The online perfume and cosmetic sales industry in Australia has performed strongly over the past five years, in line with the general online retail industry.
Over the five years through 2013-14, industry revenue is expected to grow at an annualised 7.5 per cent to total $99.3 million. This includes forecast revenue growth of 10.1 per cent over 2013-14. The industry has a low level of concentration, with no operators taking a significant market share.
The industry took a hit in 2008-09 due to the global financial crisis, and remained subdued over 2009-10 as the effects lingered. During these two years, consumer sentiment was low and savings levels increased. Although industry products are somewhat inelastic, as they are perceived by many to be necessities, they are still discretionary items. Consumers tended to refrain from purchasing extra unnecessary items, and downgraded to cheaper alternatives of items they required.
As soon as sentiment improved and economic activity strengthened in 2010-11, industry revenue rebounded solidly with a 9.8 per cent gain. According to IbisWorld industry analyst Kosta Lev, “Revenue growth has remained strong since then, driven by increasing health awareness, rapid internet penetration and the subsequent rise in online retailing”.
Strong growth is expected to continue over the five years through 2018-19, although at a slower pace than during the previous period.
Competition from external threats, especially supermarkets, pharmacies, and other online retailers that sell industry products, is expected to marginalise revenue growth. Even so, continued growth in online shopping, health consciousness and a growing male customer base will keep the industry buoyed.
Males are becoming increasingly image conscious and will be a major driver of growth in the online perfume and cosmetics sales industry over the next five years.
Consumers are embracing the choice and convenience of shopping from their computers at home, especially with the increasing bandwidth speeds available and are also taking a more holistic approach towards health consciousness, which includes taking care of themselves on the inside, through diet and healthy lifestyles, and the outside, through skincare and personal grooming.This trend is helping drive demand for industry products.
“Perhaps the most significant development over the past five years has been the growth in the male customer base, which has been a large contributor to a whole range of new, male-targeted products,” says Lev.
For more information, visit IbisWorld’s Online Perfume and Cosmetics Sales in Australia industry report.
