BW Confidential - Issue #17 - March/April 2014 - (Page 36)

Insight: Make-up Budget brands Penny pinching How low-priced make-up brands are impacting the color cosmetics business by Alissa Demorest B udget make-up brands are garnering more interest from consumers and becoming a worry for both prestige and mass brands. Companies like Italy-based budget brand Kiko, which sells through its own stores, American brand e.l.f. and Germany's Cosnova Beauty, owner of the Essence and Catrice brands, are seeing strong growth and are proving a big draw for young consumers. Mass players are particularly concerned with the rise of budget brands due to their attractive store environments-compare Kiko's colorful stores and loud music to traipsing through the sameness of the supermarket aisles. "Companies like Kiko pose a threat to a brand like ours, as their distribution appeals a lot more to young consumers; they have boutiques that you want to enter. There's lots of color and beauty advisors that are there when you need them, but that otherwise leave you alone. It's clearly a threat for us in Europe," explains L'Oréal Paris global marketing director Sandrine Jolly. LVMH-owned brand Make Up For Ever ceo Nicolas Cordier agrees: "These players will mainly take market share from mass brands-when you want to spend €5 on an eyeshadow, it's much more fun to go to a store like Kiko than to the grocery store. They may have mass formulas in terms of quality, but they have taken on luxury codes when it comes to merchandising. However, if we look on the bright side, the consumer who wants to shop in a store like Kiko, may, in the future, trade up and go to a Sephora." Kiko declined to comment on its strategy for the report. Some believe that budget brands are even 36 s Kiko shook up the make-up market in Europe with its attractive stores featuring prestige-inspired merchandising beginning to encroach on make-up artist players. "When it comes to color, they are attacking prestige make-up artist brands as well. I work with make-up artists, and I'm hearing a lot of them saying that instead of going to some of these brands, they now " [Budget] brands... have taken on luxury codes when it comes to merchandising. On the bright side, the consumer who [shops] in a store like Kiko may, in the future, trade up to a Sephora " Make Up For Ever ceo Nicolas Cordier go to Kiko, because there is a huge range of colors and it costs three times less," Jolly explains. ArtDeco international marketing director Christian Kaefer admits that the success of budget brands has impacted its Misslyn and Beyu brands, which target young shoppers. "Consumers that want to buy cosmetics for one or two euros aren't looking for great quality, so these brands are targeting young consumers, and we have felt the impact on some of our brands," he explains. Even some prestige retailers are looking to battle the budget brands like Kiko on their own turf. French perfumery retailer Nocibé launched a new chain called Les Bellista by Nocibé in December 2013, which offers only its private-label brand. Analysts see the move as a direct response to budget companies like Kiko, which is expanding its standalone store in the country. The store offers a sizeable color cosmetic assortment; the nail polish range alone comes in more than 75 shades. The central part of the boutique is taken up by a beauty bar, where walk-in makeovers and nails services are available for less than €10. "The only way for selective retail to grow in the face of mass retailers and [budget] branded stores is for them to n n n March-April 2014 - N°17 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #17 - March/April 2014

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 Guerlain ceo Laurent Boillot
Insight: Make-up
Category overview
Budget brands
The latest trends
Retail
Innovative strategies
Retail
Vending machines
Store concepts
Digital Social media content
Market watch: Latin America
Regional overview
Mexico: country analysis
Mexico: prestige retailing
Colombia: country analysis
Colombia: prestige retailing
Argentina: country analysis
Argentina: prestige retailing
Radar A profile of six up-and-coming beauty brands
Emerging markets Company profile: Mahogany
Travel retail: Brazilian travelers
Analysis
Industry viewpoint
Packaging: Decoration techniques
Trends analysis
Innovations
Last word Diagonal Reports analyst Jacqueline Clarke

BW Confidential - Issue #17 - March/April 2014