Health and beauty retail merchandising: specifics and recommendations

Health and beauty retail merchandising: specifics and recommendations

12 min read
Andrew Max
Andrew MaxEnd-to-end merchandising process expert
Health&Beauty Retail Merchandising: Specifics & Advices

Health & Beauty is currently the fastest-growing sector in retail. According to the research company GlobalData, it will grow by another 16.5% in 2023.

The development of the industry has caused changes in the field of professional merchandising, which can be a powerful sales tool for store chains. But seeing significant results from innovations is only possible if they are implemented correctly.

Updating the assortment, organizing the store space and displaying goods should be based on proper analytics and consistency. An incorrectly chosen strategy inevitably leads to losses. This is especially true for health & beauty, where there is a certain specificity.

That is why we will consider merchandising from the point of view of niche features, as well as provide essential recommendations and tools to improve the efficiency of product display, sales and customer loyalty.

Pay attention to the aesthetics of equipment and product display

Most customers of health and beauty stores are women. This requires special aesthetics and display methods for the sales area. Shelves should be well-organized and sufficiently diverse, attractive and well-stocked. This also explains the relatively high cost of layout in such stores.

“With LEAFIO Shelf Efficiency, you can control the layout’s aesthetics. In the mobile application, store employees will receive tasks to change the layout and send you realograms (a photo of the layout created based on the provided planograms). The planogram will determine the final location of goods on the shelf, taking into account the aesthetic appeal."
–Lana Panasenko, Product Director of LEAFIO AI Retail Solutions

To present goods in a health and beauty store in the most profitable way, pay attention to the following rules:

In branded stores, it is worth choosing equipment that emphasizes the status of products and justifies their value. A striking example is Sephora that also focuses on an exclusive assortment: some brands of cosmetics and perfumes can be found only in these stores.

Placement within the group can be carried out in a horizontal or vertical layout. The goods should be placed near the edge of the shelf or on hooks in a straight line. In related products, there are nuances of presentation that are practically not used for products – for example, a layout using perforated racks.

Consider the target audience when creating the display

The main target audience of health & beauty is women from 25 to 45 years old. However, there are separate niches: teenage cosmetics, age creams 40+/50+/60+, etc. In addition to age and gender, cosmetic products have many additional parameters that are closely related. For example, the skin and hair type of your audience depends on geography and ethnicity. Ethnicity is becoming a critical factor for large brands that supply their products to different countries worldwide.

Understanding the actual needs of the target audience dictates the rules of the layout, the choice of equipment, the organization of space in the store, and improves the work with cross-merchandising. The store’s location determines the category of customers with specific needs and the reasons for their visits and behavior..

Analyze competitors and follow global trends

Competitor analysis is an integral part of professional merchandising. It partly determines pricing, assortment, special offers and your marketing strategy.

A complete analysis of competitors is based on a matrix of estimates of comparison parameters: categories of goods in the sales area, cross-merchandising techniques, pricing policy, type of equipment, layout features, consumer behavior, etc.

It is important to analyze competitors geographically located nearby: in this case, the probability of finding a point of differentiation is much higher. However, building a strategy should not be based solely on "spying" on competitors. The basis of merchandising programs is always an assessment of your products and the characteristics of your customers.

At the same time, the industry dictates global trends that should not be ignored. To stay competitive, cosmetic companies should focus on three short words when forming a strategy: natural, organic, and clean. The global value of natural cosmetics is expected to reach 54.5 billion dollars by 2027.

The most significant competitors for perfume and cosmetic chains are supermarkets and drogerie stores. It is difficult to compete with them in terms of prices, but supermarkets also have significant disadvantages. They can’t maintain a complete assortment and have to create identical conditions with other products in the store. Hence, the level of cosmetics sales depends entirely on the buyer’s preference.

Recently, pharmacy supermarkets have been competing with them. But customers perceive them as a place to meet their needs rather than to have a pleasurable shopping experience. 

Zone equipment for name brand and store brand products

Shops in the health & beauty sector should provide a wide range of products for their customers and arrange them so that each product is easy to find on the display shelves. Of course, well-known brands get a lot of attention because customers follow trends. When working with brands, pay attention to the following points:

When brands rent zones for their products, they have the opportunity to collect analytics: products with the most turnover, the most effective locations and other data necessary to improve sales. They can also directly control the volume of their brand's representation in the network, form its visual presentation, and optimize the assortment on the shelves and the number of goods delivered to the store.

Remember that brands should not wholly overshadow other products, such as private label products. Private labels have a high margin and a low threshold of brand dependence. This is an essential category of goods, which, unfortunately, is sometimes mixed in with the "crowd" of the general assortment. 

Selling private labels guarantees earnings, while well-known brands serve more to attract customers to the store. A striking example is Boots, an international chain of stores, which has in its portfolio many of its own cosmetic brands, including No7 and Botanics. Such goods should be considered when forming planograms and controlling the layout. Unlike well-known brands that invest a lot of money in advertising, private labels can stand out if they are favorably presented on the shelf. 

Store brands are just as critical as name brand goods. As a rule, such products are not represented on the local market and are not imported by direct competitors. Store brand goods attract customers because of their uniqueness.

According to statistics, 1 out of 3 buyers of health & beauty products will not choose an unfamiliar brand if there isn’t a familiar one in the store.

Create planograms for shelf control

Health & beauty stores usually have a high assortment density. This is due to selling more products with a low turnover compared to the grocery group. Therefore, it is not easy to control the assortment and its availability on the shelves. If the right lipstick shades do not appear in the store on time, it means losing customers and damaging the business.

To avoid this, modern stores use merchandising planograms – these are visual diagrams that show information about the placement of each product in the store. A detailed planogram also includes the number of facings of products that should be present. The planogram helps the retailer to unify the layout throughout the chain and simplifies the work of employees to implement the layout in the store. As a result, it creates conditions for increasing sales.

Thanks to LEAFIO's solution for automatic planogram creation and optimization, our customers, on average, record the following indicators: 5% - sales profitability, 35% - optimization of assortment, and 80% - faster planogram creation process.

Organize the space in the store

In the health & beauty sector, there is a strict division of product groups. Thus, some buyers react negatively when products of a completely different purpose are nearby. Therefore, it is important to monitor the placement of different categories of goods. For example, vitamins are rarely placed near cosmetics.

Also, when organizing the space, pay attention to the following points:

Store space

Take care of the safety and security of goods

Health & beauty stores have a high rate of theft. Therefore, when organizing the space, try to find a balance between the attractiveness of goods and their safety.

In the health and beauty industry, some products are statistically considered the most "attractive" for petty thieves:

When forming planograms, it is better to allocate a place for such goods near the cash register, where the security service can monitor the buyer’s behavior.

Take into account the general psychological characteristics of customers

Known methods of increasing the efficiency of product display are based on customer psychology. Analyzing sales guides and rules used by our customers, we saw patterns in the formation of the layout in health & beauty chains:

Most cosmetics brands focus on the physiological senses of customers: sight, touch or smell. Therefore, stores offer free samples to help customers choose the right product. A striking example is the attractive scents of free testers in the perfume section.


Expand merchandising opportunities in health & beauty stores

Merchandising programs will only be successful if a well-established system allows employees to do their job effectively. This applies to merchandisers and consultants, who must know precisely the availability of a particular position and navigate an extensive assortment. Convenient solutions for efficient organization of space and control of goods are implemented with the help of software.

Leafio Shelf Efficiency helps manage all sales processes and plan work based on analytics and modern technological algorithms. For health & beauty chains, the software provides significant benefits:

LEAFIO Shelf Efficiency is constantly being improved and provides solutions based on the actual practical experience of our customers, including in the field of health & beauty. These tools ensure the implementation of an efficient strategy and result in systematic profit growth. 

LEAFIO Shelf Efficiency

To summarize

The specifics of the industry dictate the rules that must be followed to increase customer loyalty and sales growth. It isn’t easy to take into account all aspects at the same time. But it is possible if you plan your work with the help of specialized software. Create effective planograms, control the layout of goods and improve business performance by analyzing and optimizing your outcome.

Andrew Max
Andrew MaxEnd-to-end merchandising process expert

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