On Thursday, the Danish group Matas Group presented its interim report for the second quarter of the broken financial year, covering July to September. For the Swedish and Nordic beauty chain Kicks, the report shows a turnover in line with the previous year, with modest currency-neutral growth where e-commerce increased by just under two percent.
The subdued development is due to increasing competition, particularly in the Swedish and Norwegian markets, combined with consumers tightening their purse strings. The group's management does not shy away from admitting that the outcome during late summer and early autumn could have been better.
We are not satisfied with the result in the second quarter. The development reflects both tough market conditions and the effects of our ongoing transformation. Our initiatives aim to strengthen competitiveness and position the group for long-term profitable growth in each market, says Mette Uglebjerg, CEO and Group Manager of Matas Group, in a comment to the report.
Customers are looking for lower price points
A clear trend that has characterized the beauty market this year is that consumers are increasingly looking for promotions and more affordable alternatives. As Ehandel.se previously reported, the chain has noticed for some time that customers are choosing away from the most expensive luxury in favor of cheaper everyday products, which affects Kicks, which traditionally has a strong foothold in the premium segment.
To counter the changing purchasing behavior, Kicks is now actively working to broaden its range towards more accessible price points within the so-called mass market segment, while also adding completely new categories. Among other things, an expanded range within health and wellness with a focus on sleep, recovery and home spa is now being launched both online and in stores.
Kicks has a strong position in the premium segment. At the same time, we need to be more for more and relevant to more customers and purchasing situations. We are therefore working to broaden the offer with more categories, brands and price points and are now increasing the pace of that shift, says Mette Uglebjerg.
A central part of the work to offer more affordable alternatives is the group's own brands, such as BeautyAct, Nilens Jord and Matas Striber. During the past quarter, sales of the own brands at Kicks grew by just over 19 percent, which made an important contribution to the chain's margins in an otherwise price-pressured market.
IT delays and digital price tags
To be able to meet the intense price competition from pure e-commerce players, major investments are also being made in Kicks' technical infrastructure. The company is implementing new IT systems for pricing and campaign management that will make it easier to manage offers. However, the IT implementation was hit by delays during the second quarter, which, according to the report, led to lower campaign activity than planned and thus dampened sales.
At the same time, Kicks has now completed the roll-out of digital price tags in all stores in the Nordic countries. The digital pricing is an important step in the chain's omnichannel strategy, as it enables quick adjustment of prices and synchronization of flexible campaigns between e-commerce and physical stores in real time.
Our customers should have the best possible products, prices and service. Together with our partners and suppliers, we want to develop an even more relevant range and create new opportunities for growth, says Mette Uglebjerg.
New organization in place before Christmas shopping
In parallel with the digital investments, Kicks continues to integrate its physical store network with online commerce. During the period, the company has opened new modern concept stores on Drottninggatan and in Mall of Scandinavia in Stockholm, as well as in the Triangeln shopping center in Malmö. The investment follows the chosen path where the chain places great focus on flagship stores, which was clearly noticeable when the company previously opened its new store concept which attracted long queues.
To get the full effect of the transformation, a new Nordic business model also came into force within Matas Group on October 1. The purpose of the reorganization is to remove duplication of work within the group and at the same time give local markets clearer mandates to act quickly on customer demand. In connection with the change, a new leadership for the Swedish business is also expected after the turn of the year, when former Nelly CEO Helena Karlinder-Östlundh takes over as the new country manager for Kicks in Sweden and Finland.
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