Answering Retailers’ Critical Category Management Questions: The View From NPD Beauty Europe

By Muriel Danigo, NPD Beauty Europe account manager, France

Retailers of beauty products in Europe’s Selective market – the European equivalent of the prestige beauty market in the U.S. – rely on NPD’s point-of-sale information to answer critical category management questions. This installment of International Corner highlights two questions recently addressed by NPD Beauty Europe weekly data.

Pricing policy or qualitative marketing at the point of sale – which is more likely to increase sales?

The Selective market in France has struggled for the past two years; subsequently, retailers have increased promotional activity to boost sales. But to do this most effectively, retailers have to understand the different effects on sales and market share caused by “price off” discounts and qualitative marketing.

An NPD Beauty Europe weekly analysis conducted for a retailer concluded that apart from any margin consideration, qualitative market activities (i.e., displays, features and gifts for several leading brands) have been able to increase value sales and value share with effects equal to “price off” discounting activities. That means retailers can confidently focus more energy and resources on marketing at the point of sale, without having to adjust their pricing policies.

Why did my stores underperform during the key Mother’s Day season?

One retailer (“Retailer A”) asked NPD to investigate why its market share declined sharply during the Mother’s Day period – usually a strong sales season for beauty products. NPD analyzed its data at the monthly and weekly levels by using an index to compare Retailer A’s and competitors’ seasonality of gift set sales in euros. This analysis determined Retailer A had begun offering gift sets in stores later than its competitors.

Four weeks prior to Mother’s Day, Retailer A’s competitors had doubled the number of gift sets they offered; Retailer A waited two weeks longer to push gift sets and was unable to catch up to the competition. One week before Mother’s Day, Retailer A multiplied euro sales by 2.9, when its competitors multiplied euro sales by 3.7 in the same week. And during Mother’s Day week, which represents 40% of sales for the period, Retailer A saw much lower sales than its competitors (6.9 versus 9.3). This diagnostic exercise helped Retailer A prepare for future seasonal events – in the next holiday period, it’s likely the retailer won’t let competitors get ahead so early in the race!

For more information about how NPD Beauty Europe can help your company address category management and other business challenges, contact martine_ringwald@npd.com.