The accessories and personal industry is under a huge pressure from pure players like Amazon, who threaten to capture the entire market. How do brands combat that?
Despite recording the lowest omnichannel performance, customers prove that an effective omnichannel is one of their most valued features.
DOES OMNICHANNEL LEAD TO GOOD FINANCIAL PERFORMANCE?
This year, Danske Bank has provided a financial analysis of the Omnichannel Index’s industries to get a deeper understanding of each industry’s terms.
Presented in collaboration with
Solid financial performance
A challenged industry
Accessories and Personal Hygiene industry is challenged. Both in an omnichannel and financial perspective.
Danske Bank has conducted an extensive analysis of the companies’ performance in Denmark, Sweden, and Norway based on public records.
Here, they have accounted for the revenue from 2016 to 2018 and the associated growth rate. While the Accessories and Personal Hygiene industry has revenue growth in the Nordics, the EBIT-margin is pressured.
Average score of the Accessories and Personal Hygiene industry
Average score of the best performing industry
In terms of offering customers, a seamless buying experience across channels, the industry has a massive omnichannel improvement potential.
It is the lowest performing industry with an average score of just 39 compared to the best performing industry’s score of 53.
With pressured margins, the industry focus on new digital solutions and new concepts to maintain their position in the market.
Ready for disruption
By combining the financial insights with the omnichannel score, one thing catches the eye – the industry is struggling with taking financial advantage of their omnichannel effort.
With the industry’s low omnichannel score and taking into consideration customers’ expansive digital behaviour, pure players can easily disrupt the market and take market share.
The results across nations
71% of customers cite increased convenience and enhanced product range as main reason for online shopping, and 26% would rather buy the industry’s product online than in physical stores.
If you do not adapt to servicing your customers and delivering a positive buying experience in an omnichannel perspective, you will gradually begin to lose customers, you will be replaced by substitute products on the market, and you will lose control of your brand experience.
Where to improve
The industry performs best in the pre-purchase phases and has massive improvement potential in the purchase and post-purchase phases.
Since customers in this industry are relatively cost conscious, and 26% of Danish customers prefer to purchase these products online according to FDIH, brands and retailers must make better use of customer data, in order to tailor offers based on prior purchasing habits.
Here, customer data and loyalty clubs are a must.
According to Kasper Holst, CEO of IMPACT:
“Loyalty and customer data are important areas to improve for everyone in the industry since it is a way to create a need among customers and nudge them to buy. If you can predict when they need contact lens cleaners, you are much closer to securing the sales.”
The fear of Amazon
The threat of Amazon entering the market is staring every Nordic retailers and brands directly in the eyes. Especially this industry explains Kasper Holst, CEO of IMPACT.
This is an industry that easily could be disrupted by Amazon. We know that health and beauty products are one of Amazon’s top selling categories, which emphasizes the need for a stronger omnichannel effort.
Thus, to have an efficient and well organised omnichannel-weapon before Amazon enters the market, is a must – if not, the battle will be lost even before it began.
Post-COVID-19: Everyone shop online
But it is not just Amazon that challenge the industry. It is an industry that is under pressure from the digital development and new actors on the market.
In Denmark, the digital pharmacy Apropo has disrupted the market with same-day delivery of both prescriptionary medicines, over-the-counter medicines, and other pharmaceutical products.
Even though pharmacies’ primary target group is not digital native, the COVID-19 crisis has led to a larger group of people buying medicines online. According to McKinsey, 44% more of the US customers buy medicine online than before the pandemic.
This highlights the omnichannel potential in the industry.