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.
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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:
-1. Turkey
-1. Egypt
-1. South Africa
-1. Indonesia
-1. Vietnam
-1. Mexico
-1. Argentina
These seven countries offer large investment opportunities due to their:
-1. Expanding economic growth
-1. Young and growing population
-1. 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:
-1. Pakistan, Iran, and Thailand were ruled out due to political instability
-1. 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