CONFIDENTIAL CONFIDENTIAL CONFIDENTIA L · CONFIDENTIALCONFIDENTIAL CONFIDENTIAL - February 5-18,...

Comment Inside

CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL

There’s been a strong M&A flavor to the beginning of 2015. Two weeks ago, Spanish group Puig announced that it would

acquire L’Artisan Parfumeur and Penhaligon’s, two brands in the niche fragrance category—a segment that is increasingly catching the eye of large multinationals (at the end of last year, Estée Lauder Companies also bought two niche fragrance players: Editions de Parfums Frédéric Malle and Le Labo). Meanwhile, in the make-up sector, which is also proving to be fertile ground for M&A, US-based Markwins revealed that it would buy teen color brands Bonne Bell and Lip Smacker.

And some other big deals could be just around the corner. In travel retail, the Benetton family is looking to sell its stake in operator World Duty Free Group to investors. A string of bidders are said to be lining up to buy the stake in the retailer, from Swiss group Dufry, Lagardère (owner of LS Travel Retail and Aelia) and Korean group Lotte, to private-equity company KKR. Another big deal that could soon come off is the acquisition of Avon. It has emerged that private-equity player TPG Capital is in talks to buy the direct seller. This would see Avon delisted from the stock market, a move that would perhaps give the struggling company the space to sort out some of its problems. In light of the deteriorating economic environment in many markets, analysts may be

cautious about the outlook for beauty in 2015. However, current M&A activity shows that the beauty sector is still attractive and that companies are ready to spend to ensure future growth.

Changing hands The buzz 2News roundup

Netwatch 6Social media monitor

Interview 7Nuxe Groupe international director Julien Coutas

Insight 9Peru’s prestige market

Store visit 12Watsons, Taipei

Oonagh PhillipsEditor in [email protected]

www.bwconfidential.com The inside view on the international beauty industry February 5-18, 2015 #106

Meet the BW Confidential

team at:

l China Connect, Paris, March 5-6, l Cosmopack, Bologna, March 19-22 l Cosmoprof Worldwide, Bologna, March 20-23l Duty Free Show of the Americas, Orlando, March 22-25 l Esxence, Milan, March 26-29l in-cosmetics, Barcelona, April 14-16l Luxe Pack Shanghai, April 15-16l MakeUp in Seoul, April 15-16


www.bwconfidential.com - February 5-18, 2015 #106 - CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL

News roundup

The

buz

z

At a glance...

Strategy

Speculation is mounting over who will buy the stake in travel retailer World Duty Free, currently held by the Benetton family. It has emerged that travel-retail operator Dufry is considering a bid for the company and that French group Lagardère (owner of LS Travel Retail and Aelia) is also looking at purchasing the stake. Reports say that Lagardère is in talks with several investment funds to finance an operation of more than $1.2bn. These reports come after news that private-equity company KKR was interested in buying the stake in World Duty Free. Other interested parties are said to include Korean group Lotte.

Spain-based Puig has acquired fragrance brands Penhaligon’s and L’Artisan Parfumeur from Fox Paine & Company. Puig says that the deal firmly positions the company in the exclusive, high-end perfume market. Penhaligon’s has its own retail network and a global presence. L’Artisan Parfumeur operates boutiques in France and is also sold internationally. The current team, led by Lance Patterson, will continue to run both brands.

Avon is said to be in take-over talks with private-equity company TPG Capital. A buyout by TPG would see Avon go private, which would enable the struggling direct seller to turn the company around. TPG purchased Avon’s Japanese business in 2010.

US-based Markwins International is to acquire teen mass make-up brands Bonne Bell and Lip Smacker from Aspire Brands. This is Markwins’ third major acquisition in 12 years, following the purchase of AM Cosmetics in 2003 and Physicians Formula in 2012. The company also markets the wet n wild and Black Radiance brands.

French brand Atelier Cologne has raised €5m in a move to boost its retail sales from €20m today to €100m. Some €2.5m of the investment comes from management fund Extendam, while €1.5m comes from private investors. The remaining €1m will be finalized at the end of June this year. Atelier Cologne is sold in 300 doors in 25 countries.

At his New Year’s address to the press, L’Oréal ceo Jean Paul Agon said the group was beginning 2015 “with confidence, energy and ambition”, despite a volatile and uncertain economic context. Basing his comments on nine-month figures, Agon said that L’Oréal outperformed the market in 2014, albeit more moderately than in previous years. n n n

Stay informed with our daily news headlines on www.bwconfidential.com

n Speculation mounts over who will buy stake in World Duty Free

n Puig acquires Penhaligon’s and L’Artisan Parfumeur

n Avon said to be in take-over talks with TPG Capital

n Markwins buys Bonne Bell and Lip Smacker brands

n Macy’s acquires Bluemercury



News roundup

The

buz

z

n n n He added that the group’s performance showed sharp contrast by region and division and singled out the Luxe and Active Cosmetics businesses as having performed particularly well. In terms of markets, Agon highlighted that the group had seen good growth in Europe and that there had been a revival in southern Europe, which had suffered for four years. Last year was also described as being important in terms of acquisitions. “Three

acquisitions that we made are very strategic for L’Oréal: Magic Holdings, which is the number-one in masks in China and will reinforce our position in this market; NYX, which is a real digital brand from start to finish and we will learn a lot from this brand and make it global, and Niely Cosmeticos, which is a leader in haircare in Brazil,” noted Agon.

Brazil’s government has announced a major tax increase on the fuel, cosmetics and imported goods industries, a move that is set to make doing business in the already heavily taxed country a lot more difficult. For the cosmetics industry, the government will introduce what it calls a Tax on Industrialized Products (IPI). This tax is already applied to manufacturers, and with the new law it will also apply to distributors and retailers. The move is intended to raise R$20.6bn (US$7.7bn) and help consumers regain

confidence in the economy. The tax increase is set to go into effect in May.

Results

French group LVMH said that sales and net profit reached record levels in 2014. The group reported a 6% increase in sales to €30.6bn last year, while organic growth was 5%. Net profit rose 64% to €5.65bn. However, profit from recurring operations declined 5% to €5.72bn. The perfumes and cosmetics division saw a 5% increase in sales (+7% on an organic basis) to €3.92bn, while profits were flat at €415m. The selective retailing business saw sales rise 7% (+8% on an organic basis) to €9.53bn, while profit fell 3% to €882m. The group said Sephora gained market share. However, travel retailer DFS was impacted by currency and geopolitical events.

Sales at Japanese group Shiseido for the first nine months of fiscal 2015 rose by 3.8% to ¥555.8bn ($4.72bn). Operating income fell 43.6% to ¥18.8bn ($159.8m), attributed to increased marketing investment in international markets, higher bonus payments in Japan and a rise in costs due to problems at its US distribution center. In light of the sale of Decléor and Carita to L’Oréal, net income rose 66.1% to ¥27.8bn ($236.4m).

Fourth-quarter sales at French group Interparfums reached €75m in 2014, an increase of 30% over the same period in 2013. The Jimmy Choo, Lanvin and Montblanc brands reported the best performance in the quarter, which compensated for the slowdown at the Van Cleef & Arpels, Boucheron and Repetto brands. For 2014, Interparfums registered like-for-like sales growth of 19% to €297m. The

group is forecasting an operating profit of 10.5% for the year.

Fragrance house Givaudan reported sales of CHF2.11bn ($2.29bn) in 2014 for its fragrance business, a like-for-like increase of 3.6% over the previous year. Sales in the fine fragrance division grew 2.5% like-for-like. Total group sales reached CHF4.40bn ($4.79bn), up 3.7% like-for-like on 2013. n n n

The

buz

z News roundup n n n Retail

Department-store operator Macy’s is buying beauty retailer Bluemercury for $210m. Bluemercury operates 60 boutiques, most of which include a spa, in 18 states. “Our plan is to operate and significantly expand Bluemercury stores as a standalone business with an enhanced omnichannel component (…) across stores, online and mobile. We also plan to add selected Bluemercury products and boutiques to Macy’s stores nationwide,” explained Macy’s chairman and ceo Terry J. Lundgren in a statement.Bluemercury will continue to be managed by founders Marla and Barry Beck.

Travel retailer Dufry exercised its option to buy 20% of Dufry Lojas Francas (DLF) for CHF148m ($162.2m) from its minority partner Brasif Group. This will mean Dufry will hold 80% of DLF. DLF is Dufry’s operating entity for new duty-free businesses in Brazil.

L’Oréal-owned The Body Shop has completed the acquisition of the assets of Adidem Pty Limited, the company which operates the brand’s franchise business in Australia.

Travel retailer Nuance inaugurated a new store in Geneva Airport that caters to what it says is a consumer interest in “high-quality cosmetics and exceptional service” in the channel. The store features three brands: La Prairie, Ioma and Tom Ford Beauty.

LVMH-owned Benefit is to inaugurate its first standalone store in Brazil in April at the Higienópolis shopping mall in São Paulo. Benefit is currently sold exclusively at Sephora’s 14 doors in Brazil and on Sephora’s e-commerce website.

People

P&G has named David Taylor as head of its beauty business. Taylor, currently group president for global grooming and healthcare, will add beauty to his remit. Deb Henretta, who currently leads the beauty business, will become group president for global e-business, a new role. Group president of global cosmetics, prestige and salon professional Patrice Louvet has been named group president global beauty.

Sephora US chief merchant Margarita Arriagada is leaving the company. She will be replaced by Artemis Patrick, currently svp of Sephora inside JCPenney. Maureen Watson, senior vice president merchandising, is also leaving Sephora.

Avon has named former J. Crew executive James Scully as evp and cfo. n n n



The

buz

z News roundup n n n Peter Lichtenthal, global brand president of Bumble & bumble haircare, has added make-up brand Bobbi Brown to his remit. He is now global brand president for both brands. Bobbi Brown was previously managed by Maureen Case.

Packaging supplier Aptar has named Elisabeth Salom L’Ancien to the role of vice president business development fragrance in the Global Market Development Beauty division. Salom L’Ancien was previously business development director for fragrance.

Data

Prestige beauty sales in France fell by 0.6% in value in 2014 to €2.9bn, according to NPD Group. Sales in the first half were down by 1.5%, while the second half was basically flat at +0.1%. Sales in December were down last year compared to 2013. However, the fragrance and make-up segments saw slight growth in the second half. Fragrance was the only category to post growth for the full year, at

0.2% to €1.9bn. Women’s fragrance sales grew 0.6%. La Vie est Belle (Lancôme) took the market’s top spot, pushing Dior’s J’adore to second place. Men’s fragrance sales were down by 0.6%. Make-up sales, at €400m, fell by 0.1%. Smaller-ticket items, such as brow products, brushes and lip glosses performed well, says NPD. Skincare sales saw the biggest drop, falling 3.8% to €500m. For 2015, sales in France are forecast to remain flat. On a European basis, NPD reported that in 2014 for the crucial month of December,

fragrance sales by value were down 1% in France and Italy (although this does not include online sales, which are usually high during the Christmas period). Fragrance sales rose 3% in the UK and in Spain (for Spain, this growth rate is also based on sales during the first week of January 2015).

Prestige nail color polish sales fell by 10% to $29.8m in the US in the 12 months ending November 2014, according to NPD Group. NPD says this highlights a shift away from nails and towards eyes and lips. Eyebrow make-up saw sales growth of 34% for the period, while eye shadow rose 9%. Lip color was up 13%.

Launches

Spanish group Puig is launching a major new fragrance for its Nina Ricci brand this spring. Called L’Extase, the fragrance is described as a new chapter for the brand and plays on an erotic theme. It will be backed by a racy ad campaign (print and TV) featuring French model and actress Laetitia Casta. The fragrance, composed by perfumer Francis Kurkdjian (Takasago),

centers on two main accords: rose and musk. It comes in a mauve colored glass bottle in the shape of a clutch bag and is topped with a gold cap.L’Extase will launch in March and is priced at €49.90 (30ml EdP), €69.90

(50ml EdP) and €89.89 (80ml EdP). n

French prestige beauty sales* 2014 €bnCategory Sales

€bn% change

2014 vs 2013Fragrance 1.9 +0.2Skincare 0.5 -3.8Make-up 0.4 -0.1Total prestige 2.9 -0.6

Source: NPD Group *Retail sales

BW Confidential4 avenue de la Marne92600 Asnières sur Seine, [email protected]: +33 (0)1 74 63 49 61Fax: +33 (0)1 53 01 09 79

www.bwconfidential.comISSN: 2104-3302Publisher: Nicolas GrobEditorial Director: Oonagh Phillips [email protected] Editor: Alissa [email protected] Coordinator & Assistant: Katie [email protected]: Tina Clark, Alex Wynne,

Renata Ashcar, Mayu Saini, Raphaëlle Choël, Corinne Blanché

Subscriptions1 year: electronic publication (20 issues) +

print magazine (4 issues) + daily news: €499 or US$699

[email protected]@bwconfidential.comBW Confidential is published by Noon Media513 746 297 RCS NanterreCopyright © 2015. All rights reserved. Reproduction in whole or in part withoutpermission is strictly prohibited.

Net

wat

ch

BW Confidential reports on what’s being said about beauty on social networks

Social media monitor

Korean brand Berrisom’s My Lip Tint Pack is expected to start a new trend in how consumers apply lip color, thanks to what is said to be a revolutionary approach. The product is described as a peel-off lip stain, which removes dead skin cells in around 15 minutes to leave the lips glowing for up to 12 hours.

Scented jewelry has been making a comeback. Described as a chic gift idea, improved technologies are said to make fragrances in this format longer lasting. Popular products include Francis Kurkdjian’s scented leather bracelet and Kilian’s Studio 54 ring. Tory Burch’s solid fragrance pendant necklace has also been talked about on blogs.

The trend for gray hair has been a hot topic, with celebrities including pop stars Rihanna, Pink and Lady Gaga and actress Nicole Kidman sporting gray locks. The trend highlights a shift in how women think about beauty and aging, say bloggers.

Arizona-based organic oil and skincare range Kypris has created a buzz on social networks. Selling out faster than it can be stocked, say reviews, the brand is praised for its packaging and high-quality formulas. Favorites include Moonlight Catalyst, a serum-format exfoliant that is applied at bedtime and works on the skin throughout the night. Th

e vi

ews

exp

ress

ed in

th

is s

ecti

on

are

th

ose

of

blo

gg

ers

and

do

no

t re

pre

sen

t th

e o

pin

ion

s o

f B

W C

on

fid

enti

al

The inside viewon the internationalbeauty industry

www.bwconfidential.com N°16 November-December 2013

ISSN: 2104-3302

InterviewCoty ceoMichele Scannavini

Travel retailData, digital &the CIVETs

Market watch: BrazilThe ins & outs of doingbusiness in the country

PackagingSector outlook &luxury trends for 2014

Insight: FragranceGlobal market analysis

The inside view on the international beauty industry

BWCONF_oct2013-def2.indd 1 24/09/13 18:00

www.bwconfidential.com N°17 March-April 2014

ISSN: 2104-3302

InterviewGuerlain ceoLaurent Boillot

Travel retail:Brazilian travelersHow they shop & how to reach them

Market watch:What’s next for Mexico,Argentina & Colombia?

PackagingDecoration techniques& trends

Insight: Make-upDoing color better


BWCONF_fev2014.indd 1 06/02/14 15:16

www.bwconfidential.com N°19 September-October 2014

ISSN: 2104-3302

InterviewFerragamo Parfums ceoLuciano Bertinelli

Travel retail: EuropeHow the region is faring &the continent’s top airports

Market watch: AfricaThe potential & challenges ofthe next big region for beauty

PackagingHow make-up packsare evolving

Insight: fragrance creationWhat’s next for the industry?


BWCONF_septembre2014.indd 1 22/07/14 12:04

In-depth coverage of the global beauty market

...TFWA World Exhibition Cannes • Beauty World Middle East Dubai • PCD Paris Cosmoprof Worldwide Bologna • China Beauty Expo Shanghai • HBA Global Expo New York Duty Free Show of the Americas Orlando • Intercharm Moscow • Exsence Milan Luxe Pack Monaco • Beyond Beauty Paris • Luxe Pack Shanghai • In Cosmetics Paris Luxe Pack New York • Cosmoprof Asia Hong Kong • Pitti Fragranze Florence • Make Up in Paris Elements Showcase New York • Mondial Spa Beauté Paris • TFWA Asia Pacific Singapore...

Distribution at all the major international events

Boost your international business with BW Confidential> [email protected]

DemiPage-210x148NEW.indd 1 07/08/14 11:34



Inte

rvie

w

Nuxe in briefl Nuxe Groupe sales

2014: €182m l International sales: 40% of total group salesl International sales

growth 2014: +20%

l N° of markets: 73 including France

Nuxe Groupe international director Julien Coutas

Nuxe Groupe international director Julien Coutas tells BW Confidential about the French skincare brand’s development plans at home and abroad

Global ambitions

What are your priorities for developing the brand?Naturally we are continuing to develop the BRIC markets, and one of the major projects this year is our relaunch in China. When you look at the BRICs more closely, you see that these markets are complex. Brazil is very expensive to do business in when looking to medium- and long-term profitability, and Russia and India are also complicated. Investors swoon over these markets, but operationally it’s very difficult. We are also developing our existing markets. There is still a lot of growth to

be had in Europe, which accounts for around 45% of Nuxe’s sales. For us, all European markets are performing well and it’s also the region where we have the largest number of subsidiaries. Our priorities are first to reinforce our productivity in existing markets and then

to seize opportunities in major new markets, but there aren’t many of those left as Nuxe is already present in 70 countries. After Europe, Asia is our priority, as well as the Middle East, where we’ve seen strong growth in the past few years.

How are you developing Nuxe in the Middle East, and in Asia?Our biggest markets in the Middle East are Iran, Saudi Arabia and Egypt, which we opened three years ago, and the UAE. Iran is a complex market—although there is a lot of potential given the huge population and consumer interest in beauty, importing is a challenge and it is an expensive market in which to operate. The market is also very unpredictable—a brand can receive a huge order one day and then nothing for months. In Iran, we are sold in a few hundred pharmacies, which is the number-one channel for beauty there, as there are no department stores to speak of. In Asia, our biggest project right now is for China. Nuxe was present in the

country a number of years ago, but we pulled out and we are re-launching this year with reformulated products. We will be present in department stores, at Sephora and in cosmetics shops, but not in pharmacies. Although department stores in China are challenging as they are losing traffic every year and operational costs remain very high, we feel that we have the right business model for the channel. In China we will initially focus on tier-one, tier-two and tier-three cities. However, we don’t want to disperse the brand, and we will remain focused on the key cities. n n n

”Nuxe Groupe international director Julien Coutas

“Although department stores in China are challenging as they are losing traffic every year and operational costs remain very high, we feel that we have the right business model for the channel



Inte

rvie

w Nuxe Groupe international director Julien Coutas

Iran is a complex market—although there is a lot of potential given the huge population and consumer interest in beauty, importing is a challenge and it is an expensive market. It is also very unpredictable—a brand can receive a huge order one day and then nothing for months

“What are your plans for the Americas?We are slowly building our presence in Latin America. Nuxe is currently distributed in Mexico, Colombia, Brazil and Uruguay. We are putting substantial resources into the market, but the business has been slow to develop. Brazil, for example, has a quite a limited distribution landscape—there are basically no department stores and cosmetic stores are said to be losing steam. There is Sephora, which we entered last year, but with such a limited number of stores it’s a challenge. Brazil is a hard nut to crack: just doing business there is difficult, so making money is even more of a challenge. In addition, skincare is a tough category and there is a lack of quality distribution for the segment.As for the US, we have a subsidiary there, but the business could be better. We didn’t

succeed in breaking through in prestige and we don’t work with Sephora there. For a long time we worked with independent pharmacists and we are currently in the test phase with Target and are also in Duane Reade’s Look Boutique. In the beginning, we thought that the Look Boutique concept would do very well, but it seems to be struggling a bit in terms of traffic. Duane Reade planned to expand the concept to a lot more stores, but slowed down its development. We also looked at Ulta, but the stores don’t have much merchandising or many beauty advisors, and for a brand like ours which is not very well known it’s difficult for us to stand out in that context. We are also in contact with Blue Mercury, but it doesn’t have very many points of sale.

You are mainly sold through pharmacies in France. What is your distribution strategy in international markets?Basically we go to the channel that is the most qualitative in each market. If that is a pharmacy, then that is our main distribution channel. The beauty of a brand like Nuxe is that it can be at home in a number of different channels. Few pharmacy brands can make this claim. Although our business model is anchored in the pharmacy, in markets like the UAE we are both in major pharmacy chains and at Sephora. [As of the end of 2014] we were sold in two Sephora stores in Dubai and are opening a third in the Mall of the Emirates.

What is your strategy with Sephora?We are in an exploratory phase and are testing the brand in several markets with Sephora. In markets like Asia and the Middle East, where pharmacies are chains and operators are much more open and business-oriented, it isn’t a conflict for us to also have a presence in Sephora. In France, however, there is a different mentality and we have to be careful not to upset our pharmacy retail partners. Sephora has approached us in France, but for the moment it’s a no-go for us for that reason.

Do you see the pharmacy sector in France opening up to the chain model? It will have to happen someday, but the French are very conservative so it’s bound to take time. Some pharmacies are grouping together to centralize costs, so there is a momentum there, but it will be a while before we see players like Boots come to the market. But things change; when parapharmacies first opened in France, pharmacies would boycott the brands sold there, but those days are over. For Nuxe, I believe the best approach is to open as many channels as possible. n

”Nuxe Groupe international director Julien Coutas

s Nuxe is relaunching its business in China this year with a reformulated product range



Insi

ght

The prestige market is seeing solid growth in Peru, driven by increased purchasing power and new retail developments

Going strongPeru’s prestige market

Currently one of the better performing economies in Latin America, Peru is seeing an increased focus from cosmetics players. This is in part due to rising purchasing

power and ongoing retail expansion from department-store players, which is slowly drawing consumers away from the dominant door-to-door channel.While growth in 2014 was slightly slower than in previous years, according to

market observers, Peru has been less impacted by economic fluctuations than its neighbors like Brazil, Argentina, Venezuela and Chile. According to data from prestige beauty tracking firm Segmenta, Peru’s prestige

beauty market grew 12.6% in value terms year-on-year and 13.7% in unit terms in 2014. Growth is predicted to continue at similar rates in 2015. “[Peru] is the best-performing market in the region,”

comments Segmenta Latam retail manager Daniel Morimoto. He nevertheless observes that, “the market was impacted [in 2014] by the economic situation, because these countries that lead with commodities are quite affected by the slowdown of the European, American and Chinese economies.”

Changing consumer tastesMost Peruvian consumers are just beginning to access luxury cosmetics, particularly in categories outside fragrance, thanks to rising disposable incomes, the expansion of distribution and the associated access to credit now offered by department stores. BPI general manager for the Americas Gérard Pichon-Varin n n n

Peru beauty & personal care sales* by category 2014Category 2014

sales $m% change 2014/2013

Fragrance 520.4 +8.7Haircare 438.2 +7.6Skincare 308.8 +8.4Color cosmetics 261.8 +6.5Men’s grooming 184.9 +8.6

Premium beauty & personal care

98.9 +9.4

Mass beauty & personal care

2,010 +8.2

Total beauty & personal care

2,430 +8.1

Source: Euromonitor International *Retail sales



Insi

ght Peru’s prestige market

n n n comments: “More people are now able to access luxury goods. However, like most of the people who access this new world of luxury, it is more through what they see and what they read: the key names of the luxury business. Right now they go to the big names.”According to Segmenta, in fragrance, which still represents the lion’s share of the

prestige market at 56% (and saw growth of 13.5% in 2014), Puig brands Carolina Herrera and Paco Rabanne, (especially in men’s), are particularly popular.Nevertheless, consumer habits are changing. “The local population now goes to

perfumeries and department stores and is finding out about brands in general,” says Pichon-Varin. “The demand is there, and it is up to us to put [consumers] in contact with our brands.” Morimoto adds: “Peruvian consumers are maturing in terms of global consumption, getting to know the brands and starting to want more quality from products.” There is also a market for high-end brands, like Estée Lauder Companies-owned La Mer, which is performing well among wealthy consumers, he says. Meanwhile, younger consumers accessing the market for the first time are driving demand for make-up brands like MAC and OPI. Indeed, make-up is currently the category seeing the fastest growth, according to Morimoto, with sales up 18.6% in 2014. Leading brand MAC is growing its presence through retail expansion, he says, and saw 30% sales growth during the period.Skincare, meanwhile, is the worst performing category, with growth of 4.6%,

according to Segmenta. Growth is being driven by products like BB creams and clarifying items, he claims, rather than by anti-aging and moisturizing products.Morimoto says that the slowing growth is partly due to climatic phenomenon El

Niño, during which demand for moisturizers generally drops. “Also, you still have competition for skincare [from the] door-to-door channel,” he says. “Consumers prefer to have an international imported fragrance and still buy skincare from the door-to-door market.”

Promotion drivenPeru, notably in fragrance, has traditionally been a market driven by promotion, especially as brands and retailers fought to draw consumers away from the door-to-door channel. Many brands are also available at discounts in less selective distribution, notably in border areas, say sources. But this is beginning to change as retailers, especially department stores, attract consumers with full-price products thanks to exclusive launches, in-store events and branding initiatives, as well as department-store credit cards. “[Discounting] is still one of the big issues, because many consumers are quite used

to promotions,” says Morimoto, noting that business was less driven by n n n

Peru prestige beauty sales 2014Total sales $39.84mValue change +12.6%Unit change +13.7%

Source: Segmenta, sales in sell-out terms (not including Perfumerias Unidas)

”Segmenta Latam retail manager Daniel Morimoto

“[Discounting] is still one of the big issues, because many consumers are quite used to promotions. There are still consumers who have just migrated from the door-to-door channel and are totally focused on promotion. [Changing this] will take some years

Peru prestige market breakdown 2014

Skincare 22%

Make-up 22% Fragrance

56%

Source: Segmenta



Insi

ght Peru’s prestige market

n n n promotions in 2014 than in previous years. “There are still consumers who have just migrated from the door-to-door channel and are totally focused on promotion. [Changing this] will take some years.”

The development of department storesThe Lima Centro district is estimated to represent around 70% of the prestige cosmetics business, but other areas, both in the capital and beyond, are attracting more attention from retailers. Some 78% of the population lives in urban areas, according to data from the World Bank.The Peruvian market remains dominated by independent perfumeries and a single

chain, Perfumerias Unidas, with 16 stores. “Even though it only has 16 doors, Perfumerias Unidas has the best doors on the market by far, including the department stores,” says Pichon-Varin, who estimates there are around 120 prestige cosmetics doors in the country in all. “The quality of distribution is very good in Peru, where it has developed a lot in the

past five to seven years,” he says, adding that one of the biggest challenges for coming years is improving the quality of points-of-sale country-wide. “Out of our 120 doors, probably half of them are A-doors.”The biggest change facing retail in recent years, however, is the incursion of Chilean

department-store chains. Falabella entered the market in 1995 via a merger with Saga, and now has 24 stores. Another Chilean department-store chain, Ripley, followed in 2007, and now has 25 stores, including three new doors opened in 2014. Its most recent, in Pucallpa’s new Real Plaza mall, is an example of how retailers are expanding outside of the Peruvian capital—Pucallpa is a port city in the Amazon. Cencosud-owned Paris, meanwhile, entered the market in 2012 and plans to have 15 stores by the end of 2015.Local department-store player Oeschle, meanwhile, has undergone a relaunch under

new ownership after closing down in the 1990s, and now operates around 20 stores, although only two have a true selective cosmetics offer, according to sources.Department stores are estimated to represent between 15 and 20% of the prestige

beauty market in Peru, a share that is growing and will continue to do so as they expand in the regions. “They are trying to impose growth through openings in the interior of the country,” says Morimoto.“[Perfumeries] are losing importance in the market because with the department

stores and their [credit] cards, consumers get really attached to these retailers, and start buying only in these types of channels,” adds Morimoto, who claims that certain brands are leaving perfumeries and focusing on department stores, partly because of this.As Peru’s prestige cosmetics

market begins to move towards maturity and retailers expand there is plenty of room for growth ahead. n

Peru leading prestige brands 2014Skincare Make-up Women’s

fragranceMen’s fragrance

Lancôme MAC Carolina Herrera Hugo BossClinique Lancôme Givenchy Paco RabanneEstée Lauder OPI Shakira Carolina HerreraBiotherm Christian Dior Calvin Klein Ralph LaurenClarins Clinique Christian Dior Tommy Hilfiger

Source: Segmenta

”BPI general manager for the Americas Gérard Pichon-Varin

The quality of distribution is very good in Peru, where it has developed a lot in the past five to seven years

“



Stor

e vi

sit

Stor

e vi

sit

Watsons Gen Y l Opened:

November 2014l Location: Taipei, Taiwan

l Size: 3,078ft2 (286m2) l Special features:

Charging area, nail bar, candy bar, interactive counter

for colored contact lenses

Hong Kong-based retailer AS Watson has opened a new concept store catering to Gen Y under the Watsons name in Taiwan in a bid to boost its

brand awareness among this consumer group. In November 2014, the group refitted a Watsons store located in the Ximending district, Taipei, a trendy area dotted with clubs and fashion stores popular with the city’s youth. The two-level 3,078ft2 (286m2) store is billed as an emporium of health and

beauty products, rather than just a personal-care outlet. It features a wide range of derma skincare and cosmetics brands from Korea and Europe. The boutique is also home to non-traditional beauty product segments, such as an interactive counter for colored contact lenses, which are currently in fashion in Taiwan. The store’s design also keeps the younger consumer in mind. It was inspired

by a New York loft and features graffiti and neon category signs. There are also cube-like merchandising units that can be periodically rearranged to create new looks. The stairs change color, which the company says creates a fun atmosphere at the store. In terms of special features, the Gen Y store houses a charging area, which

is equipped with plug sockets for charging phones and a tablet that links to the Watsons e-commerce site so that consumers can search for products not available in the store. There are also TV broadcasts featuring the latest promotions or product advertisements. Other services include a nail bar and a candy bar. Watsons says it is satisfied with the first results of the store and plans to roll

out the concept to other cities in the near future. n

Watsons looks to Gen Y with a new concept store in Taipei, Taiwan

Youth appeal



Stor

e vi

sit

s The store is home to cube-like merchandising units that can be periodically re-arranged to create new looks

s The store’s design was inspired by a New York loft and features graffiti, neon signs and stairs that change color

BW ConfidentialThe inside viewon the internationalbeauty industry

News headlines every day

bwconfidential.com

The print magazine

Four times a year

Please complete this form and return it:

• by post: BW Confidential - Subscription Department 4 avenue de la Marne - 92600 ASNIERES France• by fax: +33 (0) 1 53 01 09 79• by email: [email protected]

Subscription order form

+ Free: each subscription includes full access to the entire contents of BW Confidential’s archives on www.bwconfidential.com

Payment method r € r US$

r CB, Visa, Mastercard/Eurocard l_l_l_l_l l_l_l_l_l l_l_l_l_l l_l_l_l_l Expiration date: l_l_l_l_l Security code l_l_l_l

r American Express l_l_l_l_l_l l_l_l_l_l_l_l l_l_l_l_l Expiration date: l_l_l_l_l Security code l_l_l_l_l

r Please bill me

Contact information

Company:............................................................................

First name:..........................................................................

Last name:..........................................................................

Job title:..............................................................................

Address:.............................................................................

Postal code:........................................................................

City:....................................................................................

Country:..............................................................................

Email (required):..................................................................

VAT number (required for European Union):..................................

Signature & date:

Subscribe for 2 years and save 20%

#

M01

9 - O

ffer v

alid

unt

il Fe

brua

ry 2

8, 2

015

Every two weeks

The electronic publication

r 2 year subscription €799 or US$1,099 • the electronic publication (40 issues) • daily news on www.bwconfidential.com • the print magazine (8 issues)

r 1 year subscription €499 or US$699 • the electronic publication (20 issues) • daily news on www.bwconfidential.com • the print magazine (4 issues)

Yes, I want to subscribe to BW Confidential

r 2 year subscription with thematic guide €879 or US$1,199 • the electronic publication (40 issues) • daily news on www.bwconfidential.com • the print magazine (8 issues) • the thematic guide (1 issue per year)

r 1 year subscription with thematic guide €549 or US$769 • the electronic publication (20 issues) • daily news on www.bwconfidential.com • the print magazine (4 issues) • the thematic guide (1 issue)

CONFIDENTIAL CONFIDENTIAL CONFIDENTIA L · CONFIDENTIALCONFIDENTIAL CONFIDENTIAL - February 5-18,...

Documents

Transcript of CONFIDENTIAL CONFIDENTIAL CONFIDENTIA L · CONFIDENTIALCONFIDENTIAL CONFIDENTIAL - February 5-18,...