It is well noted that in economic downturn premium suffers less but the scope of law-priced beauty products grows while consumers start looking for better correlation of price-quality.
Cheaper doesn’t mean worse
Cosmetic market reacted to the devaluation by an increase in retail prices. The key European and USA brands are trying to keep their leading positions. However, according to experts, the demand rapidly shifting towards the mass market, where we will notice a growing competition in the second and third quarters of 2015.
Nowadays fashion is the so-called budget chic. Women began to make much less spontaneous purchase. Previously, many went into cosmetics stores to indulge themselves and often bought up everything that seemed interesting to them. Now ladies first study the market, gather feedback and opinions about the right product, and only then make a purchase. And the most popular are multifunctional products "2-in-1”. For example, a combination of scrub and mask, anti-agers and sunscreens, restoring and anti-inflammatory serum.
Most women are not willing to give up favorite cosmetic products even if they want to save money. What they do – they begin to look for the most attractive and profitable offers. Now, they do not buy cosmetics in any convenience store, but first explore the market in search of better prices. And often find them online.
"Beauty and personal care are quintessential part of the consumer expenditures of Russians, their sales did not significantly decrease even in crisis. Moreover, in modern retail formats these products can be purchased at the lower prices, which is good for Russian consumers in the current economic environment.
When there are no financial constraints, people buy toothpaste or skin care in the pharmacy - a channel that in their perception is a guarantee of good quality – now consumer is more likely to go to the supermarket, hypermarket, a discounter or a specialized store, where, in addition to affordable price, he finds a wide range of products and a variety of promotions, "- says Oleg Kravchenko, partner non-food group, Nielsen Russia.
The difference in prices from different retailers is not enormous, but still gives the opportunity to save money. If a Russian woman wants to cut down expences, she does not betray her favorite brand, but reduces the number of products and uses it more grudgingly. They also differentiate their purchases, for example, makeup remover can be selected in an assortment of a more democratic brand. This approach helps the ladies to be confident and feel like “I can afford my favorite brand”.
The well-known Russian TV anchor, journalist, Kseniay Sobchak admitted that in her luxury cosmetic purse there is a place for mass market mascara and shared her observation in Instagram.
By the way, mascara Vivienne Sabo with effect of stage volume Cabaret (US $5), which Sobchak has named her "exclusive discovery" is often admired by Internet bloggers.
Novelties are on demand
A rational approach to buying and focus on the product functionality are the main features of the crisis demand worldwide. The behavior of Russian consumers is becoming more defined. Quality is perceived by customers today not only as a necessary functionality, but also as something that fulfills their individual needs. Hence - the high demand for targeted products and attention to novelties. Manufacturers say that today consumers are interested in new products even more than before the economic downturn.
Local cosmetic manufacturers stimulate sales of new products: they refresh their assortments every season by 30-40% and thanks to that Russian market grew by 8-10 % even during the economic slowdown. For the Russian women two categories are important: products that allow to see results in a short time, especially anti-aging serums and creams, and products that give relaxation: spa products, for example. To meet this demand, the domestic cosmetics manufacturers are trying to produce more complex innovations.
"The range of personal care in Russian retail is becoming richer, while the new category show dynamic growth. The fastest growing category - deodorants (5.4 % in volume terms in 2014, compared to the same period the previous). Cleanser added 4.6% to a year earlier, soaps - 2.7%, shampoos - 1.7 %. Among other care products that added to the active sales hair conditioners – 6.4 % and shower gels – 7.3 %, which are increasingly replacing toilet soap. In the non-food categories producers have a large scope for the introduction of innovative products that will meet new needs and even generate a new category,"- says O.Kravchenko from Nielsen.
Leadership in the times of economic slowdown is gradually seized by private labels and low-cost brands. They boldly compete with cosmetic giants, taking them their shares.
This is due to the fact that consumers are beginning to look for an alternative to the usual expensive products. The recession has forced many to look around in search of interesting and more budget products to apply to the range of less known manufacturers. Consumers are actively exploring offers from small brands.
Prices for cosmetics will grow - say all experts. Producers will have to strengthen their power in order to satisfy consumers. "The rise in prices can be constrained by large retail chains, but, nevertheless, in the first half of 2015 we will see a rise in prices by an average of 8-10%. But a Russian consumer will not buy less. He or she will only choose a cheaper brand or a private label," - says Nielsen expert.
Prepared specially for Cosmetics Business Markets