瑞信美股美容与个人护理行业关键要点美容和个人护理行业的亚马逊效应201842723页

DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.27April2018Americas/UnitedStatesEquityResearchConsumerDiscretionaryGlobalBeauty&PersonalCareEXPERTINSIGHTSTheCreditSuisseConnectionsSeriesleveragesourexceptionalbreadthofmacroandmicroresearchtodeliverincisivecross-sectorandcross-borderthematicinsightsforou[e-mail]@[e-mail]é,[e-mail]@[e-mail]@[e-mail]@credit-suisse.comPhilipWang,[e-mail]@credit-suisse.comKeyTakeaways:The“AmazonEffect”ontheBeautyandPersonalCareIndustryWehostedanindustryexpertcallonthepotentialimpactofAmazonontheBeauty&PersonalCareindustry(presentationslidesandreplaydetailsenclosed),withafewkeyIndustry&stock-specifictakeawaysbelow:■AMZNQuicklyGainingShare,butOver-IndexinginaFewKeyAreas:WeestimateAMZNhas~9%shareofUSBeauty&PersonalCaretoday,butisgrowingfast(+40%YOY).Whiletruewomen’s“Beauty”categorysalesarelikelyasmallerportionofsalestoday,AMZNdoesover-indexinafewkeyareassofar:1)MoreMassvs.Prestige;2)MoreSkincarevs.Cosmetics;and3)MoreMen’svs.Women’s.AndwhilewebelievemanyprestigebrandsstillviewAMZNasa“branddilutive”channeltoday,AMZNisstartingtogivemoreconcessionstoattracthigherendbrands(brandsupport,gating,betterdetailpages/richercontent)—whichcouldhelpopenthewindowtoprestigebrandsdistributingwithAMZNinthecomingyears.■E-ComDrivingFundamentalShiftinHowConsumersShopBeautyCategory:WhileBeautyhashighrepeatpurchasingratestoday(75-80%ofsalesdrivenbyrepeat/replenishvs.newproducttrial),theriskforthebrandsisthatcustomerschangebrandswhentheychangethewaytheyshop—&theshiftonlineisdrivingafundamentalchangeinhowconsumersareshopping(e.g.whybrandslikeKylieJenner’s“KylieCosmetics”cangrowtonearlythesizeofCliniquein18months).Consumersarewillingtogetmoreeducatedonlinevs.havingtoshopinastore(&AMZNisincreasinglywhereconsumersstarttheirresearch)—increasingtheretailer’sburdentoenhancetheirownonlineexperiences(vialoyalty,videotutorials)andkeeppushinghardertoofferconsumersnewreasonstoshopstores(exclusivity,instoreservices/events).Asbeautysharecontinuestoshiftonline,webelieveretailerssellingcommodity,“me-too”productswillbemostchallenged(e.g.,weexpectGrocery&DrugstorestocontinuetobesharedonorstoSpecialtyandOnlinechannelsinthecomingyears).■WillAMZNDriveLowerBeauty&PersonalCareIndustryMargins?:AMZNdoesnotstrivetobeapriceleader(onlowestprice),butdoespricematchtoensurethey’regivingconsumersthebestprice.Frompastlearnings,whenAMZNentersacategoryinamoremeaningfulway,itdoestendtoleadtolowerindustrymarginsingeneral—notbecauseofmarkdowns,butbecauseAMZNshinesabrighterlightonindustrypricetransparency.Inourview,afterstepped-upBeautyindustrypromosin2017,thismeansbranddistribution/controlwillbeparamounttoprotectingBeauty&PersonalCareindustrymarginsfromhere(e.g.ourexpertexpectstoseebrandsincreasinglymovetowardsanationalpromocalendar,insteadofrotatingpromoswithvariousretailerswhichexposespotentialforpricematching).27April2018GlobalBeauty&PersonalCare2■KeyStockTakeaways:■AMZN:CategorieswhereAMZN’sbeenmoresuccessfulsofararemorehomogeneous(CE,media,etc.);Otherswhereithashadamoredifficulttimelikeapparelrequiregreaterhandling.AkeydebateforAMZNwillbewhereBeautyfitsinthatspectrum—whichcoulddictatethespeedofAMZN’simpactonthecategoryincumbentsincomingyears.■ULTA:AMZNisclearlyalong-termrisk,butwestillseesharetogaininSpecialtyBeautychannelandwethinkULTAisdoingagoodjobofcarvingoutacompetitivemoat(investinginprestigeboutiques,buildingupin-storeservices,exclusivebrandslikeMorphe,28mloyaltymembersdrive90%+ofrevenue).■EL:WhilewethinkELisalongwayfromsellingdirectlyonAMZN,AMZNcouldofferagrowthchannellonger-term;betterpositionedasbrandvsretailerinsharebattlewithAMZNoverlong-term(withbetternegotiatingpowergivensubstantialprestigebeautyshare).■LVMH:TheproductmixishighlygearedtowardsprestigebrandsandtheselectivedistributionagreementinplaceintheEUwillmakeitdifficultforAMZNtogetthesupplyofLVMH’sproducts.Sephoraisperhapsthemostexposedtobeautymovingonlinebutitsonlineplatformisalreadybigwithmostprestigebrandssoldand,similartoUlta,theloyaltyprogrammightbesomethinghardtoreplicateonAMZN.■L’Oreal:DigitaliscoretoL’Oréal’sstrategy,although,insofarasAmazonisconcerned,thishaslargelybeenlimitedt