Competition for the Scandinavian beauty market intensifies as fashion giants make their move

Mid 2015 saw H&M Hennes & Mauritz and Lindex, Scandinavia’s two largest fashion retailers, make their lofty ambitions for the region’s beauty markets clear as they released their own extensive beauty collections. As a result, it is expected that the lines between mass and premium beauty products will continue to be blurred as established beauty brands will set out to differentiate their products to stay competitive.

Fashion retailers have for a long time been a significant retail channel in the Scandinavian beauty and personal care market, particularly in Norway and Sweden. Most prominent have been fashion giants H&M and Cubus, which have a strong presence in multiple beauty segments including makeup, skin care and fragrances. Extensive brand portfolios have been built with numerous mass market brands and even a solid selection of brands from leading fashion houses, such as Dior, Gucci and Prada. Nevertheless, fashion retailer’s brand portfolios so far have primarily been made up of brand names, with most only having a rather small selection of its own beauty brand.

In 2015, 14 percent of overall makeup sales in Sweden were sold through apparel retailers, while the figure is as high as 25 percent in Norway. Scandinavian women are already well accustomed to using fashion retailers as one of their primary venue for their beauty needs.

Fashion giants beauty ambitions

H&M Beauty was released mid 2015 with no less than 700 products, which was shortly thereafter extended to roughly 1,000 products. The collection includes makeup, fragrances, skin and hair care products, moreover the collection also feature a premium and conscious line. The premium line closely associates with the feeling of spas containing rare and exotic ingredients, such as lingonberries, chamomile and shea butter. Products in the conscious line are sustainably produced from certified organic ingredients and even the packaging is recyclable, important product characteristics to succeed in the Scandinavian beauty market. The beauty collection is affordable in line with the company’s overall market position in the fashion world, doing what H&M does best, deliver products for everyone. Finally, H&M Beauty is supported by a comprehensive online platform on H&M’s website which includes video guides, beauty advices and trends.

What is more, Lindex and Ellos, a leading pure online fashion retailer, released their own beauty collections with products primarily in makeup and body care in 2015. The collections are not yet as large as that of H&M, nonetheless, they still are of considerable size and show the companies intent to make their mark on the Scandinavian beauty market.

Lines between premium and mass products to be further obscured

The impact on the Scandinavian beauty market is expected to be notable as there are obvious synergies between the world of fashion and beauty. Common characteristics of the collections are that they affordable and with relatively simple product formulation. Not simple in terms of packaging, which is rather elegant, but however in terms of advanced ingredients and multifunctional properties. Therefore, with the collections affordable price tags and simple formulations it is expected they will compete at the lower and mid-range end of the beauty market.

The region’s high level of disposable income have made it a common trait among Scandinavian women, even the younger demographic, to use a combination of premium and mass makeup products in their beauty routine, this is set to further intensify. Women will now to a greater extent have the opportunity to buy affordable makeup pieces where premium features like advanced formulation and multifunctional properties are not among the most important product characteristics, like nail and lip products. Consequently, this will leave women with more financial flexibility to spend on products where premium features are important, such as eye makeup or skin care.

Furthermore, traditional beauty brands will struggle to match the price level set by fashion retailers in an already competitive environment. Therefore, it will be imperative for these brands in the lower and mid-range end of the market to differentiating themselves by highlighting multifunctional properties, advanced formulations and superior quality. This will further continue to blur the lines between mass and premium products, as premium products have traditionally been where advanced formulations, multifunctional properties and exotic ingredients have been found.

By: Peder Kraugerud, Research Analyst at Euromonitor International