Lily Twelve Tree (0:26)

Back to the Bareface Podcast, a beauty business podcast hosted by me. My name is Lily twelve Tree. I'm a beauty analyst and data science student. And this is barefaced. Happy 2025. I hope we all had a really restful holiday season and excited by the new year. I think it can be kind of intimidating. Like, the fresh slate is refreshing, but can feel like a lot. So I hope that we're all excited by 2025. I know I am. And I think there's going to be a lot of changes which at the end of this episode. So this episode is going to be a deep dive into the British beauty market. But at the end of the episode, I kind of just want to have a bit of a chat about Bareface in general, the year to come and what I want the future of this space to look like. Enough about that. That'll be at the end. But today, like I said, it's going to be about British market. But I didn't realize how complex this landscape is, particularly the retail. I wanted to do a piece on British beauty for quite some time now, and I didn't realize until I got stuck into this why I kept kind of putting it on the back burner. And it's because there's not many narratives around who does what, who sits where, who's competing with who, and there are just so many retailers. Like, another thing that I'm trying out today is that I really want these episodes to be not only entertaining, but true business resource and for it to be a point of reference. And it's hard to have a point of reference in an audio format. So I'm building out these episodes into more substantial substack pieces as well, with a lot of, like, accompanying visuals and graphs. So to that point, I made this mind map of sort of various different big beauty brands and all the different places that they're stocked to kind of just visualize how strange this market is. Like, for example, Dior Beauty, it's stocked at Harrods and Selfridges luxury department stores. It's also stocked at Sephora, the iconic prestige retailer. But then it's also stocked at Boots, which is a pharmacy. And it's sitting alongside Nyx. And then Nyx is stocked at Boots. And then it's also on Look Fantastic Beauty Bay and Cult Beauty, which are online retail sites. And anyway, then you've also got Estee Lauder in the mix of that, who are on Look Fantastic alongside Nyx, but then they're also alongside Fenty Beauty and Boots. And anyway, the Whole point is, is that it's so complicated that this episode is going to be broken down into two episodes, because I think there's a lot to be taken away from understanding why the retail landscape looks like this and why every other year it seems some come, some leave. There are mergers, there are acquisitions. And I think any beauty professional would gain a lot from understanding the uniqueness of this market because British girls love their beauty. Which will be the core of the topic of the second episode, which will be more about British beauty trends, like why is it so stylistically to other Western markets with a preference of bolder colors, heavier foundation and a stronger interest in artistry compared to the likes of America or Australia? This will flow on to look at brands that are booming in the market, like P, Louise and Makeup by Mitchell, before closing out by understanding why those brands, and British beauty brands specifically, are so dominant on TikTok shop. But anyway, that's next week instead. Today, like I said, we're going to focus on the beauty retail landscape. And there are so many beauty players in the uk. If unfamiliar, there are at least nine. Well, there are nine that I want to look at today. So there's specialty retailers like Space, nk, Cult, Beauty Look Fantastic and Beauty Bay, and then there's the newly launched Sephora, which is a story on its own. And then there's also the luxury department stores that are betting big on beauty. Selfridges, Liberty, London, Harrods, and of course, then the huge mass players like Boots and Superdrug, which have a unique set of challenges on their own, despite huge store numbers and huge web traffic. To kind of understand where each of these retailers fit, I've also built out this pyramid in attempts to both articulate and visualize how all of these players make up the British market. Where do they sit in terms of each beauty segment? Because it's not actually that obvious. So we'll look at what each do well, what each do poorly, and then try and gain a picture of why a brand would select one retailer over another and then why they would be insane several at the same time. Something else I wanted to look at was like, the customer profile of each of these retailers and what that means for the landscape, because there's a lot of slicing and dicing of customer segments. And that is the plan for today's episode. So let's get stuck in. I thought we could start by looking at online beauty retail, because the UK is quite unique in the fact that there are a lot of big retailers that are competing in E commerce alone, like they do not operate any stores. The first big one is Look Fantastic. They have 8.7 million monthly web users and they're the UK's number one online beauty retailer, at least by that web visit metric. And I'd actually only heard about this retailer through their partnership with Molly Mae, because, just like everyone else, I love her. This retailer has been around since 1996, but was taken over and bought by THG, the Hut Group, back in 2010 for £19.4 million. It was said to be the leading online beauty retailer in the UK, but that wasn't much of a statement in 2010 rather than it is now in 2024. And they've kind of held that title, having the most monthly web visits of any specialty beauty store in the uk. The only ones that beat them out are Super Drug and Boots. But they're kind of in a league of their own, which we can talk about later. What's really interesting about Look Fantastics, though, is that another online beauty only retailer is Cult Beauty and they too are owned by thg. So clearly THG has had its heart set on the British online beauty market because in 2021 they bought Cult be £275 million over 14 times what they paid for look fantastic 11 years earlier. And the difference between these two retailers, to an untrained eye, aka me, is quite minimal. Like their online stores and the brands, they feel really quite similar. Supposedly, Look Fantastic is considered slightly more premium than the Cult Beauty, but Cult Beauty is slightly less ugly of a website to me. But the key difference and the supposed idea behind acquiring Cult Beauty is that they're a younger retailer with a stronger grasp on that Gen Z consumer that every brand and their dog is obsessed with. And so Look Fantastic was struggling. So they went and bought Cult Beauty. But then Cult Beauty, pretty much right after they purchased it in 2021, started to have a bit of an identity crisis and that was really showing in their sales numbers. So earlier this year they hired a new creative director who in just four months has rolled full rebrand, a new logo, palette, mission and vision. Her name is Indigo Clark and in her own words, for a blog post on THG Careers Hub, she said that originally launched by a passionate founder, Cult Beauty was acquired by THG two years ago. Without the founder at the helm, the brand became more focused on last click and growth marketing, leading to a disconnect with the customer and their needs. While revenue has remained strong, we saw significant churn and a loss of returning customers, which is more or less exactly what's happened with Look Fantastic because in theory, running an online only retailer should be cheaper, right? Like you don't have the overheads running a store, you're not paying for rent, you're not paying for in store staffing. But what's actually happened is this space has gotten more and more crowded and there are more and more online players. You've now got less of a reason to shop with them because what becomes apparent is that like the brands that are on Look Fantastic or Cult Beauty, there is no exclusivity there because why would that be? They're only online. So you might go and buy the brand that you would buy from Look Fantastic at Selfridges or Sephora or Space nk. So for Look Fantastic or Cult Beauty to compete, like the new creative director has just said, it's become more of a focus on last click and growth marketing. So the cost of ads and the cost of acquiring a customer has gone through the roof, which has made these online businesses really unprofitable, which feels quite counterintuitive. THG or the Hut Group that owns these two retailers, is focused entirely on online businesses, so much so that a huge portion of their business is what they call ingenuity services, where they sell a service to consumer brands. To transition their physical retail stores into online ones. They have rolled this out across brands like Coke, Nestle, Kraft, Heinz and more. And while online is their bread and butter, and they seem to be the people that know the area but better than anyone, THG as a whole is struggling. So Look Fantastic is the clear frontrunner for UK luxury online retail and Cult Beauty was seen as a refreshed and more exciting younger sister. But THG reported pre tax losses of 252 million pounds for 2023, a reduction from the loss of 549 million pounds in 2022. This really aligns with kind of a lot of the conversations that we've been seeing in the press around beauty moving offline. In the last episode of this podcast where we looked into Glossier and how they explored Moving away from D2C, their new CEO, Carl Leahy has been really vocal about D2C not actually being a customer value proposition and a huge shift away from this 2010s hyped up narrative. Of course this isn't directly relevant here because we're discussing retailers, but that buying from one retailer, that online experience, that direct communications channel, changed how we approached buying beauty. That's the way that for the first time you didn't have to try something on in store, you didn't have to swatch it. You would buy fragrances without even having smelt them. And in a pre Covid world, that would have felt bizarre. But because cult beauty and Look Fantastic had been around for a second when this new way of shopping emerged, they were really quick to capitalize on that and that's what THG were betting on. But it didn't quite work. And then the last online beauty retailer that I want to talk to is Beauty Bay. Beauty Bay is less prestige slash luxury leaning, which is kind of their superpower. But they too have been experiencing slow growth. They champion brands like Makeup by Mitchell and they have a strong focus on K Beauty, so they lean more into the trend elements of beauty than these other two online retailers. But it's the same problem of being an online retailer. Beauty Bay doesn't stock nearly any brands that you can't buy elsewhere, so they can't compete with the likes of Amazon, which is really championing these K beauty brands. In January 2024, it was reported by Fashion Network that Beauty Bay has filed their annual accounts and it showed that they had a drop in turnover. It dropped from 93.1 million in 2022 to just 75.5 million closing out 2023. The company did speak on this and they said that their latest drop in revenue, which was 19% on the prior year, they weren't mad about it because it was actually their group strategy because in order to drive unit economics and profitability at an order level as opposed to chasing top line turnover, they wanted to reduce the associated high costs. In the 2023, the year that they had this drop, they said that it was their continued focus to drive their private label called Buy Beauty Bay. With the development and launch of continued new product offerings, it meant that despite the lower sales, the company delivered improved product margins with overall gross margins increasing 3 percentage points to 17%. In the year, it delivered a similar level of gross profit as it had in 2022, even though it had dropped in turnover. And I this is just a really interesting call out of what online beauty retail looks like in the uk, because you've got these other players that we'll chat about in a second. The way that you're driving someone to your website, it has to be on your unique offering and if you're an online retailer, you've got no exclusive products. So by doubling down on Buy Beauty Bay and giving the customer something that they want that they can't get anywhere else is the only way that they can combat that. So by reducing in size and Reducing as a retailer, Beauty Bay is actually better position than the likes of Cult Beauty and look fantastic although they've got a smaller customer base. It's one of the many shifts that's happening in this market at the moment. Understanding what that looks like moving away and how the pressures of Sephora opening and Space NK growing that I'll talk to in just a second. Shrinking to grow seems to be the strategy that is working for these retailers, which I just think is so interesting and it says so much about where the customer is at and how they're willing to shop. What is so crazy about the British beauty retail landscape is the is the level of competition. So for e comm focused luxury retailers in terms of web traffic, look fantastic as the clear front runner. But the third spot is fought between Space NK Sephora, Cult Beauty and Beauty Bay in terms of monthly web visits. I've built all of this out into a bar graph by the way, to try and visualize how these different retailers compete. And the graph brings a lot of color to the market. But one thing it can't point out and isn't timelined is the amount of retailers that join the market and then leave the market. Most significantly is Sephora. This graph shows you the climate that Sephora, when they reopened in 2023 was walking into and the level of competition across online and in store and how rocking up and having a strong store and website offering was so vital to the success of reentering the UK. Sephora had been operating in the UK for 17 years before they in 2005 and I quote, due to market challenges and competition from local retailers, which is exactly what we're looking at in this episode and also in this graph. And something that Sephora did that was really unique when they came back in because you had the likes of Beauty Bay, Cold beauty and look fantastic that was so dominant online is Sephora actually bought beauty e commerce site feel unique in 2021, two years before they launched in the UK they bought it for 332 million pounds. And the fact that Sephora, the biggest beauty retailer in the world, couldn't even crack it in the 90s, but then also couldn't launch again in 2023 just with their brand name alone. They needed to absorb another retailer to actually compete says so much with the way that at the time, particularly in the 2020s, the way that the British beauty consumer was buying products from these online retailers like Sephora had to come in with a bang if they even wanted a slice of that pie. And the Other obvious complexity of Sephora rocking up in 2023 after their disappearing act is many of Sephora's brands, like if you look at the US or Australia, are built off exclusivity deals. And so what this means in other countries is that like, oh, I'm in Ulta, but I want to buy Rare Beauty or Fenty Beauty. Damn, I have to leave Ulta to go to Sephora. That doesn't happen in the UK because those exclusivity deals couldn't hold up in the UK because Sephora wasn't operating there. So if you compare Sephora launching in the UK to Sephora launching in Australia, which I made an entire podcast episode about, but Sephora rocked up in 2010 in Australia, which is considered way too late because Mecca had already pinched from memory. I think it was 45% of their exclusivity contracts. But now imagine Sephora rocking up in a market three to four times the size 13 years later than they did in Australia. Sephora has nothing to draw people in, so they had to absorb that other retailer. And what they also had to focus on was opening stores right out of the gate. So Sephora UK use the Feel Unique site as a starting point and then focused all their time and energy on store expenses. Expansion. When they launched in 2023 with two stores, they started expanding fast. Currently at the end of 2024, start of 2025, they're now operating seven stores. And according to Sephora's global president and CEO, they have a goal of hitting 20 stores by 2027, which makes a lot of sense when we start to look at the retail landscape. But what is still confusing about this is that like even Sephora incubated brands like Fenty Beauty is also stocked at Selfridges and Boots. So understanding how se to position itself in this market to capture that customer is quite confusing. In any other market this just feels unfathomable, like it doesn't make sense. But that was exactly why Sephora bought Feel Unique to begin with. Because they wanted to expand into the UK, taking on 35,000 cosmetic and fragrance portfolio. They also had a 1.3 million active customers to use as a starting point. But what's super interesting is that the Sephora global president CEO said that Sephora would never be the number one beauty retailer in the UK in terms of size. Instead they hope to be the most loved beauty brand. Which is so interesting when you think it's lvmh, it's Bernard Arnault, it is Sephora. Like they are the Big dog. And they don't even think that they can crack this. And of course they can't. Like no one can. It's too crowded at this point. But that coming out of the mouth of the president and CEO of Sephora says so much about how crowded and complicated this market is and how it's been so sliced and diced in terms of customer profiling. Because you think of even at Australia where Sephora doesn't have a grip on the market, you know what a Sephora girl is. You know, Sephora brands are even in Europe where their product and brand offering is sliced and diced so many times by different countries and markets, Sephora was able to cement itself, but in the uk, they don't even plan to. But one retailer that is a favorable pick amongst lots of prestige and luxury brands when expanding into the UK is Space nk. Space NK is the first retailer that we've spoken about this far that has a really, really strong retail footprint. They have 76 stores across the UK and Ireland and on average it's open four to five stores every year for the past two years. But they also compete with the players that we've just spoken about, like Cult Beauty and Sephora in terms of web traffic, making them a really strong player because they can offer brands that omnichannel experience. They can offer a position in 76 stores, but they can also offer web users. It's this point in the story of the UK retail market that it's kind of interesting to understand. Not only the difference between like beauty segment targeting, like those that are more mass versus those that are more luxury, but those that are more focused on econ versus retail. So I have built this out into a third graph that is like a business matrix. So you can see again, not only how luxury leaning they are, but how store leaning they are moving into the second half of the century, which is crazy to think about and say, but how these different companies are positioning themselves. So founded in 1991, Space NK opened its doors in Covent Garden in 93. They were selling fresh smoothies and independent fashion labels and hard to find beauty treasures with emerging international brands such as Diptyque by Terry and Nars. Clearly it was beauty that was most profitable for them because they soon became a beauty specialized retailer. And Space NK is growing fast. Cosmetic business reported in March of 2024 that their turnover in the previous year had risen from by 34% up to 197 million pounds, while pre tax profit increased from 1.5 million to 7.5 million pounds. In the same period, the performance has been fueled by Space NK's younger shoppers. With under 25s being credited as the fastest growing segment at 167% growth. Space NK has claimed that this sales growth has continued into the 2025 financial year with with Q1 figures up 38%. So clearly what this says to me is that the need for a retail footprint is pretty major in the UK. But what's really interesting about the space NK's growth is that their online business is actually growing faster in store Sales meanwhile have increased by 24% but online sales jumped by 35% during the first six months of this financial year. So while you've got Beauty Bay and Cult Beauty and Look Fantastic that are struggling, Space NK hasn't reported to be experiencing the same struggles with their online business. All of this said, it hasn't always been smooth sailing for Space nk. It's owned by Manzanita Capital, which is a London based VC firm that owns well is majority stakeholder in Diptyque, DS and Durga, Eve Lom, Kevin Aucoin, Marlon and Gotez and Susan Kaufman. Interestingly, they also used to own Cult Beauty. They were the ones that sold it to THG in August of 2021, which is kind of crazy. They're selling it in like it's so this to me, this whole episode, researching all of this, it feels like reality TV to me or like Formula one or something because it's so, it's so insular. Like there's so many people playing. Take all of this with a grain of salt as well because these retailers stuff moves fast. This level of competition, no one is safe. There is nothing that is stable. Even these figures that I'm referencing of like, you know, Space NK is having a moment now. But this was. They weren't doing as well as they are now when the likes of Beauty Bay, Cult Beauty and Look fantastic were. It is a tennis match which makes it so hard for brands that are trying to expand in the market to understand the space. So hopefully this can bring some color. I think all of this is to add to the fact that like I really feel like there are so many particularly US based brands that launch into the UK and the experience of the brand, even from an online kind of my viewing point, it never feels as rich in the UK as it does in the us. It always feels just a little bit lost. And this is clearly why, like I never truly understood why until anyway. So with these high growth numbers that Space NK has been having, they have had conversations about whether it would be a good time to sell. They want to get out at the top of the curve the same way they did with Cult Beauty. It started Cult Beauty started struggling literally right after they bought it, supposedly from what I read. So in May 2024, Space NK hired bankers to explore the sale. And according to British news outlet Sky News, Manzanita Capital aims to fetch between 300 to 4 million pounds for Space NK. Which is interesting when we think about the fact that Cult Beauty was sold for 270 million pounds back in 2021. So in four years that's only a 25 million dollar pound jump between cult Beauty that seems to be struggling and Space NK that seems to be soaring. But maybe there's some really ugly rental contracts that we aren't privy to. Like this. 300 to 4 million dollar pounds just feels so conservative. Given again, cult beauty 275 and when you look to this business matrix that I've built out, the way that Cult Beauty and Space NK are somewhat. Space NK is probably a little bit more luxury leaning. But the way that it's so much further up in terms of retail focus and all of the signals that we're seeing about that being a real driver for the British beauty consumer moving forwards, I just feel like Space NK has to be worth more than that. And now moving across this matrix, moving further right, so further luxury leaning. We can start to now look at the luxury department stores that are very intentionally growing in beauty. An NPD study found that 80% of 2018's prestige beauty sales were from British high street shoppers. So it makes a lot of sense that these high street hubs are investing big in beauty. And what's more significant is that department stores are forecast to be experiencing big declines. Bain & Co. Forecasted in a 2020 report that from 2019 to 2025 department stores will nearly half their share of global luxury goods sales by 2025, while online retail will almost triple. Which is really interesting when you consider everything we've spoken about about how big digital beauty retailers are really struggling. But those that have that omnichannel offering, those that are doing both and feeding in to this whole experience, you can go into, but you can shop online. The way that you're doing both things seems to be supporting them. Which is very much the theme of when we start to break down these three major luxury department stores that are investing in beauty. Firstly, Harrods, there is only one, very famously only one Harrod store. But they have now also got five H Beauty stores which they started rolling out in 2020 at a time where it was well understood that department stores in the UK were on the decline and needed a free refresh. The idea was that because beauty was so established through those other online retailers that we spoke about, Harrods, Selfridges and Liberty London, could kind of swoop in and offer that luxury in store experience while really dragging off the popularity of the digital players. You can buy prestige beauty anywhere in the uk. So they had to find a way to make it difference and Harrods really wanted to be the people that did that. So they started by investing in what they call their beauty Beauty Hall. The Beauty hall is a 9, 000 square foot hall. It's this art deco style and design and it's all gold and marble, which is very obviously Harrods. And that opened in 2019. It was part of their 200 million dollar pound renovation plans. Less than a year later they started rolling out this H beauty store. So you might have thought that their beauty haul was kind of a way of testing how strong the Harrods beauty customer was, but nah, they were all ready to double down, down and they're still growing. They launched two new stores just this year, so judging by the way that they're expanding, we can assume that they're doing well. But another high street department store that is betting big on beauty is Selfridges. Selfridges is known for their in person retail, but they compete with web traffic themselves. So to paint a picture again, it's all up on substack. Harrods has 3.2 million monthly web visits, which is a little bit less than Beauty Bay. And they have their 1 Beauty hall and then 5H Beauty Stores. Selfridges has 6 million monthly web visits, which is nearly double Harrods and they match Harrods with Selfridges now operating six stores across the uk. That web traffic is pretty crazy though. That makes them outside the mass players superdruggan boots that makes them in second position under look fantastic. So while everyone else is competing each month it bounces space. Nk, Sephora, Cop Beauty, Beauty Bay. Selfridges is pretty comfy at number two. Selfridges took a page out of Harrod's book. In May of 2024, they unveiled their newly refurbished beauty haul. I have never heard of a beauty haul before. Harrods and Selfridges, I don't know if there's just. This is a sub genre I'm not across, but it's essentially a huge beauty store. What makes Selfridges so unique is that they have some brands that are operating entirely by themselves and then they have others that are more in a traditional retailer distribution partnership. And the point is that you shouldn't be able to tell the difference. They have this reven when you're sharing model with luxury brands. So they host brand operated shops in a shop like Chanel, Hermes, Louis Vuitton and it's meant to be reduced inventory risks and increased profitability while maintaining that exclusivity element. And also what this does is it really leans into experiential retail which like the pop up phenomenon which we've seen so so many times and again we've spoken about in terms of glossier in the last episode. But Selfridges bring that in house and they're really trying to push experiences and moments from brands that you can't get anywhere else but you want experience experiential retail. So for example, it might have just finished, but Refy did a four month residency there and they've done other activations and pop ups and Summer Fridays just had a pop up in London Road just had a pop up in London. But Selfridges is trying to capitalize on that trend element by bringing a brand that you usually can't experience in person. 2selfridges refy can be bought in Sephora, but what you can't experience at Sephora is a Refy branded retail space. So Sephora did that and suddenly they've got something to compete on which is really setting them apart at the moment as there is little unique beauty offering that many of these retailers can compete on. So they've given in their new beauty hall, 37 brands, individually crafted counters. So they're trying to make it look less like a department store store and almost like you're walking around on the high street itself. Business of Fashion did a terrific case study titled Can Selfridges Future Proof the Department Store in July of 2021 and they wrote about how betting on experiential retail with a sharper luxury focus, better novelty and discovery and expanding their digital selection and services were amongst the ways that Selfridges was focusing on moving forwards. And we can really see that play out as this fight to be the number one luxury beauty player in the UK is panning out. There's also Liberty London which is is a lot more luxury leaning, but a lot, lot smaller. So there was a piece that I read about Bobby Brown's brand Jones Road on why they chose to be in Liberty London and it's essentially just compromising the reach compromising the high numbers of these other players and their online web visits. Because Liberty London has 1.5 million monthly visits, which is half the size of Harrods and only one store. But also Liberty London, you're sitting besides just the creme de la creme. It's like that very luxurious, high price point. And then finally we have the big two. I wanted to close out this episode talking about Boots and Superdrug because the fight for the prestige players and luxury players is more alive and well. But the challenge for the mass market is also very much a thing. But it just looks very, very different. So we spoke about the competition in the online space, we spoke about the competition in the prestige space. We spoke about it in terms of luxury department stores. But then you've also got the big, big mass players, Boots and Superdrug. Boots is so unique. Like, Boots is just. You can't. I had to watch YouTube videos to try and understand how any of this works, because I didn't understand how all of these brands, across price points, segments, target customers, and everything made sense, not only being under one roof, but in a pharmacy. Like, back to that first graph that I made. Boots. Boots stocks Dior, but it also stocks the Ordinary. But it also stocks Estee Lauder, but it also stocks Nyx. Like, how can that all be in one space? Blows my mind. But then you've also got makeup by Mitchell and all these really trendy, hyped brands. But it's a pharmacy, and the mechanics of this is just so interesting. So Boots is owned by Walgreens, which is formerly known as Walgreens Boots alliance, wba. And they're the second largest pharmacy chain in the US behind cvs, Walgreens. We all know Walgreens. And at the end of 2023, there was a lot discussion around Walgreens looking to sell boots for about 7 billion because they wanted to focus on the U.S. the reason they wanted to focus on us is WBA stock has plummeted in the last three years. Stocks is a little bit above my pay grade, but I watched a few videos on trying to understand WBA stock prices. And what I understand is that for the better part of like 80 years, for a really long time, WBA stock was outperforming the S and P index by crazy percentages. And then in just the last year, year particularly, the stock price has fallen by 64.8%. And what this has meant is their market capitalization has fallen from roughly 50 billion in early 2022 to just 7.5 billion earlier this month. That's insane. So three weeks ago, Forbes reported that Walgreens struggled lately due to declining prescription reimbursements and rising competition from Amazon and other discount stores. It has also closed hundreds of stores in recent years and it plans close 1200 stores by 2027, a move necessitated by the fact that a quarter of the company's stores aren't profitable. So WBA have rolled out a similar plan with Boots stating in early 2023 that they would close 300 Boots stores, mainly those in close proximity to other outlets, as it seeks to focus investment on big performing locations. So really they're just trying to get costs down, right? So it's the same idea of shrinking to grow. What's really interesting though is that with all that being said, Boots had a really strong Q4. Their sales were up by 6.2% and they reported growth across all categories, particularly skincare and premium beauty. Which makes a lot of sense because in the same year that they closed 300 stores, they opened their first ever dedicated beauty store called Boots Beauty, which had the same rhyme and rhythm of Selfridges and Harrods with it being a beauty hall. I have never heard of a beauty hall. This one too was 11,000 square feet. So they seem to be doubling down on their beauty offering just like every other player. And they this year they launched brands like Floral Street, Laneige, made by Mitchell, Sculptor by Amy Prada Beauty and Supergoop, which all to me feel like Sephora type brands. But keep in mind, this is a pharmacy. When you compare the brands at Boots, verse the brands that are at Walgreens in the US and again to remind you they're owned by the same people, it's a drastically different offering. So also when they started having all this turmoil, I believe it was in 2021, they announced that they were going to try and up they were going to double down on their online offering to try and compete with all those other online players we've already spoken about. And while I can't find a point of reference of what their monthly web traffic looked like before this, they set this as an intention Boots wipe every other player clean. They have 35 million monthly web visits, which is crazy because it's a pharmacy. There is nothing better than shopping for beauty at a pharmacy. But I have never once thought to do it online. Also, just to play back the store counts for you, you the luxury department stores, Harrods and Selfridges six each Sephora six stores, space NK 76 Big Boots 2,232, an insane retail footprint. You wonder how these places can not be operating at a profit because they've probably been around for decades. Even with that higher store count, even with that higher monthly web visits, no one is safe. Even the biggest retailer in the country seems to have a blurry future. And then the last retailer I want to talk about is Superdrug. The I want to say quiet underachiever because they're following Boots and just the way that I've decided to tell this, but they are not a quiet underachiever because they're doing bloody well. They are a lot more mass than Boots, but they too are a pharmacy, but also have a deep, deep focus on beauty. Superdrug is bigger than all other retailers we've discussed by all metrics other than Boots, but that seems to be their superpower because it's in a lot stronger place than not necessarily boots, but WBA. Superdrug revealed in their 2023 financial statements that its pre tax profits rose by a heroic 44%, soaring to 112 million pounds last year. The health and beauty giant saw 12% more sales in the year ending December 30 as it turned over a hefty one point billion, according to its annual report published by Companies House. What's kind of confusing here is that Boots doubling down on prestige beauty makes so much sense, but Superdrug not bothering with prestige beauty also makes so much sense because Superdrug competes on price in a way that Boots doesn't, because Superdrug isn't trying to be luxury leaning. They are so proudly mass and in the current economy with the cost of living crisis, but also significantly in beauty, the rise of amaz As a retailer, Superdrug is primed for that. They're primed for the ugly beauty. They're primed for products that are efficacious and nothing more. They don't have that glitz and glam which granted is where the high profit margins are, but they can offer something so different to every other retailer that we've discussed. This isn't a groundbreaking ideal super drug. That's very much their strategy. Their Chief executive Peter McNab said that inflationary pressures drove it to inflation invest heavily to keep its prices competitive. And that's the UK beauty retail landscape for you. Like I told you it was going to be a mess. I've tried to give this narrative structure by creating these graphs that'll be up on Substack and kind of also a short piece on walking you through all of the phases that we've spoken about today because it is hostile out here. Just the amount of mergers, the amount of acquisitions. And I only spoke about the exciting ones because, for example, there was like the minority stakeholder of Selfridges just sold it to another guy, which I was just like, I don't really. It didn't really seem that relevant, but maybe it is. But the amount of movement in this market is just like, I don't know how brands are navigating this. Like the brands that I think have done really well in launching in the UK are all on the more affordable end. Like, you've got the new brand by Jamie Lobden, the Monday hair care founder. She's just launched Days Beauty, which is partnership with Superdrug and they're a Gen Z targeted brand. They're doing things like body mists and lip balms. So Superdrug makes so much sense. Or Bubble Skincare. When they launched into the uk, they went straight into Boots. That made a lot of sense. The smart move or the right move for a luxury brand seems to be a far more complex decision and is based on so many factors that I hope that this episode was able to bring to light where these retailers are sitting in terms of the broader landscape, what they're good at, what they're poor at. But like I said, it's a minefield in terms of keeping up with this and watching all of this pan out. Truly like reality tv. I think the most interesting areas, if you are interested in this, to keep kind of tabs on, would be Sephora. I think the way that they uniquely position particularly their big US brands, I'm thinking Fenty, I'm thinking Red. There is going to be a challenge and the way they navigate that I think is going to be really interesting. It just is going to have to be interesting if they want to compete. There's also just something about the amount of money that Sephora has. Like it feels LVMH to me is so Hunger Games and I find it crazy but entertaining in the way that their movements in growing and establishing themselves in the UK will be really interesting to watch. Pan and out. And I think like London's already a hub for activations, but I feel like it's just going to become more so. The story of these luxury department stores I think will just kind of ride itself. What's going to be a lot more random and I truly don't know what's going to happen to these big online players. So I've just had a quick Google because I Thought I just remembered a headline and I did. So in September 2024, look fantastic. Have actually opened up a concept store, a digital only, very proudly digital only retailer. And that's again THG's entire higher business model. They've opened up a store. Retail, Retail, retail. The only player to me in this whole conversation that feels secure is space. Nk. They know who they are. They've got a really good retail network. They've got really strong online performance. They've got some really cool prestige brands. They've got some really cool trending brands. They're the only prestige player that's comfortable online and in store. Or maybe Selfridges. I don't know. I don't. I don't know. I thought I had a take. I don't. But they feel the most comfortable to me. So the fact that there's conversations about being, about it being sold. So maybe we should check in at the start of next year. I'm not sure there is a lot of movement in this space. And that's it today in terms of the episode. Thank you so much for being here. Come back next week for part two where again we're going to look at what makes the British beauty consumer so different. Why does she buy differently? Why are the biggest brands in the UK not only really bold color and high pigment, but why are they TikTok shop brands? Why is the UK so uniquely positioned to want to shop on social media apps so interesting? I think so at least. But anyway, that'll be next week. Thank you for being here. I am going to ramble to you now in this position now where I am really happy with where this podcast is going but I think it lacks a little bit of personality. And of course with the new year was like looking at some of my other favorite podcasts that I get a lot out of and it's always the content and the educational piece at the core of it. Hence why this podcast is the way it is. But I think when I get invested and the reason I come back week after week is because I'm like personally attached to the host and that comes from it being a bit more conversational. And another thing that I really enjoy is that kind of behind the scenes or background information of like feeling like you're coming along with someone while. While they grow a thing. So I want to just speak to you guys a bit more about where I'm at and what's happening. And the big thing that I really want for Bare faced is community. I think something that I've just Really quickly learned is that I have always worked in consumer spaces like consumer businesses, which is hence why my content is what it is. But this is my first time in. In a B2B sort of role and position. And the way the tight. You guys are bloody clever. Like the people that have stumbled across my work in just the weeks that I've been doing this in the seven or so podcast episodes and I think it's like 12 substack posts is unbelievable. And I think what I really want to find a way to do is kind of is foster that back and forth dialogue a bit better. At the moment it just kind of feels a little bit siloed, which is fine. And that dialogue exists on places like TikTok but and substantiated a bit more. And when I was thinking about that, I quickly started thinking about where does one post that. And I really think substack is the best place to be the home. So I really want to double down on what I'm doing there also very much. Because another realization I had is that like what I've been learning about growing this thing is I'm always pulled between like the product or the marketing. The product to me is the report, so the paid reports. That's the way I earn money. And then also the podcast. The only way Bareface can grow is to keep the core offering, which is data and detail. I'm so over lazy content and surface level content and I want the detail and the substance. And for Bareface to work, for this podcast to work, it has to be the antithesis of lazy content. And not only to cut through the noise, but like for me to enjoy the work. Like, I hate people when people say that they're a perfectionist. But like truly at my core, it's not a flexibility. It is such it kills me daily because I want to do, I want to put my everything into everything. I'm a big ideas person. Like I have so much sitting on the tip of my tongue and at the top of my head. But it's just me. So figuring out how I can best serve the community and how I can best grow Bareface as a business, the content will just be coming back a bit. But then in saying that you can actually rely on these podcasts being posted every, every week. So that's fun. And something that's just been like a learning with Substack is like when you spend all this time working on a report or something, you want everyone to see it. So I send it out to everyone for free. But then it's not creating a really strong paid offering. And that is the business model, right? So what I am going to do is that these episodes, I'm going to build them out, as I've mentioned throughout today's episode, I'm going to build them out a lot more more on substack. There'll be a lot more resources, a lot more references so that this can be the free offering and that will then free up my ability and time to spend on building reports that are actually really worthwhile for beauty businesses. Because that's the core idea. That's the whole point that we're here, right, is that this is an industry that just has so little data and context of the inner workings and it's very silo. And then by trying to make this more conversational, hopefully I can start to better articulate what the reports are on this podcast rather than I have no regrets doing like little sponsored call outs in the past few episodes because frankly, this podcast has been the biggest learning curve. Like if I knew it was going to be this much of a learning curve, I doubt I would have done it. But what I hope from it being like I said, more conversational is that I can actually just be like, hey. So I've been working this is a real example on a beauty in 2024 data, trends and signals report that looks at skincare, hair care and makeup for the biggest TikTok beauty trends, signals and long term shifts in 2024. And how I did that was by identifying 10 influencers that are really dominating in those three categories. I was then able to web scrape roughly 200 videos per creator to find the most common brand t hashtags, even the most used words in their video descriptions before grouping those together to identify the signals before taking it to Google and measuring convergence. So idea of convergence is basically you've got a TikTok trend that might be booming, but that's considered top of funnel, right? But what we want to figure out is what volume of those people actually were expressing the same interest in intention over on Google. Because that's further down the funnel that's now in consideration. And from there I've built these out into a matrix so we can then figure out what are the macro shifts in the industry, what did 2024 teach us about the modern beauty consumer and what is she looking for in 2025? How can brands best position themselves in alignment with those shifts? But that was a huge amount of work. It's taken me way longer than I intended. Hopefully this new model of less but better will aid that. And then I can actually build out these resources that are hopefully really beneficial to beauty for effects professionals. Tick tock. Yeah, you get the reach. Most of you, I believe, have come from there. And I'm so, so grateful for having the reach of that platform. The people that actually get here are so clever. Like I stalk you guys on LinkedIn and you guys have some cool bloody jobs. Like, you are clever people. And the fact that we're all sitting in one space like that is an insanely cool industry resource. And for my learning, for everyone's learning, I just think it would be really, really cool to double down on that, to foster that rather than chasing these kind of tick tock vanity metrics. That's so not the game that I'm in. Again, it's really good for top of funnel, top line awareness, but in terms of building something, building Bare face into what I want it to be, we're going to do less, better. That is the vibe. That is the way we're moving forward. I am so appreciative, truly of everyone that's listening, everyone that subscribed on Substack and just anyone that is that I hope is finding value in my work. But I see you guys rocking up week after week to check into the posts or liking on TikTok or whatever it may be. I think it's really cool just when something is this fresh and like an idea is leaving someone, I. E. Me, like my brain and watching it come to life and fruition, even if it is so small and micro and precious and it doesn't look anything like how I had ever predicted in the years that I was dreaming this up in my head. But it is so, so exciting to watch it reach real people and hear everything that you guys have to say and what you think. So, yeah, 2025 is going to be huge. Genuinely, I believe in all that manifestation. But even if I didn't, I have done my four podcasts. I've got my goals. Yeah, I'm stoked. I could not possibly be more pumped for this. And if there's one thing about me, it's that I'm gonna work. But anyway, that's enough of that. I look forward to seeing you next week UK Part two. And I wish you all a wonderful, wonderful week. Good luck. Bye for now. This episode was recorded on Ghana country. I acknowledge the traditional custodians of this land and pay my respects to elders past and present.