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Interview: How Superdrug is primed for future growth

Interview: How Superdrug is primed for future growth

Starting with a single store in Putney, London in 1964, Superdrug has evolved into a health and beauty retail giant over the course of six decades.

Known for its focus on value and competitive pricing, the retailer quickly expanded to over 800 stores nationwide. This value stance has seen the business thrive amid the cost-of-living crisis as it enters its 60th year, and just yesterday revealed that pre-tax profits had soared 43% to £111.6m in the year to 30 December.

Its market share grew for the third consecutive year, rising to 10.6% versus the 8.9% market share held in 2020.

Superdrug’s ecommerce, customer, and marketing director Matt Walburn tells Retail Gazette: “What’s really encouraging is that we’re starting to see more and more customers shop both in-store and online. We’re also seeing positive performance in the stores, and that’s across most locations.”

“We obviously have quite a big high street portfolio, but shopping centres and particularly retail parks continue to do well.”

Superdrug

But it’s not just store sales that are on the rise. After a post-Covid slowdown, Walburn says online sales have also rebounded.

“We are seeing that customers are keen to shop online again, and I think that is helping the numbers.”

Cost-of-living boost

The retailer’s reputation for value has seen it thrive as shoppers’ budgets have been squeezed in recent years.

As Superdrug CEO Peter Macnab flags :”As inflation continued to put pressure on households, at Superdrug we’ve invested heavily to keep our prices competitive and help families keep costs down.”

Walburn backs this up and says it aims to beat its main competitors on price.

“We go into a lot of price comparisons on a weekly basis to make sure that we’re in line and where we need to be,” he says, adding that it works with suppliers to make sure its promotions represent “the best value” in the market.

But he stresses: “The big thing that we’ve majored on over the last 12 months is our member pricing and loyalty scheme.”

Superdrug became joined the throng of retailers that have launched member prices, giving its loyalty card holders exclusive access to sharper prices.

“It’s not rocket science why lots of retailers have turned to their loyalty schemes to provide the value, and while we took a bit of time to decide what the market was doing on that one, we definitely jumped in,” admits Walburn.

“I think we’ve gone more consistent and bigger versus some of our competitors in terms of our member pricing proposition across the store.”

It is really driving sales. Walburn says: “The participation of loyalty has never been higher. Some weeks, up to 70% of shoppers are using their loyalty cards, a significant increase compared to previous levels, so it’s encouraging people to join the scheme”.

The loyalty programme has also driven Superdrug’s app downloads, which Walburn says are up by a million this year alone.

He says this means members have “a little bit of the brand in their pocket”, and are therefore more likely to shop online with the retailer when they go home.

“We’re very much focusing on the app as a real driver for us,” he says. “Don’t get me wrong, the majority of our loyalty members have the card but we have quite ambitious plans to move across to the app over time.”

However, Walburn notes it has to “balance the amount of member prices” it uses, and even admits that it went “too hard” in certain areas to start off in.

He flags that categories like fragrance and skincare are often driven by customers who actively compare prices and prefer flexibility over exclusive member pricing.

While it continue to offer member discounts, Superdrug is also focused on maintaining open deals accessible to all customers in a bid to attract those “more floating voters”.

The power of bricks and mortar

Back in May, Superdrug kicked off a major investment in its bricks-and-mortar portfolio to provide customers with “best-in class shopping experiences”. It unveiled plans to open 25 new locations and refit 60 existing stores this year.

This is on the back of 14 new stores last year, including in Manchester’s Trafford Centre and London’s Brent Cross shopping centre.

Superdrug’s expansion strategy is focused mainly on retail parks and shopping centres, which Walburn says aligns with a host of other retailers including Primark and Hotel Chocolat.

Last month it opened the doors to its biggest UK store in Westfield Stratford in London, which he says reflects its desire for larger stores in strategic locations.

These stores enable it to offer a wider range of products and deliver more experiential retail.

“We’re working on a proposition which will really bring to life the customer’s ability to still do their shop, but also immerse themselves in more exciting products,” says Walburn.

He describes the new shops as creating a “beauty playground” with more digital elements like screens and holograms to showcase products in a more engaging and immersive way.

Walburn adds that it could bring in “more niche” brands into these larger stores that might introduce their own staff the way that some of its beauty and department store competitors do.

Superdrug views its physical stores and digital presence as complementary rather than competing. He notes the importance of stores in allowing shoppers to experience new products, whilst pointing out that its app can be used for both information and ordering products whilst in-store.

The convenience of online orders being available for in-store pickup within just 30 minutes helps bring the gap between online convenience and in-store experience, he adds.

“We’ve really cemented the relationship between the two,” Walburn emphasises.

Superdrug’s marketplace moves

Superdrug has also been improving its online offer.  Back in 2022, it launched a health and beauty marketplace, which now has over 22,000 products listed.

The platform is integrated onto Superdrug.com where third-party marketplace products sit alongside products it has always stocked.

According to Walburn marketplace has performed strongly in its first full year.

“The percentage of our sales that go through marketplace are increasing all the time. We had our biggest ever week outside of Christmas last week. We’re on track to hit our targets for this year which is great,” he adds.

Walburn explains that the marketplace allows Superdrug to quickly move into new trend areas and categories that it can’t launch in its physical stores, like fashion and halloween costumes.

“Halloween is a big event for Superdrug…but we’ve never been able to add outfits alongside [make-up]. This is just an example of where the marketplace comes into its own.”

Connecting to younger shoppers

Its fast-growing online offer is not the only way Superdrug is appealing to younger demographics. Back in May, it launched a new branded obstacle game on Roblox, dubbed ‘Superdrug Obby’, to coincide with its 60th birthday.

It is made up of three games themed around some of its own brand ranges: ProCare, Fruity and Solait.

Walburn says the game was developed to appeal to and engage with younger customers, specifically Gen Alpha.

“We’ve got a big project going on about younger customers and how we can attract them in the right way,” he explains.

This ranges from how it communicate to younger consumers in stores and online, including the language it uses, the imagery that attracts them, and the product they want.

Walburn adds that by providing an interactive and engaging experience for younger consumers, it gets them talking about and interacting with Superdrug’s brand and products.

“We’ve had 36,000 user generated items that go on the avatars redeemed,” he says of its Roblox game, adding that it has sold nearly 2,000 shower gels, which players redeem in-store after winning them whilst playing.

“If that’s not online and offline working together, I don’t know what it is,” he says.

Elsewhere, Superdrug has also dabbled with social commerce, including trialling a TikTok shop to see how it might work and learn about the logistics involved.

He notes that “there’s quite a lot of heavy lifting involved” as when you make a sale on the popular app, it has to find its way into Superdrug’s own logistics system.

“We’ve have some really good results on it, particularly in terms of TikTok live,” he says. The live shows, where Superdrug products are showcased have generated “a lot of orders”, he says.

“Now we’re at the stage where we think we’ve learned what we need to know,” says Walburn.

“We know [social commerce] is something that will take hold eventually in the UK and in Europe. We know Superdrug will be well placed to play in social commerce. We just want to get the timing right and make sure we do it in the right way.”

As the retailer celebrates 60 years on the high street, it is clearly focused on not just thriving today – but meeting how consumers will shop tomorrow too.

Walburn says: “We’re really proud of our results, proud of our customer service, proud of our prices – it’s a model which has worked for the last 60 years.”

“I think the model will continue to work well as we continue to adapt to trends and satisfy customers – that’s what retailing is.”

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