1. THINK RETAIL THINK VERDICT
UK Retail Futures 2011
Health and Beauty
Forecasting Report - Published February 2007
Health and beauty pricing pressures, 2007
• Premium & masstige • Innovation
brands • Natural, ethical,
• More affluent organic
• Advanced own brands
• Indulgence • Department stores
• Specialists
Current Prices
• Basic products
• Mass-market competition
• Value
• Own brands
expectations • Supermarkets
UK Retail Futures 2011: Health and Beauty
“Verdict expects the majority of categories to continue experiencing price
deflation over the forecast period, although the most pressure is likely to be felt
in bathroom toiletries and OTC medicines. Offsetting much, but not all, of the
downward pricing pressures is a growing interest in higher priced products. At
the more mainstream end of the spectrum, this is being further encouraged by
retailers allocating additional shelf-space to value-added products such as niche
shampoos and whitening toothbrushes....”
www.verdict.co.uk

2. About Verdict Research...
Verdict Research has been producing independent retail analysis and comment on the UK retail marketplace for
well over 20 years and is regarded as a key source by BBC, ITV and the leading broadsheets including, the FT,
Times, Independent and Daily Telegraph. Many leading trade publications also frequently refer to Verdict's opinion
and research including Retail Week, DIY Week, Cabinet Maker and The Grocer.
Products and services include:
• Consumer Research Reports - Furniture and Floorcoverings • Location and Channel Reports
- How Britain Shops - Grocery - e-Retail
- Where Britain Shops - Health and Beauty - Mail Order Retailing
- Consumer Satisfaction Index - Homewares - Neighbourhood Retailing
- Consumer Insights Profiles - Menswear - Out of Town Retailing
- Pharmacy Retailers - Town Centre Retailing
• UK Sector Reports - Value Clothing
- Accessories - Womenswear • Retail Futures
- Childrenswear - Quarterly Forecasts to 2009
- DIY and Gardening • European Retailing Reports - Annual Forecasts to 2011
- Department Stores - European Clothing Retailers
- Electricals Retailers - European Department Stores • Retail News & Comment
- Entertainment - European DIY Retailing
- Footwear - European Grocery Retailers
Verdict Retail Futures 2011
Verdict Retail Futures 2011 reports are designed to provide an accurate UK population 2006 and forecast 2011,
by age group
and detailed five year forecast for each retail sector. Each report
complements Verdict sector reports by providing a detailed market 15
14.3
outlook for the forecast period by analysing a host of economic, social 14
13.3
and political and technological factors that determine demand. In 13
13.0
million
12.4
addition they take account of factors like fashion, changing consumer
12.3
12.0
12 11.8
11.6
preferences and the influence of the media. 11 10.7
10.4
10
The Retail Futures 2011 series of reports provide a complete overview of 0-14 15-29
2006
30-44 45-59
2011
65+
UK retail. It provides 5 year forecasts for 7 retail sectors – clothing and
footwear, DIY and gardening, electricals, food & grocery, furniture & Source: UK Retail Futures 2011: Health & Beauty
floorcoverings, health & beauty, homewares.
"While already commonplace in categories such as
OTC, older consumers are increasingly looking for
As the only provider of forecasts exclusively for the UK retail more targeted products that cater for specific age-
industry, Verdict is uniquely equipped to give thorough and reliable related issues faced at their lifestage - for example in
skincare, issues ranging from lacklustre tone and
projections and analysis on its future development.
firming requirements to more crêpe-like skin as they
age. Retailers need to ensure they are stocking
products that cater for these changing expectations..."

3. www.verdict.co.uk
Companies examined by the Retail Futures 2011 series...
HEALTH AND BEAUTY • Office • Magnet
• Alliance Pharmacy • Schuh • Furniture Village
• Asda • The Shoe Studio Group • Homeform
• Avon • Shoe Zone • Carpetright
• Body Shop • Shoefayre • Allied Carpets
• Boots • Sportsworld • Floors 2 Go
• Debenhams • Stead & Simpson
• House of Fraser • Stylo DIY AND GARDENING
• Lloydspharmacy • B&Q
• Morrison ELECTRICALS • Wickes
• Sainsbury • Currys • Homebase
• Savers • Currys.digital • Home Retail Group
• Superdrug • PC World • Focus
• Tesco • Comet • Argos
• The Perfume Shop • Game • Wilkinson
• Jessops • Wyevale
CLOTHING AND FOOTWEAR • Argos • Topps Tiles
• Arcadia • John Lewis
• Bhs HOMEWARES
• Debenhams FOOD AND GROCERY • Primark
• Gap • Tesco • Matalan
• George (Asda) • Asda • B&Q
• H&M • Sainsbury • Ikea
• House of Fraser • Morrison • John Lewis
• JJB Sports • Aldi • Argos
• John Lewis • Co-operative Group • Next
• Marks & Spencer • Iceland • Debenhams
• Matalan • Lidl • Tesco
• Mosaic • Netto • Woolworths
• New Look • Somerfield Group • Wilkinson
• Next • Waitrose • Dunelm
• Peacock Group • Marks and Spencer
• Primark FURNITURE AND FLOORCOVERINGS
• River Island • Argos
• Sainsbury • Homebase
• Tesco • DFS
• TK Maxx • IKEA
• Brantano • MFI
• C&J Clark • B&Q
• Dolcis • Homestyle
• Faith • John Lewis
• JD • Land of Leather
• Kurt Geiger • ScS

4. UK Retail Futures 2011: Health and Beauty
The £14.9bn UK health and beauty market offers a large and growing
Share of turnover by location 1996, 2001,
market for retailers. The market will be worth £17.4bn by 2011, but not all 2006 & 2011
market participants will benefit from this growth. Indeed, with grocers %
expected to account for half of all health and beauty sales by 2011, 60
50.4
48.5
50
department store operators, home shopping companies, specialists and
45.7
42.0
40
general retailers all need to improve to simply keep up with market 30 25.6
28.8
31.0 31.9
growth. 20
19.4
17.2 16.5
15.0
11.1
10 5.5 6.8
4.6
UK Retail Futures 2011: Health and Beauty is the first in a series of 0
1996 2001 2006 2011
eight new forecasting reports using Verdict's retail expertise to analyze
Neighbourhood Town Centre Out-of-Town Non-store
current trends, plans and upcoming developments across seven key retail Source: UK Retail Futures 2011: Health & Beauty
sectors to provide in-depth forecasts for the next five years.
"The rise of the Internet has resulted in an
underperformance among the traditional store-based
This new annual forecast report analyses the prospects for each of sector of retail in recent years. This trend is evident
the major categories in the health and beauty market to help from sales at physical stores increasing by 15.6%,
retailers and investors make informed decisions regarding the future compared to the 17.3% increase in total retail
of the UK health and beauty market and its key participants over the expenditure over the past five years. Over the next five
years, we expect this trend to accelerate, with store-
next five years.
based retail underperforming total retail growth by 5.3
percentage points..."
Key issues examined in this report...
• Pricing pressures. The continued strength of supermarkets and
Mass market retailers will come under pressure
other value-led channels have prompted several years of price 2007-2011
deflation among basic health and beauty products. The prevalence Premium & Masstige
of strong own label products has furthered customer expectations
(Higher Margins)
of at least one very low price option in all major categories from the
major supermarkets
Value competition
Higher costs
prompting deflation
• Consumer trends. There is a growing consumer movement towards
ethical, natural and organic products. This creates opportunities for Value Market
manufacturers and retailers to justify higher price points - because
(Higher Volumes)
consumers are generally willing to pay slightly more for products Source: UK Retail Futures 2011: Health & Beauty
that provide emotional as well as physical benefits.
"For retailers, margins are coming under pressure from
higher costs - rents, rates, wages and fuel - making a
• Mass market retailers. Margins for mass market retailers are facing mass market positioning rather an unpleasant place to
pressure from higher costs including rents, rates, wages and fuel. be. Growth in the market is coming from the masstige
This is making a mass market positioning rather an unpleasant place and premium sections of the market, which department
stores and upmarket specialists are well positioned to
to be. Growth is coming from the masstige and premium sections of
benefit from..."
the market, which department stores and upmarket specialists are
well positioned to benefit from.

5. www.verdict.co.uk
Sample information from ‘UK Retail Futures 2011: Health and Beauty’
Chapter 3: Key Market Issues
Figure 3: Key issues impacting the
health & beauty market 2006-2011
Consumer Marketing &
Trends Innovation
Key Issues
Mass Market
Pricing
To Struggle
Pressures
Demographic
Changes
Source: UK Retail Futures 2011: Health and Beauty
Demographic changes
• The number of people in the UK aged from their mid-40s onwards will jump by 7.5% over the next
five years. The growth will be stronger towards the older age groups with a particular rise in the 65+
category, which will increase by 10.0%. The overall ageing of the population profile will have a
positive impact on a number of categories: particularly OTC healthcare, skincare, dentalcare and
vitamins & minerals (which fall under the Other category).
• While already commonplace in categories such as OTC, older consumers are increasingly looking for
more targeted products that cater for specific age-related issues faced at their lifestage - for example
in skincare, issues ranging from lacklustre tone and firming requirements to more crêpe-like skin as
they age. Retailers need to ensure they are stocking products that cater for these changing
expectations.
• Based on projections from the UK Government Actuary department, the number of infants in England
aged 0-2 has been rising, but is set to fall marginally in 2007. This decline is forecast to continue to
2010, with the number of infants falling 1.6% over this time, before picking up again in 2011. If, as
expected, this pattern is mirrored across the UK, this will limit the potential growth of babycare
market volumes. The babycare market will instead be reliant on higher value products to drive
growth.
Order this report today to find out more...

6. Table of Contents from ‘UK Retail Futures 2011: Health and Beauty’
CHAPTER 1: EXECUTIVE SUMMARY • GDP, Earnings & Disposable Income, Employment,
• Key Findings Inflation, Exchange Rates, Interest Rates, Savings Ratio,
• Main Conclusions Consumer Debt, Equities, House Price Inflation, Mortgage
Equity Withdrawal, Housing Transactions :
CHAPTER 2: FORECAST SUMMARY - How does it affect retail?
• Expenditure Summary - What’s happened?
• Specialists Summary - What will happen?
CHAPTER 3: KEY MARKET ISSUES CHAPTER 8: UK RETAILING FORECASTS 1996-2011
• Market Drivers • Key Indicators
- Demographic changes • Retail Expenditure
- Consumer Trends – More Trading Up, More Men and • Sales by Location
More Self-medication • Sources of Growth
- Pricing Pressures • Store Numbers by Location
- Mass Market to Struggle • Space by Location
- Innovation & Marketing • Sales Density by Location
• Action Points • Average Store Size
• Average Store Sales
CHAPTER 4: HEALTH & BEAUTY SPECIALISTS OUTLOOK
• Retail Sales CHAPTER 9: GLOSSARY
• Store Numbers • Terminology
• Space Growth • Sector Definition
• Sales Densities • Location Definitions
- Town Centre
CHAPTER 5: CHANNELS OF DISTRIBUTION - Out-of-town
• Sales & Spending - Neighbourhood
• Forecast Changes for Major Channels - Non-store Retail
• Health & Beauty Market Shares • Forecasting Methodology
• Abbreviations
CHAPTER 6: CATEGORY FORECASTS
• Expenditure Summary TABLES
• Expenditure Analysis • Health & beauty summary data – expenditure 2001,
• Market Growth 2006 & 2011
• Babycare Products • Health & beauty summary data – specialists sales 2001,
• Bathroom Toiletries 2006 & 2011
• Cosmetics • All sales through health & beauty specialists 1996-2011
• Dentalcare • Sources of growth for health & beauty specialists
• Haircare 1996-2011
• Men’s Toiletries • Total selling space for health & beauty specialists
• OTC Medicines 1996-2011
• Paper Products • Retailers' share of the health & beauty market 2001-2006e
• Perfumes • Health & beauty expenditure summary 2001, 2006 & 2011
• Skincare • Health & beauty category analysis 2006-2011
• Other Health & Beauty • Total health & beauty expenditure 1996-2011
• Babycare expenditure 1996-2011
CHAPTER 7: UK ECONOMIC FORECASTS • Bathroom toiletries expenditure 1996-2011
• Key Messages • Cosmetics expenditure 1996-2011

7. www.verdict.co.uk
Table of Contents (Contd.)
TABLES (Contd.) 2001-2006e
• Dentalcare expenditure 1996-2011 • Health & beauty category growth rates 2001-2006 &
• Haircare expenditure 1996-2011 2006-2011
• Men’s toiletries expenditure 1996-2011 • Health & beauty principal components of expenditure £m
• OTC medicines expenditure 1996-2011 2001, 2006 & 2011
• Paper products expenditure 1996-2011 • Health & beauty expenditure as a % of total spending
• Perfumes expenditure 1996-2011 1996-2011
• Skincare expenditure 1996-2011 • Health & beauty expenditure growth at constant (2003)
• Other health & beauty expenditure 1996-2011 prices 1996-2011
• Economic drivers for retail 2007 • Babycare expenditure as a % of health & beauty
• Measures of inflation 2007 expenditure 1996-2011
• UK retailing forecasts summary 2006-2011 • Babycare expenditure growth at constant (2003) prices
• Total consumer retail expenditure 1996-2011 1996-2011
• Forecast chronology 2006-2011 • Bathroom toiletries expenditure as a % of health & beauty
• Sales by location 1996-2011 expenditure 1996-2011
• Total UK physical store sales & selling space 1996-2011 • Bathroom toiletries expenditure growth at constant (2003)
• Sources of sales growth for physical stores 1996-2011 prices 1996-2011
• Store numbers 1996-2011 • Cosmetics expenditure as a % of health & beauty
• Space by location 1996-2011 expenditure 1996-2011
• Sales densities by location at current prices 1996-2011 • Cosmetics expenditure growth at constant (2003) prices
• Average store size by location 1996-2011 1996-2011
• Average sales per store by location at current prices 1996- • Dentalcare as a % of health & beauty expenditure
2011 1996-2011
• Health & beauty market definition 2007 • Dentalcare expenditure growth at constant (2003) prices
1996-2011
FIGURES (ABRIDGED) • Haircare expenditure as a % of health & beauty
• Health & beauty expenditure growth 1996-2006 and expenditure 1996-2011
forecast to 2011 • Haircare expenditure growth at constant (2003) prices
• Health & beauty specialists sales growth 1996-2005 and 1996-2011
forecast to 2011 • Men’s toiletries expenditure as a % of health & beauty
• Key issues impacting the health & beauty market expenditure 1996-2011
2006-2011 • Men’s toiletries expenditure growth at constant (2003)
• UK population 2006 and forecast 2011, by age group prices 1996-2011
• Health & beauty pricing pressures 2007 • OTC medicines expenditure as a % of health & beauty
• Mass market retailers will come under pressure 2007-2011 expenditure 1996-2011
• Health & beauty specialists sales as a % of total retail • OTC medicines expenditure growth at constant (2003)
spending 1996-2011 prices 1996-2011
• Health & beauty specialists store numbers 1996-2011 • Paper products expenditure as a % of health & beauty
• Space growth for health & beauty specialists 1996-2011 expenditure 1996-2011
• Health & beauty specialists sales densities at current prices • Paper products expenditure growth at constant (2003)
1996-2011 prices 1996-2011
• Health & beauty specialists sales densities at constant • Perfumes as a % of health & beauty expenditure
(2003) prices 1996-2011 1996-2011
• Health & beauty channels of distribution 2005, 2006 and • Perfumes expenditure growth at constant (2003) prices
2011 1996-2011
• Changes in shares of health & beauty market 2011 on 2006
• Health & beauty retailers' change in market share

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