More and more brands are looking at Indian women and men, in that order, to write their growth story. Beauty segment has shown itself to be a recession proof industry, in the Indian context, if the growth numbers of the past few years are anything to go by. Manisha Bapna shares a microscopic view of the industry keeping in mind the India perspective.
N. Krishna Mohan, chief executive officer– sales, Supply Chain and Human Capital, Emami Ltd. says “Indian consumer be it in urban or rural has come of age and is willing to spend to look and feel good. With increased awareness thanks to infrastructural improvement and companies engaging with consumer, the personal and beauty care categories would see high growth”.
Increasing disposable incomes, global travel and a resultant exposure to global trends are making this category ready to explode. International and Indian brands are seen getting hyperactive in the their pursuit to grab the consumer’s share of wallet. According to Mukesh Kumar – vice president, Infiniti Mall “Beauty and Personal Care industry has shown tremendous growth in terms of volume and value both over the past three-four years. Rise of income for young population and availability of disposable income has fuelled this growth. The invasion of several TV channels, influence of Bollywood etc. has greatly contributed towards interest in self grooming. Many companies have introduced new gender specific products to cater to this ever growing segment,” he adds.
The market has gone beyond the traditional line of usage and ‘one product fit for all’ to products which are more generational, specific and have occasional utility. A typical urban consumer is looking beyond the utility aspect of a product to seek intangibles like brand, present ability, groomed and lifestyle statement associated with the product. In this pursuit they are marketing themselves aggressively with adequate priority being given to the 4P’s – product, price, place and promotion. Packaging is playing a big role as well. For instance Lacto Calamine, a brand that has been in the market for 25 years with an established credence among the woman who equated beauty with simplicity, has opted to recreate its look and the packaging to ladder up to a larger and aspirational space by connecting with a “self-assured” woman who makes informed decisions. Mohan says, “With foray of many national and international players the market has grown and each one is trying to innovate to get differentiation in their brands. This is the key to be successful in this category.”
According to ASSOCHAM’s report the market size of the cosmetics industry in India is estimated to be touching 20,000 crore by 2014. The industry in India has been growing at an annual rate of almost 20 per cent, which is twice as fast as that of the United States or Europe and is estimated to grow at a CAGR of 8 per cent till 2016. Despite this rapid growth per capita expenditure in India is the lowest (approx Rs.30/-) as compared to developed markets which is close to Rs. 1600/-. Despite of all odds the sector is expected to reach USD 20.23 billion by 2017. This growth is primarily due to the dominance of mid and lower ranged cosmetic products which capture around 80 per cent of the market.
Pakhie Saxena, associate director – retail – Technopak Advisors shares, “Beauty and wellness products contribute to the significant share within this industry. The women’s segment continue to dominate this industry, thus majority of such products are aimed at women. Nevertheless, the men’s segment is witnessing rapid and robust growth and emerging as the focus segment. The services segment, though a relatively smaller share compared to products is expected to reflect phenomenal growth over the next few years. Consumers’ acceptability towards these brands is evidenced by the fact the services segment shall grow at 30 per cent CAGR annually”. A Nielsen survey conducted amongst 1,000 SEC A and B men in four cities of Mumbai, Delhi, Kolkata and Hyderabad on male grooming shows every second Indian men from Metros has a monthly date with the beauty salon! (This survey was conducted in 2012 amongst 1000 working men, 25 yrs+).
Growth in personal care industry is directly proportional and aligned with the population base. With the median age taken at 25 years, India is among the world’s youngest nations enjoying a consumer base from 16 year till 75, as compared to 43 years in Japan and 36 years in the US. The skin care category has been the cornerstone of beauty and personal care for last two decades in India. According to ASSOCHAM in 2011 the skin care segment grew by 4.4 per cent and the category is forecasted to see absolute growth of $16.3 billion in 2016. Body care showed a declining growth of 3.9 per cent in 2011 as compared to 4.2 per cent in 2010 to reach $16 billion while hand care posted a healthy 5.6 per cent gain to reach $2.5 billion. Rima Gupta from TNS Global feels that looking at the Indian consumer psyche, the acceptance of imperfections is going up as we expect that we have solutions to look better. Face is still the key on being thought of as attractive though body is taking over as well. According to a beauty expert, out of 66 skin tone shades, India has 40 of those which indicate the kind of opportunity and potential still largely untapped here.
Gupta adds that “the age groups which house the bulk of fairness cream users are 20-29 years (35 per cent), 15-19 years (22 per cent) and 30-39 years (20 per cent). The growing usage has made the fairness cream market the largest segment in the skin cream category”. Wellness is another emerging category in India showing a 40 per cent growth in the primary segment where male consumers have been the game changer. Back home Garnier had been around for over 15 years as a beauty brand for women before it decided to launch a men’s range. India is the first market in which the L’Oreal brand decided to address the males. The brand decided to capture this potential market on the insight that Indian consumers are less reluctant to use skincare products than in Europe according to an article in Economic Times dated April 4, 2012. It further said that the company opted to make the gender-based extension because the values that the brand stands for – efficiency and quality, in a no-nonsense manner – are easily transferable.
Cosmetic buying is very impulsive in nature and is highly influenced by retail stores, ambience, look, touch, feel and above all promotions. Statistics from a study in retail by ASSOCHAM shows that in the present times nearly 48 per cent of people go to a super market to buy his or her personal grooming product range, 28 per cent go the same old habitual traditional store -these are people either from backward area or semi urban areas. 21 per cent of the urban population goes to malls for shopping and are very keen to try out new products in promotions or trials. Only 6 per cent of the population deals with online purchasing of cosmetics. The neighbourhood general store continues to be the most popular purchase location for personal care products. Interestingly, the new formats which are emerging as important purchase points are the local chemist shops/pharmacies, beauty salons, petrol junctions, nearby paanwala for sachets and smaller packs etc.
Boutiques are becoming selling centres for natural and organic cosmetic products as they trying to penetrate a class of women segment who is very conscious of her looks and the products she uses. Alarmingly, more than half of urban consumers have never shopped for personal care in department stores. A new kind of format which is gaining foot hold in urban as well as semi and rural areas is the night market or small haat shops which sell branded as well as unbranded and local cosmetics stuff, Kumar say, “Companies are using various promotional tools to woo new customers. Regular sessions on makeovers, free sampling, setting up of Beauty clinic, smaller packs for two and three ties etc. are some of the common strategies being used by the companies to increase the market share and improve its value and volume”.
Cosmetic giants like Oriflame, Avon, Amway and Modicare have gained strong foothold in Indian market by way of direct selling. Wellness retailers such as Kaya Skin Clinic and Lakme are taking the kiosk retailing way of reaching their customers wherein they have set up small retail counters in malls or huge departmental stores to reach out to the walk in customer. The key deliverable is the live experiences at a kiosk which can either positively pre-dispose or completely turn off the customer from the brand. Cosmetic Industry is following the premise of walking to the customer and not making the customer walk to you. Brands like L’Oreal are setting up their own make-up studios as well as shop-in-shop oulets in the malls of the five top Indian cities to deliver real make up experience enhancing the shopping experience of customers at malls. Branded, established salons, spas, health centres, and gyms within the organized segment are taking initiatives to woo customers. Formats spread over smaller commensurate area are being launched along with affordable, viable pack sizes are being forayed into.
For instance, Soul Flower a brand with presence in more than 140 shop in shop stores has a strong focus on delivering a great online experience to its consumers through its website in addition to a number of e-malls, lifestyle and beauty sites, according to Amit Sarda, managing director, Soul Flower. In the next financial year the company plans to add another 40 SIS and 18 franchise stores. The brand is betting big on the hair care category as well as the aromatherapy range which is their top seller.
Another key channel emerging is online selling of cosmetics which accounts for 4 per cent of its global sales for Estee Lauder. Joining the bandwagon for online retailing are L’Oreal, Mac, Lakme, Revlon, through their own websites as well as third party websites. Various service providers such as spa / salons and fitness centres enlist themselves on deal sites offering one time coupons or short term memberships. These trials help new consumers experience the benefits of spas and fitness centres and thus initiate habit building.
India is a price sensitive market which traditionally had a strong foot hold of players like Lakme and Ponds. With plethora of international players paving their way into the market, companies are deploying innovative marketing strategies to suit Indian preferences. 80 per cent of the market is driven by masses with nearly half of the consumers are price conscious who are always looking out for discounts, promotions etc. Sarda says, “For marketing brands we are using BTL activities at the Point of sales to offer a real time product experience”.
With more than 50 per cent of consumers buying cosmetics every month as a regular habit and looking for quality with added features of price and utility, celebrity endorsements plays a major influencer. Brand advocacy by celebrities also helps brands occupy consumers mind space and thus help gain preference in the decision hierarchy during the moment of truth. Mohan says, “Celebrity endorsement in India works and Emami has been a pioneer in using celebrities to endorse our brands. However, the celebrity image has to gel with the brand image. Sarda adds “Celebrities have a mass appeal and people like Shahrukh Khan, Priyanka Chopra, etc. can be a great influence on a brand which has a mass appeal. Brands in niche segment need to focus on real experience to the consumer at the Point of sale”.
The companies have started tapping rural markets which contribute to 50 per cent of the sales in major FMCG categories today. The usage and sale of oil, bathing soaps, washing soaps, fairness creams in rural areas are more as compared to urban usage. The Indian skin care and cosmetics rural market is valued at US $172.6 million and is dominated by HUL, Colgate Palmolive, Gillette India and Godrej. Interestingly, rural Indian demand for skin care product is rising exponentially compared to urban India. Mohan states “Our proposition is to engage consumer in all class of cities and villages. In our opinion the Bharat and India divide is crumbling hence we need to offer same brand to the consumer both in urban and rural albeit may be of different pack sizes price. To reach to the consumer we use digital as well as other channels available.
- Women in the age group of 30 and above are getting very selective about the type of products they choose. Their purchases are becoming more specific targeting the problem area and there is an increased willingness to spend.
- Consumers prefer natural and herbal cosmetic products given the kind of lifestyle they live today and the environment they survive in.
- Women spend close to 20 per cent of their earnings on beauty and cosmetic products. This increased spending is a result of higher disposable income, increased media exposure and the slowly evolving corporate culture in India. Men have developed a special craze for cosmetic application and their monthly expenses have risen by 60 per cent to 80 per cent on cosmetic products.
- According to an independent study by the National Hairdressers and Beauty salon in India, the demand for in-salon skin care treatments by men is increasing by 40 per cent in a year. Leading companies such as ITC and Hindustan Unilever have introduced ranges of male-specific bath and shower product.
- Promotions, advertisements both in electronic and print have influenced increased spending among consumers to the extent of Rs. 5000 per month on cosmetics as compared to 1000 earlier.
- Herbal cosmetics industry is driving growth in the beauty business in India and is expected to grow at a rate of 12 per cent as more people shun chemical products in favour of organic ones. Few players are Forest essentials, Biotique, Himalaya, Soul Flower, VLCC, Body Shop, Ayur, Amway etc.
THE FUTURE DECODED
- Players and brands are buoyant about a vertical and horizontal growth in hair care and skin segment.
- The “at Home personal care market is growing in India with few players like Oriflame, Amway, Avon, Modicare already enjoying huge success by route of multi level marketing.
- The demand for natural and organic based personal care products is going to rise as Indian consumer is focusing on their health and wellness.
- Consumers with in the age limit of 45+ to 60 are a potential segment for personal care industry as they would be looking for more healthy aging solutions from these cosmetic companies.
- Focus would increase on multifunctional, convenient, safe, healthy personal care products as consumer consciousness is on the rise.
- Market is ready for professional make up hence brands like MAC, Ikea, Chambor, L’Oreal have a big opportunity to tap.
- Japanese cosmetic manufacturers, Swiss skin care manufacturers like Mibelle biochemistry are looking forward to enter India and set up distribution arms.
- There is a huge scope for both international and national companies to set up Spa chain in Southern India as it is the hub for wellness centres and penetration of cosmetics and toiletries products is very low.
- Newer distribution channels have to be developed to enhance the shopping experience of cosmetics.
- NanoTechnology and green chemistry will be key strategies in the coming years for cosmetic Industry.
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