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2017

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Turnover has passed the £40m mark at organic health and beauty products business Neal's Yard, boosted by expansion in the UK and overseas.

The company also completed the expansion of its head office and production facilities in Dorset during the last financial year.

Neal's Yard manufactures and sells products including skincare, cosmetics and therapies and has more than 50 stores across the UK.

According to recently filed accounts, turnover grew to £42.4m in the year ending 31 March 2017, up from £37.3m in 2015/16.

However, pre-tax profit dipped to £804,000 from £993,000 the year before. This was put down to investment in infrastructure and increased interest costs on additional loans. EBITDA remained at £2.9m.

In their report accompanying the results, the directors said the group "continued to strengthen its market position during the year via product innovation in the organic health and beauty category as well as expansion in UK and in existing and new markets overseas".

Overall retail sales increased by £3.2m during the period, a rise of 13 per cent, and were boosted by the refurbishment of the company's e flagship store in Covent Garden, London.

The Covent Garden Therapy rooms were also renovated during March 2017 and a new store opened in St Pancras International station in February.

Neal's Yard's UK and International wholesale businesses also performed well, with sales up 17 per cent. The company's partners also launched eight new stores and branded counters, including the first outlets in the Philippines and India.

The expansion of the Neal's Yard's production facilities and head ofﬁce in Dorset was completed in September 2016 and this is expected to enable "a step change in growth" and ensure that its products continue to be made in the UK.

The directors added: "The focus on building the infrastructure for future growth and the impact of the decline in sterling on the cost of purchases, has led to a temporary fall in profitability but this is expected to recover over the coming year.

"The multi-channel and international strategy operated by the group provides a broad platform for continued future growth and we expect to continue to expand in all sales channels in the coming years."

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Turnover has passed the £40m mark at organic health and beauty products business Neal's Yard, boosted by expansion in the UK and overseas. The company also completed the expansion of its head office and production facilities in Dorset during the last financial year.

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International Stance:
NYR is well developed in the Asian market with over 30 stores in Japan alone. However, they would benefit greatly from opening more stores in North America as they only have one at the moments and they are missing out on a huge market. The Californian and New York environment would be perfect ones to enter in initially as the demographic fits NYR's due to most people living in those regions being very health conscious and prefer using organic products. Furthermore, NYR need to expand their production and warehouses due to the fact that for international customers it would cost £30 or more for their products to be shipped which is too much.
Also NYR could open more stores in popular shopping areas in the UK as often their stores are tucked away at the back.

Marketing:
NYR need to heavily work on their marketing efforts in order to get more traction as a large percent of the market has not been tapped into by NYR. The company needs to regularly update their social media pages and start looking into the possibility of collaborating with either another like-minded company or influencer (who is well known e.g. Niomi Smart- advocate for organic and ethical living) to promote their products. Youtube is the biggest promoter of beauty and skincare products with over 700 million views a month devoted to beauty related videos. Customers want to see results and if products really work before forking out a ton of money on them.
They also need to work harder to ditingusih themseleves from other 'natural' brands and really push the fact that they are over 90% organic as often customers don't know that natural brands can use synthetic products (Kiehl's).
https://www.refinery29.com/en-gb/2017/10/177954/synthetic-natural-beauty-ingredients

Promotions:
NYR rarely has promotions on their products that will attract customers. They need to use peak buying times such as 'Black Friday' and Boxing Day to push promotions in order to attract more sales.

Demographic:
Although NYR states that they cater to the 25-50 age range, they are seen to be focusing mainly on the older consumer which leaves out a large market. NYR need to release products that can be catered to younger consumers. NYR has products that could be catered to the younger demographic, they just aren't marketing them well enough and do not disclose how the product can help with skin issues which means it makes it a longer task for the customer to find a product that may help with redness for example as they have to search which ingredients helps with that.

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NYR has been posting the odd recipe video on their youtube channel for a long time using some of the organic ingredients they sell on their website.
They could take this idea further by partnering with popular food blogs or companies like Bon Appetite or Goodful (focus on healthy recipes) to promote their products further.

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Chocolate Pieces Recipe | Neal's Yard Remedies

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NYR has always been very transparent in their production and manufacturing processes. This video gives and insight to customers on exactly where their ingredients are sourced and how they are made which is favoured by customers as they like to be in the loop.

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Neal's Yard Remedies | Skincare | Feelunique

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Bargaining power of buyers: Medium

NYR products are priced high and cater to the premium market. However, affluent buyers are less price-sensitive and unlikely to switch to lower-priced products.

Bargaining power of suppliers: Low
Because they have many suppliers, company has more power as they can easily source else where, also company manufactures their own products not externally.

Threat of new entrants: Medium
NYR has a loyal customer base so even if there were new entrants, the company most likely wont suffer due to good brand loyalty and reputation.
Another factor which discourages entry into this industry is the huge competition present in the industry.
Although, NYR is having trouble marketing their products to mass market so is possible for a company to use their concept and preform better with better marketing techniques.

Threat of substitutes: Low
Cosmetics is typically bought according to skin types and income levels. It’s difficult for a new company to enter the skin and beauty care business unless the brand features new technology.
Hence, high-end companies such as NYR rely heavily on repeat customers and mainly compete on product quality, brand recognition, and product differentiation.

Competitive rivalry: High
Many competitors who are offering similar products but at cheaper price or are more well known. However NYR has customer loyalty.

Suggestions:
NYR need to use aggressive marketing as it will ensure that they have products which are known to the market (Chaudhury & Jean, 2002: 22-24). Creating market awareness will ensure that highs ales levels are achieved. A combination of Internet, electronic and mass media advertising should be used in order to reach all the desired target market segments.

Due to the high competition present in the skincare industry, it is important to implement a cost leadership strategy. This involves pricing products lower than competitors to attract consumers. The cost leadership strategy will ensure products are cheaper than those of competitors and customers will be attracted from the large firms which sell products at higher prices (Bateman, 2010: 44-46). Developing customer loyalty will ensure long term profitability.

https://www.ukessays.com/essays/marketing/cosmetic-industry-porters-five-forces-analysis-marketing-essay.php

https://marketrealist.com/2015/08/porters-five-forces-model-estee-lauders-competitive-analysis
https://www.businessnewsdaily.com/5446-porters-five-forces.html

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Neal’s Yard Remedies (NYR) was established in 1981 as a modern apothecary which strives to create natural and organic health and beauty products. Their very first store was located in Neal’s Yard, Covent Garden but now they have over 300 outlets spanning over five continents. NYR also run therapy rooms across the UK where they offer services such as acupuncture and massages using their products. The company is now being run by the Kindersley family.

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Biggest Competitor- Kiehl's (New York Company)

About: Kiehl's offers natural personal care products that contain beneficial properties. The ingredients are natural with minimal preservatives.

Product price: £15-£50.

Marketing: maintain Fair Trade partnerships that support local and international communities/ charities. Mainly support; AIDS research, environmental conservation and child outreach programs. Each store has trained sales reps who are skincare experts offering personalised consultations. customers can sample before they buy.

Kiehl's also have better promotions. They have discount codes that customers can use to get money off their purchases. For example, now they have a promotion where if you buy £80 worth of products you get a £16 discount.

L'occitane

About: Offers personal care products for both men and women inspired by mediterranean lifestyle. Products made using botanical ingredients which a quarter are organic. They use principles of physiotherapy and aromatherapy.

Product Price: £10-£80

Marketing: Aim to preserve the knowledge of the power of nature. Each individual bottle is traceable back to its original origin and producer. The company foundation donates £1 million to support visually impaired and women in Burkina Faso. Each store is filled with scents if their famous oils and customers can find samples of each product within the store to smell and test.

NYR advantages:

The only company to have majority of organic and natural products which justifies their high price point unlike Kiehl's.

They don't only specialise in personal care products but also health products and sales reps can give advise to customers about that.

They have therapy rooms offering treatments to customers.

Also their price points are the most median.

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Their brand mission (symbolized by their logo of a balanced tree) from the very beginning was to create products that will balance a person’s outer beauty with their inner health which is why they use the highest possible percentage of organic ingredients not only because they are better for the environment, but they are also better for the consumer. The herbs, botanical''s and essential oils are ethically sourced from countries like Mexico, Kenya, Spain and Morocco whilst they also grow acres of herbs on the grounds of their Dorset factory. The company is also known for their blue glass bottles which are vital in keeping their products safe from UV. Lighting meaning, they don’t have to add as many preservatives to keep them fresh.
https://www.nealsyardremedies.com/about-the-brand.html

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https://issuu.com/annarobbins93/docs/nyr_report

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neals yard remedies nyr organic skincare natural neils neal's aromatherapy herbs safe beauty

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Neal's Yard Remedies is the UK's foremost destination for scientifically formulated, ethical, effective, natural health and beauty. Our comprehensive range of award-winning, certified organic products, the largest in the UK, is handmade in the eco-factory in Dorset, using our own 'home grown' and sustainably sourced, certified organic ingredients.

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Neal’s Yard Remedies was the first company to be certified organic in beauty and health by the Soil Association since 1991. Since then, they have partaken in various campaigns to help protect the environment such as banning micro beads, saving endangered forests and bees. In 2014 NYR became the first company in health and beauty to receive 100/100 for ethics by The Ethical Company Organization.

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NYR demographically targets men and women  within the 25-50 age range who earn an above average income.
Their customers are used to living a busy city lifestyle and try to avoid putting more stress on their bodies by keeping fit, eating organic produce and using as little chemicals on their skin as possible.

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NYR had collaborated with the University of Westminster to deliver two successful KTP strategies.
The first was to be able to produce and launch new products more easily.
The second was the completely remove any trace of synthetics from their products. They were able to do this by extensively researching and testing existing materials. This helped the company to align their products to their values better.

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Double KTP success for Neal's Yard Remedies - Business - University of Westminster, London

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The University of Westminster has collaborated on two successful Knowledge Transfer Partnerships with Neal's Yard Remedies.

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Poor.

Data from research found that of the 16-34 age group of UK customers only 18%  were aware of the the brand and 3% had purchased from them. In the 34-54% age range, only 25% had heard of the brand.

Most customers who knew about NYR lived around London. The company is not full saturated in the UK.

Many don't buy from them as they perceive them to be overpriced.

Many are not aware of the company ethics and charitable contributions which is their USP. Brand is not communicating strongly to consumer and why customers believe its overpriced.

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NYR internal branding is quite strong as employees scored highly (88%) when asked if they believed the brand stays true to their mission statement.
91% of NYR employees said they were proud to work there. (https://www.b.co.uk/company-profile/?neal%60s-yard-remedies-ltd--72562)
Employees also have a forum where they can propose ideas and improvements to the company and are given prompt responses. 75% of employees said they believe that they are listened to and that they help make a difference in the organisation.
Store managers have been given various opportunities to visit the NYR factory and farm to see how the products are produced and packaged. This shows how transparent the company is and are proud of their production values.

The owner of NYR, Peter Kindersley gifts staff with a 15% share in the company. (2008)

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Staff handed share in Neal's Yard business

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Owner gives 280 employees a 15% stake as retailer embarks on major global expansion plan

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Good Journal on competitor analysis and brand health

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Marketing Strategy and Expansion for Neal's Yard Remedies

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Issuu is a digital publishing platform that makes it simple to publish magazines, catalogs, newspapers, books, and more online. Easily share your publications and get them in front of Issuu's millions of monthly readers.

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Good Journal if need extra info on STP or competitor analysis.

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Integrated Marketing Communications Plan for Neal's Year Remedies

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Integrated Marketing Communications Plan for Neal's Year Remedies - Free download as PDF File (.pdf), Text File (.txt) or read online for free.

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NYR owns just one factory in Dorset to produce their products. The factory is designed to be as ecological as possible by using energy efficient air management, rainwater and greywater recycling. Their also have air source heat pump systems and solar panels along the whole factory. This way the company keeps their carbon footprint to a minimum. Using small scale production, they are able to ensure their products are at their most fresh and effective state. The production team at NYR fills, labels and packages the products making sure that every product is individually checked to ensure quality and consistency.

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Segmentation:
NYR has split their customers into three segments. The first is consumers ages between 25-50 years old who earn above the average income as their products are priced higher. The second is people whose values strongly align with NYR, they believe in using purely natural products that are sustainably sourced and would rather buy from a company who values ethics like NYR does. The third segment is people who are health conscious and use products that aid in their health and well-being journey as NYR sells various health supplements and herbal remedies.

Targeting:
NYR has an advantage of being the only company amongst its competitors who are wholly organic and ethical. They should use this opportunity to really sell this to consumers who support ethical businesses and prefer using organic products. Now more than ever, consumers are being more conscious when purchasing products, especially skincare. In fact, 40% of millennial women said that a product being natural would encourage them to spend more on it (Toluna x Refinery29 Research 2017)
https://www.refinery29.com/en-gb/2017/10/177954/synthetic-natural-beauty-ingredients. So NYR need to really focus on targeting this demographic by pushing collaborations with like minded influencers and promote their sustainability more as customers are not aware of the good that they are doing which is why they aren't investing in the products.

Positioning:
Customers who are aware of brand view it as a very natural and positive brand who fulfils their mission statement of being ethical and organic. However there is a large number of people who are not aware of the brand and their values (survey results show 97% of respondents were not aware of the brand), so do not feel the price is justified for 'natural' products that they could purchase cheaper from competitors. This is an issue NYR needs to address.

(To see survey- look at attached journal)

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Promotion: