BW Confidential - Issue #16 - November/December 2013 - (Page 134)
Last word
Guest column
Untapped niches
The industry needs to look at
unexplored areas to ensure future
growth, says UK-based research
company Euromonitor International
senior analyst beauty and personal
care Oru Mohiuddin
Industry outlook
The beauty industry proved resilient to the
economic downturn, achieving a robust 5%
CAGR over 2007-2012, mainly driven by
emerging markets and innovations based on
cross-category convergence. Now, however, it
seems to be showing signs of a slowdown. The
first half-year results posted by Unilever, L’Oréal
and Colgate showed slower growth in 2013
compared to 2012.
China and Brazil are showing signs of fatigue
and in Western markets, recovery continues to
be slow. While it is too early to predict full-year
growth rates, leading manufacturers agree
that further innovations are needed to sustain
existing growth. After exploring innovations
based on cross-category convergence, the scope
of such opportunities is narrowing. Turning to
less-explored areas could help sustain growth in
the face of an impending slowdown.
Ethnic beauty gains prominence
An area that has traditionally remained
underexplored in Western markets is ethnic
beauty, primarily because its smaller size has
hindered economies of scale. With global
expansion, beauty companies are able to
leverage their knowledge from regional
markets to serve ethnic consumers in Western
countries. One of the objectives behind
L’Oréal’s acquisition of Kenyan beauty company
Interconsumer Products in 2013 is to access
the newly acquired company’s R&D facilities to
develop more targeted products, not just for
consumers in sub-Saharan Africa but also those
of African origin across the world.
Skincare and appliances
The alignment of beauty and appliances has
been gaining momentum, driven by both
beauty and electronic appliance manufacturers.
The most popular ways of approaching this
134
credit: stock.xchng
“
Drawing the right balance
between innovation in
mainstream categories and
underexplored areas, while
looking at smaller economies,
can [...] bring optimal growth
for beauty manufacturers
”
Euromonitor International senior analyst
beauty and personal care Oru Mohiuddin
category are either through direct presence,
such as L’Oréal’s acquisition of Pacific Bioscience
Laboratories to access the Clarisonic brand,
or by forging a partnership with an electronics
company, as Unilever has done with lightbased treatment systems company Cynosure,
launching eye contour devices and other
personal-care tools. A key benefit emerging
from such alliances is that beauty and electronics
companies complement each other with their
respective knowledge, the success of which can
be seen from Clarisonic’s robust growth, with
sales increasing from 128,000 units in 2007
to 1,700,000 units in 2012, according to our
research. While Clarisonic has been successful,
other companies such as Procter & Gamble,
owner of the Olay Pro-X Cleansing System, have
been less so, as this is still unfamiliar territory and
as such, requires that consumers be convinced
of its efficacy. The high-end technology has
made the category more hospitable to premium
brands, as mass brands have yet to develop the
same level of technology at a lower cost to make
such products available within their price range.
Some beauty manufacturers are using
unconventional methods to create brand
exclusivity for their products and key categories.
Lancôme, for example, collaborated with Alber
Elbaz to launch limited-edition mascara and eye
shadow palettes using his signature patterns
on the packaging, while Nars collaborated
with well-known shoe designer Pierre Hardy
to create limited-edition nail polish. This has
helped create a strong buzz around these
products and is expected to translate into better
sales performance. More beauty and fashion
alignment can be expected in the future.
No big shifts ahead
Although manufacturers are increasingly looking
into underexplored areas to drive growth, these
categories still account for a small share of the
overall market. Growth will continue to come
from innovations in mainstream categories. In
addition, smaller economies, which are not fully
covered by some manufacturers, could also
provide further growth through volume sales
due to their large populations. Drawing the right
balance between innovation in mainstream
categories and underexplored areas, while
increasingly looking at smaller economies, can
be expected to bring optimal growth for beauty
manufacturers. n
Euromonitor International is a UK-based market research
company for consumer goods. For further insight, contact
Oru Mohiuddin, senior analyst beauty and personal care:
oru.mohiuddin@euromonitor.com
November-December 2013 - N°16 - BW Confidential
Table of Contents for the Digital Edition of BW Confidential - Issue #16 - November/December 2013
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 Coty ceo Michele Scannavini
Insight: Fragrance
Category overview
Regional breakdown
Launch strategies
The niche market
Retailer initiatives
Launch roundup
Strategy M&A analysis
Retail
The store of the future
Creative strategies
Store concepts
Digital Innovation strategies
Market watch: Brazil
Country overview
Natura & Grupo Boticário
International brand strategies
Prestige retailing
Trendwatch Upcoming innovation
Travel retail
Channel analysis
The CIVETs
Digital strategies
Interview: L’Oréal Luxe md travel retail worldwide Barbara Lavernos
Interview: WDFG global head of beauty Antonin Carreau
Radar Up-and-coming brands
Emerging markets Company profile: Shanghai Jahwa
Packaging
Luxury packs in the BRICs
Luxury innovations
Industry viewpoint
Last word Euromonitor International senior analyst beauty and personal care Oru Mohiuddin
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