Section: NACDS Marketplace
Among the various preshow sessions offered for NACDS Marketplace
attendees was "The State of Beauty: An Inside Look From In Style," an
educational seminar focused on beauty trends, particularly within the
prestige side of the business.
In Style beauty editor Ning Chao discussed the trends she believes to be
impacting women - and their effects on the beauty industry - Tuesday
morning to a crowd of more than 50. The presentation addressed a
number of factors changing the business, including the increasing role of
the Internet, the democratization of style and the celebrity lifestyle and
culture that has influenced the market, or as Chao dubbed it, the "Jessica
Simpson phenomenon."
Chao analyzed beauty trends among different generations and their
effects on individual businesses. Attitudes widely vary between Generation
X, Generation Y and Baby Boomers, she said.
"Generation Y grew up with the Internet and technology and use it to
interact with people online," said Chao. "They're willing to go out there and
find things themselves. These are participatory consumers who have been
raised on reality TV shows. They're experimental and view beauty as a
self-expression. They demand more for less and take pride in finding a
steal."
Generation X's primary concern, according to Chao, has become time
management as they grow older and focus on raising children.
"They're looking for easy and affordable products and have limited beauty
routines," said Chao. "They want the most effectiveness in the least
amount of time."
The Boomer generation accounts for the largest sector of women who
want to lead more "vibrant and full lives than people in that same age
category in the past," and are considered to be loyal consumers of their
beauty products, she said.
Chao also discussed making beauty application processes easier through
built-in brushes and sponges, the industry's involvement in the green
movement, the continuing growth of celebrity fragrances and the rise of
neutraceuticals.
"Beauty is now being tackled from all angles, and it's all about combining
beauty and health," said Chao. Chao then gave mass marketers a preview
of prestige trends that have yet to go mainstream.
~~~~~~~~
By Michelle Edgar
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The BRICs and beyond: The lure
of emerging economies for the
beauty industry
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By Carrie Lennard.
Why are the BRICs (Brazil, Russia, India and China) such a draw for
beauty companies and in particular direct sellers?
Brazil and China are the star performers and are set to add around US$8 billion
and US$10 billion to the size of their respective beauty industries by 2014.
All of the BRICs are set to be pivotal to future growth. These four countries alone
will contribute over half of the total US$43 billion absolute growth in the global
beauty industry over 2009-2014.
Although there is a general trend towards urban dwelling in the BRICs, rural
areas continue to account for the majority of consumers in nearly all of them.
While the number of chained stores is beginning to grow in the big cities, the
distribution infrastructure is often very poor and still developing in these markets,
meaning that it would otherwise be very difficult to reach rural consumers.
Furthermore, there is still a very strong emphasis on community living in the
BRICs. Direct selling is, therefore, the ideal way to reach these rural consumers.
What sort of products and price points are popular in the BRIC
markets and why?
Sales in both Brazil and India are almost exclusively accounted for by mass
brands, so there has been little evidence of the kind of trading down to cheaper
brands which has been so prevalent in mature Western markets, quite the
opposite in fact. Rapidly increasing disposable incomes mean that consumers
are shifting beyond solely purchasing basic products to more sophisticated
beauty products. Brazilian sales are dominated by hair care, fragrances and
deodorants (body sprays are often used as cheaper substitutes for more
expensive eau de toilettes).
Russia was the only BRIC market to see a trend towards consumers trading
down from premium products to cheaper brands during the recession. Its beauty
market comprises a higher proportion of premium products than the other BRICs
- in 2009 premium beauty accounted for 11% of total beauty and personal care
sales in Russia, compared to just 1% in Brazil.
Skin care dominates value sales in China because of the widely held belief that
pale skin, especially facial skin, equates to beauty. Per capita expenditure on
skin care in 2009 was still five times higher than that on most other personal care
categories. Sales of premium skin care products from multinational companies
are thriving in China because of widespread consumer mistrust of domestic
brands, and belief in the superior quality of premium skin care over mass priced
products.
Why are frontier markets such as Mexico, Thailand and Indonesia
moving into the spotlight and how are companies targeting them?
Looking further beyond the BRICs, there are yet more up and coming markets
which are seeing rapid growth in their beauty industries. Markets such as
Thailand, Mexico and Indonesia will be key contributors to global beauty industry
growth. All have rapidly expanding middle-classes and high levels of
urbanisation, making them prime targets for beauty companies in the future.
L'Oréal has now opened subsidiaries in the key frontier markets of Vietnam,
Egypt, Pakistan and Kazakhstan. It recently announced that it aims to double the
number of people that use L'Oréal brands worldwide within the next 10 years.
With this in mind, L'Oréal has said that new smaller markets are expected to be
the focus of further developments in the future.
The UK cosmetics store chain The Body Shop International opened its first outlet
in Vietnam in 2010 in recognition of the rapidly increasing disposable incomes in
the country and willingness to spend on beauty products.
Japanese beauty company Mandom has looked outside its stagnant home
market in order to grow. It is focusing particularly on developing its business in
the fast growing Indonesian market, where it is currently achieving double-digit
sales growth. The company now plans to expand its export business in Africa
and the Middle East.
The Countries & Consumers team at Euromonitor International have chosen the
Future Seven markets, which are the next major emerging market economies to
watch. The Future Seven are:
Turkey
Egypt
South Africa
Indonesia
Vietnam
Mexico
Argentina
These seven countries offer large investment opportunities due to their:
Expanding economic growth
Young and growing population
Rising income levels and expanding middle class
Emerging markets are leading the global recovery following the economic
recession. Many advanced economies are seeing slowed economic growth due
to large public debt, creating a larger role for the Future Seven in world-wide
recovery. Their openness to global trade will lead to an improvement in living
standards across all seven countries.
However, the future seven do face some challenges due to their status as
emerging markets. Income inequality is quite high in most of the future seven
economies, and although the population is young and growing, this can only be a
benefit if the job markets improve. Some countries were ruled out of the Future
Seven because the challenges were too great:
Pakistan, Iran, and Thailand were ruled out due to political instability
Bangladesh was ruled out because of environmental risks
Mexico has been battling drug wars, but neighbors the world's biggest consumer
(United States) and is part of NAFTA, therefore providing opportunities to the
country which outweigh its challenges