BW Confidential - Issue #1 - April 2010 - (Page 48)

Market watch Western Europe: Spain More hard times ahead With the economy still in trouble, the signs for Spain’s beauty market don’t look good this year T he faltering Spanish economy and almost 20% unemployment rate has not spared the country’s beauty market. While market figures from industry association Stanpa had not been released at press time, according to market-research group NPD, prestige beauty sales reached €1.O3bn in 2009, down 5% on the previous year. It is a far cry from the 6% growth rates the market enjoyed in 2007. an association, called Persé to help members confront economic challenges and address specific issues in the Spanish market. However, many of the smaller retailers were forced to resort to discounting. Perfumes y Trading down Although Spanish consumers are among Europe’s biggest beauty consumers, average annual spend per consumer fell from €174 in 2007 to €172 in 2008. Consumers began to look for cheaper items and traded down to mass-market products or privatelabel offers from large retail chains. Natura Bissé group senior vice president Patricia Fisas comments: “We’ve noticed a trend for affordable all-in-one products. Although high-end clients have continued to be loyal to our most exclusive products, they tend to space out their purchases much more than before. Mid-priced products have been the least successful.” All this has taken its toll on the country’s selective perfumeries, with many retailers closing doors in the market last year. This has made the need for cooperation among independent retail players all the more important. In 2008 the market’s retailers founded “ Although high-end clients have continued to be loyal to our most exclusive products, they tend to space out their purchases more than before. Mid-priced products have been the least successful schemes and incentives are also gaining ground. For Father’s Day, for example, Perfumery chain IF is offering customers who spend more than €70 (or €60 with an IF loyalty card) a free coffee machine, while a competitor is giving away a free watch for the purchase of a 100ml fragrance. Other independent perfumeries are offering their customers generous payment terms. Looking for a point of difference Those retailers who succeeded in bringing exclusive offers to market fared better. “The latest trend in Spain’s selective market is to focus on specialization. Retailers are looking for brands which bring an added-value factor to their clients,” notes one industry player. LVMH-owned retailer Sephora, for example, with its regular influx of exclusive brands, continued to expand in the country this year. It now operates 60 standalones and 20 corners in El Corte Inglès department stores. The outlook for Spain’s beauty market is still uncertain. But with the economy showing no signs of rebounding, the high growth the market got used to in the recent past looks to be a long way off. n Spain prestige beauty sales 2009: €1.03bn, -5% vs 2008 Source: NPD Group Natura Bissé Group senior vp marketing Patricia Fisas Diseño Spain sales manager Javier Blanco warns they should be cautious: “Discounting is one of the biggest challenges facing the Spanish market today. This practice could cause the consumer to become suspicious over the value of the product”. Loyalty ” 48 April 2010 - N°1 - BW Confidential credit: stock.xchng

Table of Contents for the Digital Edition of BW Confidential - Issue #1 - April 2010

Update - Brand and retail recap
Take note - Market facts, figures and trends
Launches - The latest fragrance, skincare and make-up launches
Best of BW - Market highlights
Interview - Sephora international & development md Olivier Schaeffer
Insight: make-up - Category overview
 - Industry viewpoint
 - Trends
Wellness report - Overview
 - Industry roundtable
 - Spa case studies
Travel retail - Europe: little chance of a rebound
Market watch: Western Europe - Regional analysis
 - Germany
 - France
 - UK
 - Spain
 - Italy
Radar - Six up-and-coming beauty brands
Packaging special -  Industry analysis
 - Innovation
Last word - UBS analyst Nik Modi's outlook for 2010

BW Confidential - Issue #1 - April 2010