BW Confidential - Issue #8 - October/December 2011 - (Page 90)

Market watch: Russia Prestige retailing All change With acquisitions, regional expansion and new format stores, Russia’s prestige retail scene continues to see major changes, while competition among the majors heats up by Yana Krupenina T he Russian retail market for beauty has gone through many changes over the past few years. Arbat Prestige, Russia’s leading perfumery chain with around 80 stores, shut up shop in 2009. This had an immediate negative effect on brands, which saw a large portion of their business disappear. It also left a large gap in the market and gave its competitors a rare opportunity. Competitors quickly looked to take Arbat Prestige’s share and strengthen their own positions. The market is now split among seven main retail chains: L’Etoile, Rive Gauche, Ile de Beauté, Douglas Rivoli (which was recently acquired by Rive Gauche), Arbor Mundi, Mercury and Articoli (Bosco). However, drugstores, such as Podruzhka and All!Good! also managed to grab a piece of the pie. Market research firm Discovery Research Group estimates that L’Etoile is now the outright leader in perfumery retailing in Russia with 33% of the market. It is followed by Rive Gauche with a 22% share, Ile de Beauté, which has 21% and Douglas Rivoli, which claims 5% of the market. Fierce competition It was thought that the closure of Arbat Prestige would see regional chains enter the capital. However, the crisis seemed to have cancelled their plans. Analysts say that a chain similar to Arbat Prestige is unlikely to enter the market for at least the next two years, as there are too few perfumery specialists that can effectively manage large volumes of product. In the past three years competition among 90 s L’Etoile (top) dominates prestige retailing in Russia with a 33% market share; but all eyes are on Ile de Beauté (bottom), after LVMH’s increased investment in the chain the major chains has been fierce and shows no sign of letting up. As retail players seek to increase their market share they have looked to mergers and acquisitions. At the end of 2010 Rive Gauche, which has been controlled by businessman Oleg Boiko since 2008, acquired competitor Douglas Rivoli in a deal estimated to be worth between €55m and €75m. In addition to taking over Douglas Rivoli’s 32 stores, Rive Gauche acquired the right to use the Douglas Rivoli brand name for three years. With the deal, Rive Gauche became Russia’s second largest perfumery chain. The acquisition also gave Rive Gauche access to Douglas Rivoli’s luxury customer base. Douglas has a premium positioning in the market, with high-priced items and almost no mass-market products. The stores also benefit from prime retail locations with a good catchment of luxury shoppers. Because of this, October-December 2011 - N°8 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #8 - October/December 2011

Cover
Comment
Contents
Update
- Brand & retail news recap
- Companies on the move
Take note
- Market facts, figures & trends
Best of BW
- Highlights from our e-publication
Launches
- The latest in fragrance, skincare & make-up
Interview
- Estée Lauder Companies group president international Cédric Prouvé
Insight: Fragrance
- Category overview
- Retailer roundtable
- Retailing strategies
- Rare fragrance brands
- Launch roundup
Wellness
- Spa chains
- Spa case studies
Retail
- E-commerce
- Store concepts
Travel retail
- Sector analysis
- Hainan & China Duty Free Group
- Retail concepts
- Passenger habits
Digital
- Industry experts on harnassing the power of social networks
Radar
- Six up-and-coming beauty brands
Market watch: Russia
- Country overview
- Prestige retailing
- Industry viewpoint
Packaging
- Market outlook
- Sustainabilty
- Trends
Last word
- Buyology Inc president & co-founder Donna Sturgess

BW Confidential - Issue #8 - October/December 2011