A direct selling revival is unlikely to happen in 2024. Consumers craving personalised shopping experiences are migrating towards pharmacies. In this article, Euromonitor International explores the drivers for channel depletion in Latin America.
Pharmacies deliver the wellness side of beauty as products expand beyond dermocosmetics
During the pandemic, pharmacies emerged as a key retail channel – one of the few that did not close – and as their beauty and personal care offerings grew, driven by dermocosmetics, the channel was seen as a link between beauty and health and wellness.
Once lockdowns in Latin America ended in 2022, consumers still visited pharmacies for beauty and personal care, as the blurring wellness concept had become a priority for many, while the one-stop shop aspect of pharmacies remained relevant. 
Pharmacies’ penetration in beauty and personal care has been growing steadily throughout the years. Chile stands out; more than 28% of beauty and personal care sales were sold through pharmacies in 2022 – up five percentage points from 10 years earlier.
The number of pharmacies has also increased sharply across many countries in the region. Between 2020 and 2023, the number of pharmacy outlets in Latin America grew by 7%, representing 14,598 new stores in just three years – reflecting an accelerated pace of expansion compared to the 18,858 new stores added between 2010 and 2020. Additionally, greater shelf space in these stores is being dedicated to beauty, as well as more specialised sales reps, and even more “medical” assistance, such as dermo-experts or nutritionists mixing beauty and dietary supplements products into one holistic solution.
E-commerce wins over Latin American consumers through personalisation and positive shopping experiences
The growth of retail e-commerce has also contributed to declining share among direct sellers. Personalisation is not only present in stores, but also online, with apps and websites that allow consumers to chat to or call a specialist to advise on products, brands and benefits.
The omnichannel operations of legacy store-based retailers are a huge part of this shift. In Brazil, for instance, two out of the top five retailers that contributed most to total e-commerce sales growth for beauty and personal care were pharmacies during Q3 2023, showing the important dynamism and attraction of pharmacies as a relevant and fast-growing channel for beauty.
Direct sellers continue to face challenging times in a region showing rapid digitisation
While 2020 was an exceptional year for direct selling in Latin America, the situation for direct sellers became much more challenging from 2021 onwards due to several factors – such as a declining salesforce that became more attracted to remote work, and premiumisation trends that were unfavourable to many mass-positioned direct selling brands.
2023 added new challenges for the channel, as Latin American consumers’ purchasing power continued to shrink, while economic stabilisation eased the unemployment rate – making it difficult to recruit new sales reps. Inflation was lower than 2022, but ongoing economic uncertainty made consumers cautious. Trading down was the main strategy adopted, via formats, brands or even categories. This trend was supported by the proliferation of private label lines, some of which were developed by pharmacy chains.
As a result, direct sellers are adjusting to the digital era and developing new ways to reach the consumer, through digital interactive catalogues, faster logistics and new selling platforms to recruit sales reps. They now need to add value to their brands to keep customers from trading down to cheaper options, offer new business that is attractive for sales reps and, most importantly, improve the shopping experience by offering greater personalisation.
How can direct sellers continue to meet the needs of Latin American beauty consumers?
To better attract beauty consumers, retailers in Latin America should embrace novelty and affordability – two key qualities that attract Latin American consumers. Indeed, limited purchasing power is often a barrier to affordability, and small sizes are gaining share in not only beauty-centric categories, but also personal care, such as deodorants.
2024 holds challenges for direct sellers, but also represents the opportunity for them to improve the shopping experience and add value to their brands. Direct selling is, and will probably remain, the leading channel for beauty in Latin America, but as society evolves, so must the retailers that play in the space.
Their keys to success will be embracing innovation, omnichannel strategies, new and more attractive claims and a new, consumer-centric selling philosophy. Some big direct players are already answering some of consumers’ new requests. Natura strives with its sustainability claim, Belcorp has been able to diversify through brands that focus on its consumer target, and Yanbal is trying to relaunch the brand with innovation. However, broader and stronger actions must be taken to retain and attract consumers in the direct selling channel.
Read our article Direct Selling in Latin America: Facing New Challenges in the Beauty and Personal Care Industry to learn more about this situation, as well as our brief Megatrends: Shopper Reinvented – Impact on Consumer Goods and Services Categories for a deep dive into why consumers migrate towards pharmacies.