Who s looking glam in online stores? Which UK Cosmetics brands are poised to win online?

Who s looking glam in online stores? Which UK Cosmetics brands are poised to win online? Online Store Performance For Fast Moving Consumer Goods Brands

Investing in looking good According to The Independent, British women spend an average of forty pounds per week on cosmetics, adding up to over two thousand pounds per year, one hundred thousand pounds over the course of a lifetime. These women could opt to buy a Ferrari with the money they spend on cosmetics, but the Cosmetics industry, whose 2014 UK sales were over 1.6 billion, is happy that most women are choosing to keep themselves looking good instead. British women spend an average of forty pounds per week on cosmetics Cosmetics spend may seem dazzling, but sales are relatively flat Though British woman seem dedicated to their cosmetics, sales of Colour Cosmetics in the UK are under pressure, with 2014 UK sales up only one percent versus 2013 according to Euromonitor. Certain segments haven t lost their lustre, such as multi-purpose cosmetics like Blemish Balm creams as well as premium Lip and Nail products. However, increased promotional activity has set a precedent among consumers, with promotion-savvy shoppers unwilling to buy their preferred brand at full price. This has contributed to minimal growth and, in some cases, decline in annual sales in key Cosmetics segments such as Mascara and Lipstick where annual sales are relatively flat, while Nail Polish is down 20 percent versus 2013. However, there is a silver lining in the UK Cosmetics seemingly dull prognosis. While Cosmetics brands and retailers struggle in a competitive and promotion-driven category, the share of Cosmetics sales moving online is increasing. Cosmetics add glamour to online retail With the total UK Cosmetics market failing to deliver growth in 2014, online Cosmetics sales increased by seven percent against the previous year, accounting for 10 percent of total UK Cosmetics sales (Euromonitor). Additionally, we know that the importance of online is not limited to online sales. Deloitte reveals that over half of in-store sales are digitally influenced, from consumers researching in-store purchases in advance to making shopping lists and checking prices to help them make their in-store purchases. As some consumers move their Cosmetics spend online, even more are leveraging online stores to research in-store purchases. To capitalise, brands need to ensure that they are providing shoppers with accurate and engaging Content, Images and optimising on Findability, that products are returning in the top Search positions against key search terms. The Clavis Insight Index, CI 2 As the importance of online grows for both on- and off-line sales, Clavis Insight analysed how Cosmetics brands across Lipstick, Mascara and Nail Polish categories are performing online against key metrics. Brands are ranked based on The Clavis Insight Index, CI 2, a proprietary benchmark of online retail store presence and performance for CPG brands. The score is calculated based on key performance indicators (KPIs) that are critical drivers in the online pathto-purchase, such as: Availability: Is the product in-stock and available for sale? Image Presence: Does the online product listing include a key brand image? Content Integrity: Is key product information present and correct on product landing pages? Search Rank: Can shoppers find your products based on category keywords? Portfolio: Do I have a broad (breadth and depth) portfolio offering across key online retailers? Just as in physical stores, brands need to ensure their products representation is fully optimized in online retail stores in order to drive sales. In the offline world brands focus on metrics such as Distribution, Assortment, Packaging, and Shelf Placement. Online where there is no shelf layout to draw the eye, no physical product to hold and no packs to touch, feel and read success is determined by different KPIs, such as those above, more appropriate to the ecommerce environment. 2

UK Lipstick Category 2015 Puckering up with strong Availability and Search performance Brands at the Top of the Lipstick Clavis Insight Index, CI 2, ranking are generally performing above the category average on Content Integrity, Availability and Search. This means their product pages include product titles and descriptions, warnings and ingredients, their items are in stock and available for purchase and that consumers can locate their items quickly and easily when searching with key category terms. Those brands in the Top 20 that underperform in one area generally make up for it with stellar performance in one or both of the others, demonstrating that consistency in performance across metrics and stores is key. Four of the top five UK Cosmetics market leaders make the top 20 performing Lipstick brands: Maybelline, Max Factor, L Oreal and Rimmel. Only Boots own label brand, No7, falls outside, meaning that most of the offline beauty queens are also dominating in the online channel. Many of the other top performers such as Urban Decay and Laura Mercier are smaller brands taking advantage of the level playing field online to compete with the bigger players. CI2 RANK BRANDS BRAND NAME CI2 SCORE 1 Tom Ford 109 2 Maybelline 108 3 Barry M 108 4 Urban Decay 107 5 Shiseido 107 6 Max Factor 107 7 Elizabeth Arden 107 8 Bourjois 106 9 Estée Lauder 106 10 NARS 106 11 Laura Mercier 106 12 Dior 105 13 Bd Trade Secrets 105 14 Yves Saint Laurent 105 15 L Oréal 104 16 MAC 104 17 Clarins 104 18 Lancôme 104 19 Rimmel 104 20 Clinique 104 Figure 1. Clavis Insight Index (CI 2 ), Top 20 for online store presence and performance, Lipstick, 2015. 3

Lipstick Performance Drivers Why are some Lipstick brands looking more kissable? We generally see brands at the top of the Lipstick CI 2 ranking over-indexing across Content Integrity, Availability and Search, with a couple of exceptions. Upmarket Lipstick brand Tom Ford grabs the top ranking with strong Availability and Search results, Meanwhile, Maybelline, with the third highest Colour Cosmetics market share in the UK according to Euromonitor, is able to climb to second place on the Lipstick CI 2 ranking due to strong Content Integrity and a broad and welldistributed product range. At the bottom of the Lipstick CI 2 ranking, some notable premium Lipstick brands under index on Content Integrity, often with short product names, and under-indexing on Search, making it more challenging for consumers who shop via key category search terms to locate their products at upmarket retailers like House of Fraser and John Lewis. C1 2 Ranking & Index Scores per metric for Top 5 Brands BRAND CI2 RANK IMAGE CONTENT INTEGRITY AVAILABILITY SEARCH Tom Ford 1 100 95 106 131 Maybelline 2 100 103 91 96 Barry M 3 100 101 104 103 Urban Decay 4 100 103 106 118 Shiseido 5 100 103 106 113 Figure 2. High Performer Clavis Insight Index (CI 2 ) Breakdown, Lipstick, 2015. 4

UK Mascara Category 2015 Both high and low priced Mascara brands are batting their eyelashes online As with Lipstick, Maybelline outperforms the rest of the Mascara category, occupying the top spot in the Mascara Clavis Insight Index, CI 2, ranking, with L Oréal following closely behind. Both Maybelline and L Oréal have strong breadth and depth of distribution as well as strong Content Integrity and Availability. The Top 20 Mascara brands are a mix of more mainstream high-street brands available at retailers like SuperDrug and Tesco, such as The Balm, Max Factor and Rimmel, along with more premium brands available at more upmarket retailers House of Fraser and John Lewis, like Dior, Lancôme and Clinique. As we can see, neither end of the Mascara market has yet gained a clear advantage online, with half of the Top 20 brands over-indexing on Content Integrity, Availability and Search, the rest making up for poor performance in one area with strong performance in the others. Search is the new shelf Optimizing your products to rank in the Top 20 against key category Search terms and then consistently monitoring Search performance is imperative for online success. According to Millward Brown Digital, less than 30 percent of Amazon shoppers click beyond the first page of search results, so if you re not returning on the first one to two pages of key search term results, you aren t on shelf for those consumers. For offline market leaders, it s critical that their offline share of shelf is reflected in their search results against key category search terms, such as mascara in this case. CI2 RANK BRANDS 1 Maybelline 111 2 L Oréal 110 3 Dior 109 4 Lancôme 109 5 The Balm 108 6 Clinique 107 7 Max Factor 107 8 Urban Decay 107 9 MAC 106 10 TOPSHOP 106 11 bareminerals 106 12 Rimmel 106 13 MUA 105 14 Estée Lauder 105 15 Bourjois 105 16 Benefit 105 17 Gosh 105 18 Shiseido 104 19 Yves Saint Laurent 104 20 Bd Trade Secrets 103 Figure 3. Clavis Insight Index (CI 2 ), Top 20 for online store presence and performance, Mascara, 2015 BRAND NAME CI2 SCORE 5

Mascara Performance Drivers Is your Mascara running? Winning Mascara brands are generally outperforming their category peers online with strong performance across KPIs. All Mascara product pages include at least one Image, and top performing brands generally have complete Content on their product pages, are Available to drop into online baskets. Search looks to be a key differentiator, with most of the Top 20 Mascara brands over-indexing and all but two of the Bottom 20 falling below the Search category average. C1 2 Ranking & Index Scores per metric for Top 5 Brands BRAND CI2 RANK IMAGE CONTENT INTEGRITY AVAILABILITY SEARCH Maybelline 1 100 102 102 94 L Oréal 2 100 101 107 96 Dior 3 100 99 107 114 Lancôme 4 100 100 104 115 The Balm 5 100 102 107 121 Figure 4. High Performer Clavis Insight Index (CI 2 ) Breakdown, Mascara, 2015 Unlike in the Lipstick category, we did not find many premium brands toward the bottom of the Mascara rankings. Many of the lower performing budget brands were penalized for below average Integrity and Search scores. A few also scored poorly on Availability, a missed opportunity to allow consumers to drop items into their online shopping basket. 6

UK Nail Polish Category 2015 Premium Nail Polish brands looking lustrous at the top of the Nail Polish CI 2 ranking Tom Ford, the top brand in the Lipstick CI 2 ranking, again wins the day in the Nail Polish CI 2 ranking. Top 20 Nail Polish brands are optimising on Availability, with 16 of the 20 brands operating at 100 percent Availability with all items in stock and ready for purchase. Interestingly, all but two of the Top 10 Nail Polish brands are premium brands, an upmarket dominance not seen in the other Cosmetics categories. The premium brands in the Top 20 all perform well above the category average on Search, suggesting that premium Nail Polish retailers may be less congested than the more affordable retailers, which offer a wider array of Nail Polish products and brands, creating more competition for top Search results at lower priced retailers. Indeed, retailers such as SuperDrug and Tesco offer roughly twice as many Nail Polish items as House of Fraser and John Lewis, a disparity not seen in the Lipstick or Mascara categories, making it easier for premium brands to hold majority share of the first page of Nail Polish Search results at premium retailers. CI2 RANK BRANDS BRAND NAME CI2 SCORE 1 Tom Ford 122 2 Jessica 116 3 Barry M 115 4 NARS 114 5 Estée Lauder 112 6 Dior 110 7 Lancôme 110 8 Essie 110 9 MAC 110 10 OPI 110 11 Max Factor 109 12 Models Own 108 13 butter LONDON 107 14 Clinique 107 15 Bourjois 105 16 L Oréal 105 17 Bobbi Brown 105 18 Revlon 105 19 Maybelline 105 20 Yves Saint Laurent 104 Figure 5. Clavis Insight Index (CI 2 ), Top 20 for online store presence and performance, Nail Polish, 2015. 7

Nail Polish Performance Drivers Which Nail Polish brands are looking flawless? With the exception of Nail Polish brand Barry M, all of the Top 5 Nail Polish CI 2 ranking are premium brands, available at upmarket retailers like House of Fraser and John Lewis. Although the Top 5 over-index on Availability what clearly separated the winners in the category is impressive Search performance. As noted previously, the playing field maybe somewhat skewed towards premium offerings, (upmarket retailers have a more limited range of Nail Polish products), enabling these brands to hold a greater share of Search when compared to their more moderately priced counterparts. Barry M is able to crack into the Top 5 despite below average Search results with above average Content Integrity and Availability and with a broad portfolio offering. C1 2 Ranking & Index Scores per metric for Top 5 Brands BRAND CI2 RANK IMAGE CONTENT INTEGRITY AVAILABILITY SEARCH Tom Ford 1 100 85 107 192 Jessica 2 100 102 107 151 Barry M 3 100 102 104 97 NARS 4 100 97 107 150 Estée Lauder 5 100 96 107 142 Figure 6. High Performer Clavis Insight Index (CI 2 ) Breakdown, Nail Polish, 2015 The bottom of the Nail Polish rankings is made up of more everyday affordable brands, who either under-index on Search across mainstream retailers or on Content Integrity. All brands at the bottom of the ranking also have Availability issues. 8

Presence Management Brand One Brand Two Brand Three Brand Four Presence Management Digital Performance Ranking Availability Filter Results Products Analyitics Search Reviews & Ratings Market Share J F M A J F M A Summary In anticipation of the dramatic growth of online sales in the UK, Cosmetics brands need to be optimizing their online Search, Content and Availability both to take advantage of this shift in purchase behaviour and to educate consumers who turn to the internet to research Cosmetics products in advance of their in store purchases. Looking across the three UK Cosmetics categories Lipstick, Mascara and Nail Polish we see room for growth online. Neither premium nor mainstream brands dominate online presence and performance, with the exception of premium brands coming out ahead on Search for Nail Polish at the less congested upmarket retailers, who offer a smaller Nail Polish product range. Products that cannot be found via Search or fail to rank in the first page of Search returns are less likely to be added to basket hence at a significance disadvantage to convert sales online. If key Product Content is present, correct and engaging yet persistent out of stocks are an issue, again this presents barriers to purchase with potential to impact online performance. In essence, consistency is key, all metrics must be consistently optimised across stores to fully capitalise online. The Clavis Insight Index, CI 2, in focussing on these key performance indicators identifies which brands are positioning themselves for online success in the Cosmetics market. ipad 9:45 AM Brand Intelligence Overview Digital Performance Digital Presence ecommerce Optimization Brand Intelligence Overview Digital Performance Ranking Availability Market Share 9

Appendix Scope of Research This analysis was conducted based on data collected from five UK online Stores Boots. com, HouseofFraser.co.uk, JohnLewis.com, Superdrug.com and Tesco.com. The analysis includes 78 leading UK Cosmetics brands in the Lipstick (46 brands and 1,072 products), Mascara (44 brands and 874 products) and Nail Polish (49 brands and 1,640 products) categories. The category search terms used for the purpose of this analysis were as follows: Lipstick: lipstick, luxury lipstick Mascara: mascara, luxury mascara Nail Polish: nail polish, nail lacquer, luxury nail polish To produce the Clavis Insight Index, CI 2, product level performance is calculated and weighted against these metrics, which are aligned to each step of the online shopping journey. Brand (summation of product) performance for each Clavis metric is benchmarked versus the average score for the category to produce the Clavis Insight Index, CI 2, for each brand. Brands indexing greater than 100 outperform the category average; those that score less than 100 underperform relative to category. Data for this research was collected during the first week of June 2015, using the Clavis Insight online store audit and analytics platform. Research Methodology Clavis Insight online store metrics included in this analysis across the above mentioned brands and SKUs are: Availability Content Integrity Image Presence Search Rank Portfolio 10

of 107 products are ava e 125 100 75 50 25 0 Online Store Performance For Fast Moving Consumer Goods Brands About Clavis Insight Clavis Insight is at the forefront of the ecommerce revolution, delivering ecommerce Insights and Online Retail Store Analytics to a broad range of Consumer Products brand leaders around the world. Our Insights are designed to enable you to optimise your distribution, content integrity and online placement in the digital channel in order protect your brand online and grow your sales. To learn more about The Clavis Insight Index, CI2, and to find out how our Insight will enable you to maximise your digital channel performance, please contact Katherine.Wilson@clavisinsight.com or Supriya.Chaudhury@clavisinsight.com. 45% Prouct count 40 20 Prouct to count 0 20 40 BOSTON 44 Farnsworth Street 1st Floor, Boston, MA 02111 United States + 1800 693 9591 LONDON 22 Upper Ground #610, 6th Floor London, SE1 9PD United Kingdom +44 20 3318 6329 SHANGHAI No. 1788 Nan Jing Road West Room 965, ECO CITY Jing An District Shanghai, China +86 21 2231 0511 DUBLIN D Olier Street 10th Floor O Connell Bridge House Dublin 2, Ireland +353 1 254 3440 info@clavisinsight.com @clavisinsight