Superdrug strong Christmas confirms ‘lipstick effect’ and own-brand appeal

Health and beauty chain Superdrug had a very merry Christmas with the retailer on Tuesday saying its total sales rose 9.2% during December, while like-for-like sales rose 7.1%.

The company also saw double-digit sales growth (10%) in its own-brand driven by gifting and loyalty club deals. Category standouts included cosmetics, fragrance and oralcare. The latter’s strength was all about consumers buying electricals to look after their teeth.

The “category hero” was the Superdrug ProCare Water Flosser, which landed on shelves in Q3 and went on to sell more than three times the number of units than its branded counterpart had sold all year. The flosser also sold out online and in-store numerous times during the Black Friday period.

Meanwhile Beauty Studio sales rose 20% on the back of a very active Christmas party season. Superdrug has invested heavily in the expansion of Beauty Studio services, with December seeing the launch of the latest studio in Jersey. December also marked the milestone of the 500th piercing store, with piercing continuing to prove the most popular service, up 54% in December vs 2022.

Own-brand is key

Own-brand was crucial too. The retailer said Studio London, “is the fastest growing and biggest own-brand range and has contributed to Superdrug achieving 20% year-on-year category growth in Cosmetics and 9.1% volume growth in December, as customers prepared for the party season”.

The Studio London 8-piece brush set was the top-selling product across own-brand sales, with sales of the eyeshadow palettes also peaking over Christmas after the palette range was recently expanded through a partnership with beauty broadcaster Ateh Jewel.

Superdrug now holds a 40% market share of mass-market cosmetics, its highest share in 10 years.

Sales through the retailer’s app also rose 74% thanks to the launch of VIP rewards.

It all meant the company had a good month both online and offline and it said that its investment providing “high-performance products at an affordable price was a significant driver of growth, alongside an uptake of members-only deals amongst loyal Health & Beautycard customers, as they continued to battle the cost-of-living and inflation in the run up to Christmas”.

It added that in the peak trading weeks leading up to Christmas, three own-brand gift sets were sold every second and three fragrance sets were sold every minute, with customers snapping up scents Ariana Grande, Versace Eros Flame and CK Euphoria.

Analyst vote of confidence

Analysts were impressed. Jacqui Baker, head of retail at RSM UK, said: “The lipstick effect is still driving growth in health and beauty, as consumers look to treat themselves to little luxuries despite a squeeze on household budgets”.

Citing a survey of 1,000 consumers that RSM conducted, she added: “Despite the cost of living, the majority of consumers don’t plan to cut back on health and beauty, they are instead opting for cheaper own-brand products to get their beauty fix.

“Interestingly, women are more likely to trade down to an own-brand product as men opt for the premium end of the health and beauty market.”

Meanwhile, Sofie Willmott, Associate Retail Director at GlobalData, said: “Superdrug’s wide range of prices across gifts and beauty attracted Christmas shoppers and festive party goers. The retailer has successfully captured consumers that adjusted their shopping habits with almost 45% of UK health & beauty shoppers trading down to cheaper toiletries within their usual retailer or switching to a cheaper retailer (according to GlobalData’s UK survey conducted in November 2023). Its own-brand ranges resonated with thrifty shoppers with sales up against a strong comparative and sales of its own make-up range, Studio London rising on last year, which will drive higher profit margins for Superdrug.

“GlobalData predicted health & beauty would be the best performing non-food sector in the golden quarter and Superdrug’s strong results, alongside Boots’ performance for its quarter to the end of November, demonstrate the resilience of the sector. As well as beauty items being accessible gifts and affordable treats, making the sector attractive in times of restricted spend, both retailers have invested in their store estate and have benefitted from the accessibly of their locations as shoppers have favoured physical stores. Additionally, their loyalty schemes have been at the forefront with member pricing being clearly communicated, appealing to shoppers seeking value for money and discounts.”