Pharmacies lure consumers from beauty retailer Sephora

Pharmacies lure consumers from beauty retailer Sephora

PARIS - Sephora, the top seller of Dior lip gloss and Lancome face creams, is under attack in continental Europe from far less glamorous competitors: pharmacies.

New data shows specialist beauty retailers such as Sephora, one of the fastest growing companies at world No. 1 luxury group LVMH, are losing market share to pharmacies offering cheaper products.

Ubiquitous in big European cities, they have been elbowing their way into what used to be the preserve of big beauty retail chains such as Sephora in France and Germany's Douglas, controlled by US private equity group Advent.

More and more pharmacy shelf space is dedicated to organic, natural cosmetics brands such as Weleda, Caudalie and Garancia in France, Dr. Hauschka in Germany and Louis Widmer in Switzerland, which cost 30-50 per cent less than brands such as Clarins or Lancome sold at the specialist beauty retailers.

Pharmacies' buoyant beauty business appears to be both the result of their efforts at energetically promoting these cosmetics products as well as consumers'cautious spending against the backdrop of a still very fragile and uncertain economic recovery in the euro zone.

"Pharmacies are a place where people go regularly, where the pharmacist's advice is well regarded and the value for money proposition of the brands they sell is appreciated by consumers," Jean-Paul Agon, head of L'Oreal, the world's biggest cosmetics group, told Reuters last month.

"The pharmacy, when it comes to skin care, is the most dynamic retail network in Europe."

L'Oreal's Vichy and La Roche Posay skin care products, and Roger & Gallet perfumes, which are mainly sold in pharmacies, generate the fastest growing sales, Agon said, and they are likely to remain the main growth engine in the years ahead.

The price difference is clear. A day cream from Vichy costs 15-17 euros, one from Caudalie or Garancia costs 20 to 30 euros, while Clarins and L'Oreal's Lancome are priced at 55 euros.

Specialist beauty retailers such as Sephora and Marionnaud in France have seen their share of the cosmetics retail market drop to 35 per cent from 40 per cent over the past three years, according to consumer research company Kantar Worldpanel.

In contrast, pharmacies' market share has gained 3 percentage points to 18 per cent.

"Pharmacies are the number-one retail network attacking specialist beauty retailers and taking revenue away from them, particularly in skin care," said Stephanie Poupineau, account manager at Kantar Worldpanel.

Pharmacies have been pushing beauty products in recent years attracted by higher margins: 30-32 per cent against 21 per cent in their core prescription drug business, which has been hit by cash-strapped governments pruning the number of treatments covered by national insurance and the rise of cheaper generics.

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