The success of French pharmacy staples Bioderma and Vichy in the United States has woken the American beauty industry up to the power of the pharmacy channel in Europe, but fragmentation makes the channel challenging to navigate.
Pharmacies are responsible for about 20% of France’s $18 billion beauty and personal care market, and there are over 20,000 of them across the country, where they’re destinations for shoppers seeking trusted recommendations and compelling product selections. Joel Palix, founder of investment and M&A advisory firm Palix Unlimited, points out that beauty brands entering Europe frequently choose not to partner with Sephora because the beauty specialty retailer’s assortment is comparatively considered “boring” in the region.
During a panel discussion at Beauty Independent’s Dealmaker Summit in London earlier this month, he said, “In Europe, it’s not the same game as in the U.S. The job that Sephora is doing in the U.S. is done by the French pharmacies.” He added the speed at which pharmacies can pick up brands makes them attractive brand launch pads, too. Palix said, “If you want to start doing 10 pharmacies, you can do it in a month, whereas it takes a year or two years to get into a big chain. It’s a real opportunity for brands.”
Palix was joined on the Dealmaker Summit panel by Pascal Houdayer, senior advisor at global management consulting firm Kearney and former CEO of Orveon Global, and Carlota Thevenot, CEO of haircare brand Les Secrets de Loly.
Palix spotlighted Colgate-Palmolive’s $1.69 billion acquisition of Filorga, a premium anti-aging skincare brand primarily distributed in French pharmacies, in 2019 as evidence of the French pharmacy channel’s brand-building prowess. In 2021, Lashile Beauty, a French gummy brand that racked up around 30 million euros or roughly $31.4 million in annual sales through pharmacies, was purchased by Cooper Consumer Health in 2021. A year before, it received a minority investment from Palix Unlimited.
“It’s a real opportunity for brands.”
French beauty brands are often exclusively sold in the pharmacy channel and tailor their positioning and products to pharmacies. Houdayer, Palix and Thevenot identified the skincare brand La Rosée as opting for distribution and merchandise strategies tailored to the pharmacy channel. Created by two pharmacists in 2015, it’s stocked at 8,000 pharmacy locations in France. Last year, Belgian family office FG Bros acquired a 20% stake in the brand.
“They brought refillable natural clean skincare at an entry price point with a strong community backing and online and social buzz,” said Thevenot. “They’ve taken codes from selective retail into the pharmacy to elevate the brand’s visibility in store. They also have animation, education and sampling.”
Les Secrets de Loly targeted the pharmacy channel early when developing its brick-and-mortar strategy in 2021. It landed at 2,000 pharmacy doors, initially tapping a third-party distributor to manage its large wholesale network before bringing the function in-house to amplify education and merchandising.
“It’s a channel that requires operational excellence because of the density of the doors that you want to go after and also the impeccable in-store execution,” said Thevenot. “Those mega pharmacies that you have in France and in continental Europe, they’re big chains, and they provide experiences to the consumer. They’re also hungry for new offerings for digital savvy brands that resonate with the younger generation.”
The French pharmacy channel is largely comprised of about 200 cooperative groups, including Alphega Pharmacy and Giphar, that were created by independent pharmacies to achieve greater buying power and economies of scale. Thevenot mentioned that the largest French cooperative has sales of over 1.7 billion euros or roughly $1.78 billion annually, with the top five groups representing 30% of all pharmacy doors in the country and about half of the channel’s beauty sales. She explained that brands have to negotiate with individual pharmacies on merchandising and pricing and with cooperatives for “special conditions and visibility.”
Categories and Prices
French pharmacies sell products in most beauty and personal care product categories across a wide range of prices from mass to prestige. Luxury is an exception, and Houdayer remarked that luxury beauty hasn’t yet fully penetrated the pharmacy channel. Located within the bustling Cap3000 shopping center near the Nice airport, he named Pharmacie Cap3000 as one of France’s top pharmacies, generating about 50 million euros or roughly $52.4 million in sales a year.
One product category that hasn’t made tremendous inroads into French pharmacies is fragrance. Palix noted they’re not embracing both legacy and niche fragrance brands. He said, “The pharmacist will see fragrance as a bit futile and not a proper beauty product.”
Similar to trends in the U.S., haircare and skincare is going premium in France. Boosted by higher prices, the categories are growing by double-digit percentages in the pharmacy channel.
The In-Store Experience
Modern French pharmacy design resembles retail stores rather than clinical spaces. Thevenot likened French pharmacies to “fast fashion retail” with beauty merchandising upfront and prescription counters in back. “They have in-store catalogs, and they have retail merchandising spaces that highlight ‘hot on TikTok,’ for instance,” she said. “They’re rethinking the retail experience to differentiate themselves.”
Palix shared that PharmaBest, a pharmacy cooperative with 125 locations in France, has shop-in-shop installations from luxury skincare brands like Clarins. He said, “The luxury brands now have to go to these stores because there is so much traffic.”
The French Pharmacy’s Future
Houdayer theorizes that the future of retail in the pharmacy channel and other channels will involve a shift from purely selling products to combining selling products with enhanced experiences encompassing services. “There are some forward thinking channels that are working on what they call care centers,” he said. “You go with your wife on a Saturday and you drop your kids off in this care center. Your wife wants to have a service. It can be a facial or she can get her hair or nails done.”
As the beauty, health and wellness categories blend and the longevity movement heats up, Palix believes pharmacies are primed to gain further ground. “They’re local. They know you. I think personalization will be pretty big in the next decade,” he said. “Supplementation all the way to longevity, I think this can be provided by a pharmacy professional.”
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