beauty
At the beginning of this year, The Hut Group acquired US online retailer Dermstore, a subsidiary of mass retail major Target, and in October last year it acquired premium anti-ageing US skin care brand Perricone MD. In June 2020, a flurry of beauty brands also partnered with the e-commerce major to expand online, including Elemis, PZ Cussons Beauty and Burt’s Bees.
“The Hut Group has employed an aggressive expansion strategy – including high-end US skin care retailer Dermstore from Target – to get ahead in this fragmented market,” Agorlou said.
“However, to protect itself and meet its lifted sales expectations, it is pivotal for The Hut Group to further expand on its offering on own-brand and premium-end beauty products to deepen its customer base and cultivate loyalty as more players enter the crowded market,” she said.
The Hut Group executive chairman and CEO Matthew Moulding said 2020 had certainly been a “transformational year” for the company and that it would remain focused on rapidly growing its workforce and continue to build business and growth strategies in 2021 and beyond.