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This year's Black Friday was perhaps hard proof of the large transfer of brick-and-mortar sales to

online in the US. Sales in brick-and-mortar stores in the US fell by between 4% to 7% on Black Friday, while footfall declined 5% to 9%, according to RetailNext. However, Adobe Analytics stated that online sales were up 24%. These figures saw analysts call Black Friday an increasingly online shopping spree—even before Cyber Monday, when most deals are done over the web. Online is only set to increase its share of these big

shopping moments in the retail calendar. Despite strong consumer sentiment in the US, which traditionally means more shoppers in stores, growth online is shaping up once again to fast outpace that of brick-and-mortar for the upcoming holiday season. In addition, more consumers are not only opting to buy online rather than in store, but are also spending more on the web. Indeed, a key trend of this year's Black Friday was that consumers were more comfortable buying high-ticket items on the web.Overall, Black Friday this year has been deemed a success and this bodes well

for the Christmas shopping period. However, with more sales done online, retailers will have to count the costs of the bait of free shopping or quick delivery, initiatives to entice shoppers into stores and of course the steep discounts offered.

Online on top for Black Friday The buzz 2 News roundup

Netwatch 6 Social media monitor

Interview 7 Shiseido Americas president & ceo Marc Rey

Insight 9 South Korea

Show review 12 Intercharm Moscow

Store visit 15 Beautycounter, US

Oonagh PhillipsEditor in [email protected]

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News roundup

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At a glance...

Strategy

Private-equity groups including US- and UK-based Advent International may be looking to acquire French beauty brand and retailer L’Occitane, according to reports. The retailer listed its shares in Hong Kong eight years ago and today has a market value of $2.7bn, says the Financial Times, which has received confirmation of Advent’s interest from two insiders and says industry peers may also be considering a bid. Neither L’Occitane nor Advent International have commented on the matter.

Japan's Shiseido has named Grand Slam women’s singles tennis champion Naomi Osaka as its new brand ambassador. The global agreement will start with Osaka as an ambassador for sunscreen brand Anessa and clean beauty brand bareMinerals.

US-based Procter & Gamble (P&G) is letting go of the alpha-male image of the past in a new communication campaign to win over millennials for its Gillette brand. Known for its ‘The Best a Man Can Get’ tagline, Gillette is now taking a modern approach to target younger consumers, who are losing interest in the traditional market leader, according to P&G Global Grooming president Gary Coombe.Coombe spoke at a November 19 launch event in Paris for the new Gillette Skinguard

razor. As part of its new communication strategy, which is already rolling out in the US, Coombe said the company also plans to focus on sports marketing for Gillette, while its female razor brand, Venus, is to concentrate on what it calls real women, with its My Skin My Way campaign including real women behind and in front of the camera.

Italian fashion house Dolce & Gabbana’s founders issued an apology to Chinese consumers via a video posted on social-media platform Weibo following an ad campaign deemed as racially insensitive by the Chinese. Following the controversy, online retailers including Suning.com, Taobao, JD.com and Yoox Net-a-Porter reportedly removed the brand’s products from their sites. The videos at the origin of the controversy, posted on the brand’s Instagram account, depict an Asian model clad in D&G who is trying to eat traditional Italian dishes such as spaghetti bolognese and cannoli with chopsticks

L’Oréal has teamed up with Swiss technology start-up Gjosa for a system that aims to let consumers use less water when rinsing shampoo. Gjosa has developed a showerhead that can rinse shampoo using 1.5 liters of water instead of the eight liters usually needed, says L’Oréal, while the French cosmetics company has created what it calls easier-to-rinse shampoos. Gjosa’s low-flow showerhead uses two liters of water per minute, n n n

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n Advent International may be eyeing L’Occitane acquisition

n L’Oréal appoints new Luxe president

n Clinique launches customizable skincare system

News roundup

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n n n breaking up the flow of water while accelerating the speed of droplets, making for an effective rinse, the company claims. Meanwhile, L’Oréal scientists have developed shampoos that are easier to rinse and applied directly through the showerhead.

Victoria Beckham is launching a YouTube channel dedicated to beauty. In a video with YouTube's new fashion and beauty director Derek Blasberg, Beckham said the channel will feature make-up and styling tutorials.

People

French group L’Oréal has named Cyril Chapuy (pictured) president L’Oréal Luxe and member of the group’s executive committee as of January 1, 2019. He will succeed Nicolas Hieronimus, who was appointed deputy ceo in charge of divisions in April 2017. Chapuy joined L’Oréal in 1993 and was most recently deputy general manager L’Oréal Luxe, in charge of international brands.L’Oréal has also appointed Christophe Babule executive vice-president, chief financial

officer and member of L’Oréal’s executive committee as of mid-February 2019. He succeeds Christian Mulliez, who has spent 36 years at the group and is stepping down for personal reasons. Babule joined L’Oréal in 1988 and is currently administration and financial director for the Asia Pacific Zone.

Estée Lauder Companies (ELC) has named Amber Garrison senior vice president and global general manager for Bumble and bumble. Garrison was previously ELC vice president, global strategy. The group also announced that Jean-Guillaume Trottier will add Darphin to his responsibilities, now as global brand president for Jo Malone London and Darphin. Anne Troussicot has been named Darphin senior vice president, global general manager.

She most recently held the role of vice president, general manager, Estée Lauder and Origins, EMEA and will step into her new role on January 1, 2019.

France-based Galeries Lafayette Group has appointed Marianne Romestain head of its newly created buying and merchandising department, which encompasses ready-to-wear, accessories and beauty for retailers Galeries Lafayette and BHV Marais. Romestain’s responsibilities include differentiation between the retailers’ online and offline stores, strengthening partnerships with brands and developing Galeries Lafayette’s own brands. Romestain was previously ceo of Lancel (Richemont Group).

Retail

Coty-owned Covergirl opened its first permanent retail store on November 23, in New York’s Times Square. Described as an ‘experiential beauty playground’, the two-level flagship store focuses on digital tools, customization and product discovery. Digital tools include a ‘virtual greeter’ named Olivia, powered by Google platform Dialogflow, and augmented-reality glam stations, by software company Holition, where customers can virtually try on lipsticks by picking different shades from a connected n n n



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customization station, where shoppers can personalize a lipstick and/or a make-up bag, plus make-up application by a team of ‘Covergirl BFFs’.

French department store Printemps has created an area focusing on natural beauty called Le Green Market at its flagship store in Paris. Set at the basement level of Printemps’ beauty department, the space stocks cosmetics brands that boast over 99% natural ingredients. Le Green Market features skincare, haircare, make-up, fragrance and nutritional supplements from brands including Tata Harper, Pai, Antipodes, Patyka and 100Bon. It also has an experience bar for product discovery and testing as well as an aromatherapy concept. Another new addition is an in-house tattoo studio (pictured), by tattoo artist and founder

of Paris studio Désolée Papa (French for 'Sorry, Dad'), Eva Edelstein. Edelstein’s trademark is an open space and a focus on bespoke illustrations, created using vegan ink. Both Le Green Market and the Désolée Papa tattoo studio at Printemps opened on November 23.

Travel retail

Swiss travel retailer Dufry Group has signed a long-term contract with P&O Ferries to operate stores under the World Duty Free (WDF) banner on board 15 vessels. The operations will include 19 shops on routes across the English Channel, the North Sea and the Irish Sea. The concessions, representing a retail space of 3,600m2 (38,750ft2), are in line with Dufry’s strategy of expanding its presence in the cruise and ferry channel.

Dior (LVMH) and Qatar Duty Free have opened a world-exclusive Dior Les Parfums podium at Hamad International Airport (HIA). The activation is designed as a tribute to fragrance creation and includes a virtual journey to Grasse.The installation features a 360° screen

accompanied by aromas that take passengers on a virtual trip to Dior’s gardens in Grasse. It features the brand’s full fragrance catalog, as well as fragrances from the Maison Christian Dior Collection and gift-wrapping stations. This is the fourth Dior Les Parfums installation at HIA in partnership with Qatar Airways Group.

Spanish company Puig has run what it calls its most ambitious travel-retail activation for Paco Rabanne in the Middle East. Located at Abu Dhabi International Airport and called Paco Market, the supermarket-themed concept ran throughout n n n

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n n n October in partnership with DFS. Measuring 39m2 (420ft2), the space included barcodes projected onto the floor, a giant, selfie-friendly shopping trolley at its center and brand representatives dressed in retro US-style supermarket uniforms at mock cash-till stations. Interactive features included a touch-screen vending machine distributing Paco Rabanne samples and an iPad shopping game offering chances to win a gift-with-purchase.

Data

Sales of prestige foundation in France grew 4% to €110m between August 2017 and the end of July 2018, according to The NPD Group. During the period, there were 80 new launches in the category, up from 39 the previous year. Liquid foundations were the biggest sellers in the category in terms of texture, up 5%. However, new textures gained ground, with sales of gel formulations increasing by 211%, mousses by 672% and foundation sticks by 93%. Sales in matte finish foundations increased by 38%.NPD also highlighted the increase in new foundation shades, with 330 new colors

available in the year ending July 2018, compared to about 100 in the previous-year period. All of the top-five best-selling foundations in selective distribution in France in the 12 months ending June 30 2018 offered at least 15 different shades. The top-five foundations sold in the 12 months ending June 30 2018 were (in

alphabetical order): Dior Diorskin Forever SPF35, Estée Lauder Double Wear SPF10, Lancôme Teint Idole Ultra Wear SPF15, Lancôme Teint Miracle Foundation SPF15, YSL Touche Éclat Le Teint SPF19.

Launches

Clinique (Estée Lauder Companies) launched a customizable skincare system called Clinique iD on December 1. The system includes a hydrating base that can be mixed with an active ingredient to create 15 different possible combinations. The system is based on the brand’s Dramatically Different moisturizer, with customers

choosing between three textures of the formula: A jelly, lotion or oil-control gel version. One of five different active concentrates in a cartridge format is then inserted into the base to create a personalized product. The concentrates each contain a main ingredient that targets a specific concern. The product is priced at €52.

French brand Nuxe is to launch a new anti-aging range, which it claims improves women's self esteem. The new line is called Nuxuriance Gold and targets older women, and for it Nuxe embarked on a study in collaboration with a neuroscience research lab that showed use of the products result in more positive self-perception. The line claims to firm, densify and add radiance to the skin. The formula boasts four patents and ingredients that are said to be 92% natural. The packaging was eco-designed, is lighter and can be recycled. Nuxuriance Gold comprises four products, with prices higher than the brand's average,

in line with its premiumization strategy. The 30ml serum retails at €65, while the 50ml day cream-oil and night balm are priced at €59, and the 15ml under-eye balm costs €46. The line rolls out in January. n

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

Social media monitor

The topic of fake reviews on social media has come under the spotlight. This follows skincare brand Sunday Riley's admission to posting fake reviews on Sephora's website, and has prompted commentators to demand websites to take a firmer stand to prevent this.

The new Glossier flagship in New York is liked for its Instagrammable setting. Popular features include the Wet Room for sampling skincare products and 'experiential' Boy Brow Room, designed as a tribute to the brand's best-selling brow gel.

Castor oil is said to be the new must-have ingredient. Commentators say castor oil is set to become even more popular than coconut oil, especially in the haircare category, where it has been included in many recent launches.

Benefit Cosmetics' collaboration with homeware brand PBTeen has been liked for its nod to Art Deco and retro styles of the 70s. The blush pink and gold color scheme and beauty-inspired take on products like the Hollywood-styled vanity mirror (pictured) have also found favor online.

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Marc Rey, who heads up Shiseido's Americas business and also oversees the company's Centers of Excellence for Makeup and for Digital in New York sat down with BW Confidential in October to talk about digital, data and social media

Digital first

How can Shiseido improve profitability in the Americas? All our brands are growing in double digits year-to-date apart from Bare. For Bare we had 180 of our own stores and we are closing almost 100 of them, so that is impacting us. But apart from the closures, Bare at retail is also growing. The issue in the US is the level of profitability. If I just look at the commercial region (so not the make-up and digital Centers of Excellence), we are at between 6% to 9% profitability. In the US we would like to have double-digit profitability. So how am I going to grow? By crossing the portfolio of brands with the channel dynamics in the US, and we now have a rich, well-balanced portfolio of brands and it is a question of putting the right resources behind it. We are also rebalancing distribution channels, as in the US there are lot of changes in distribution. We have closed a number of our Bare stores, increased our presence in self service, where we were already very strong with Sephora and are growing very fast with Ulta. And the most important thing is that we are boosting digital sales—e-commerce and m-commerce is now between 20% and 30% of our sales in the Americas. Online is growing very fast, between +25% and +50% depending on the site, so it is not marginal any more. The problem with the US is that a lot of malls are losing traffic and there is a huge transfer to digital. But with online there is a triple whammy: Growth, profitability and access to consumer knowledge.

What is the ambition for the recently acquired Laura Mercier brand?We think it should reach a billion dollars at retail pretty soon—by 2022. [Sales today are estimated to be around $400m]. The brand is growing 12% year-to-date in the US in a flat make-up market, and it is strong in the UK, Thailand and Korea and we are opening travel retail. There are also a lot of categories we can develop, so I am very bullish on this.

How do you see digital impacting the business?First, digital is mobile. In the US, 83% of beauty buyers use their phone before or during the purchase in-store. Prestige brands are no longer involved in monologue marketing, but are in a dialogue marketing with users and influencers. Digital is not just e-commerce or m-commerce, but social media, data marketing and CRM. In the US, 95% of our media spend is in digital, and in make-up it is 100%. [With digital] you target exactly, you do CRM and you build your database. But data by itself is nothing; what you want is knowledge and action and consumer intimacy. [By exploiting data] you move from just a transaction to a long-term relationship with your consumer.

Why did you take a minority stake in online beauty retailer Violet Grey? First, we liked the team and we think they have the capacity to create content around beauty products that is very interesting. They are very good at telling stories and we liked the way that they curate assortment. n n n

Shiseido Americas president & ceo Marc Rey*

”Shiseido Americas president & ceo Marc Rey

Amazon is raising the bar for everyone. In New York, Amazon orders are delivered in two hours. So Amazon is defining the benchmark for Gen Z and millennials

“

*At the beginning of this month, Shiseido announced that Rey would also take on the role of chief growth officer from January 2019


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”Shiseido Americas president & ceo Marc Rey

Personalization is a fundamental [consumer] expectation, and it is a also a way to have a better knowledge and understanding of the consumer. Women want personalization, but they want it now, and that is what we need to crack

“


How do you see retail evolving?There is an evolution of retail. We grew up in an environment where retailers had the consumer information, and that is no longer the case. [Retailers] are going to adapt like everyone. Retailers are very active in digital. There are two ways to do it: Have a multi-brand view, or a wrong way focused on price and promotion, which is happening a lot and is a losing battle. The right way is to understand [the consumer] better and have a long-term relationship with her rather than a transactional one or promotional one.

You acquired AI specialist Giaran and MatchCo focused on personalization. Is there a risk in acquiring technology that could become obsolete? In technology there is always a risk of obsolescence. We are not going to always make acquisitions; sometimes we will do partnerships. But in the case of Giaran, we thought [an acquisition] was important, because we think AI-driven AR and VR is major. There are a lot of applications beyond just virtual try on. There is access to information and when I have this information I get into a relationship with the consumer that is not transactional and have consumer intimacy. This is a testament to the ambitions we have. It is a way to think about beauty differently. Our key competitors in a few years will be Amazon and Google.

What is your stance on selling on Amazon?Before even talking about whether we go on Amazon or not, one of the most important things [to realize] is that it is raising the bar for everyone. In New York, Amazon orders are delivered in two hours, and consumers in the US now expect to [receive online deliveries] the next day. So Amazon is defining the benchmark for Gen Z and millennials.Amazon is a force that we will have to deal with one way or another. For prestige

beauty, Amazon may want to adapt its model, as many brands today are reluctant to go there as they are not sure that the brand will be presented as it should be. This is an area Amazon needs to address. But there is a dilemma: You want to be where your consumers are looking for your brand—and they are certainly looking for it on Amazon—but you also want your codes of prestige to be respected. Everyone is looking at how to reconcile this. [...] We are in an industry where there is a product with a strong aspirational and emotional benefit, and Amazon needs to find a way to deliver that also.

Is that not against Amazon's DNA of offering consumers low prices?This is the tension. But if you lower pricing in prestige, they are no longer prestige products. So at some stage, one of the equations in the model will have to change so there is a fit. But Amazon's model is evolving and the company does 10,000 things a minute, so if it manages to find a way to respect the prestige codes there could be a way.

How do you see personalization, especially since the acquisition of MatchCo?We have an app [to create personalized foundation] for bareMinerals, and this will go to almost all of our brands. Personalization is a fundamental [consumer] expectation, and it is a also a way to have a better knowledge and understanding of the consumer. Women want personalization, but they want it now, and that is what we need to crack. This is complicated as it means either putting machines everywhere or delivering right away. Today we deliver two or three days later, but for some women it is too late, so we are trying to figure that out. n



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As tensions ease between South Korea and China and Chinese travelers return, beauty is benefiting

On the up

South Korea

After a period of difficulty following political tensions between South Korea and China over the THAAD missile program and China’s ban on group visas

to the country, which significantly dinted beauty sales, business appears to be looking up again for South Korea’s prestige beauty market.According to Euromonitor International, premium beauty and personal care in

South Korea saw slower growth last year than at any time in the past decade, impacted by the decline in Chinese tourists. “Manufacturers are experiencing limitations from their high reliance on duty-free,” the research firm said. But market players report that since March, tourist numbers have been picking

up again, boosting business. Local leader Amorepacific saw its domestic sales decline 1.6% in the first nine months of 2018, although its luxury division sales were up a much more significant 11.6% in the third quarter, boosted by sales increases in skincare and stronger business from travel retail, notably due to the return in Chinese tourists, the firm said. “The skincare category continues to grow in the South Korean prestige market, which is a positive for strong skincare players like us,” n n n

South Korea beauty sales* by category 2017Category 2017 sales*

$bn% change 2017/2016

Prestige skincare 3.40 +2.7

Prestige color cosmetics 1.08 +3.2Prestige fragrance 0.43 +9.9Prestige beauty & personal care**

5.53 +3.7

Total beauty & personal care**

12.56 +3.5

Source: Euromonitor International *Retail sales price **Totals include categories not listed

credit: istock


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n n n explains Amorepacific Group Strategy Unit senior vice president Changkyoo Lee, citing Sulwhasoo in particular as having seen good growth. LG Household & Healthcare, meanwhile, the market’s second-largest player, said its domestic business in the third quarter had been boosted by its luxury cosmetics brands, including Whoo and Su:m37.However, while the situation between Korea and China may have eased, and

the Chinese are returning, consumer confidence among Koreans remains low. This is largely due to a faltering job market, despite government efforts to boost the economy with an approximately 30% increase in minimum wages over the past two years (a move that has been criticized by many business owners).

Attracting the localsCosmetics imports, meanwhile, grew 3.6% in the first nine months of 2018, according to industry body Korea International Trade Association, following on from growth of 5.2% to $999.2m last year. Despite the downturn, Korean duty free and department stores remain lucrative for prestige brands. “There are certain international brands for which South Korea is now their biggest market, boosted by Chinese travelers,” says specialist consultancy Information & Inspiration general manager Florence Bernardin. She continues: “The Chinese don’t necessarily come to buy Korean brands, they come to buy Hourglass, Armani, Yves Saint Laurent—international brands that are cheaper than at home thanks to promotions, or skus that are not available in China.” Analysts note that demand for Japanese products or the J-wave especially among the Chinese has also had an impact on Korean products.However, with the decline in Chinese consumers last year, domestic groups

looked to make moves to better attract local consumers, especially millennials, according to market observers. Korean consumers’ pride in their country’s home-grown cosmetics is strong, and has often worked against international prestige brands, especially due to the broad array of quality mass-market products available on the market and a fast-paced innovation pipeline, making it hard for some players to keep up and making mass products more appealing, especially to younger consumers with lower purchasing power. Local consumers are increasingly concerned about product safety, meanwhile,

driving brands to minimize the number of ingredients in products, implement clearer labeling and focus on gentle formulas for sensitive skin. “Cica” products are proving particularly popular, according to observers. "Safety has become the biggest agenda in the South Korean beauty industry,” says Mintel senior beauty analyst Hwa Jun Lee. “Consumers’ concern about chemicals is growing, and the demand for safe products is huge. […] More consumers are pursuing safety over convenience.”

Retail changes & becoming 'Sephora-ready'The key changes impacting the beauty market in South Korea are happening at retail, which could potentially result in opportunities for international brands. The domestic market is moving away from single-brand stores and towards a multi-brand environment. "One-brand shops like Skinfood and Innisfree are struggling with traffic,” observes Mintel’s Lee. (Local player Skinfood, for n n n

”Information & Inspiration general manager Florence Bernardin

Everyone is anticipating Sephora’s entry. They want to be ready, so they are pre-empting all the possibilities. It’s a big change

“

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n n n example, recently filed for receivership). While mass-market health and beauty stores like Olive Young and Lotte’s LOHBs chain have been growing strongly for several years, recent incursions are making their mark on prestige, too.Boots, for example, entered South Korea last year via a franchise agreement

with department-store operator Shinsegae, and offers premium brands including Origins, Clinique, Clarins, MAC and Benefit, although it is unclear how successful the concept has been. Sources say Boots' flagship recently closed, although other stores remain in operation. Shinsegae also debuted its own prestige perfumery concept, Chicor, two

years ago, which offers a range of niche brands. New branches have been opening fast, with 16 outlets currently in operation, mainly within Shinsegae’s department stores or malls, with one standalone flagship in Seoul’s Gangnam neighborhood. Such moves are intended to counter local consumers’ shift away from department stores, which still remain lucrative for tourist traffic but less for local consumers. “The reason for all this change is [also] that everyone is anticipating Sephora’s entry,” says Bernardin. “They want to be ready, so they are pre-empting all the possibilities. It’s a big change.” The LVMH-owned chain is expected to enter South Korea next year.

Improving the shopping experienceOlive Young is also working on improving the shopping experience in its stores with interactive installations and lifestyle spaces, according to Bernardin, including a fountain area featuring French dermocosmetics brands, which are popular in South Korea and tie in with growing demand for products that are deemed to be safer for the skin. GS Retail, meanwhile, has rebranded its Watsons stores in the country under the Lalavla banner with a more millennial-focused positioning.As for Amorepacific, it too has upped its game with the new Aritaum Live

Gangnam store, which opened in September with new services and experiences and featuring third-party brands for the first time. The concept is expected to be rolled out further in the future. "Amorepacific is expanding experiential space for customers to build brand attraction and loyalty,” says Lee. Other initiatives from the firm include a pop-up for Hera called Jump Up, Seoulista! to introduce new product UV Mist Cushion, and featuring a trampoline zone.Such changes at retail are likely to open

up new opportunities for prestige brands in South Korea as consumers adapt to and adopt new store concepts. The return of Chinese consumers is also likely to be a boon to the market, suggesting that despite challenging times, the outlook for prestige beauty in the country is promising. n

”Mintel senior beauty analyst Hwa Jun Lee

Safety has become the biggest agenda in the South Korean beauty industry

“



s Local players Skinfood and Sulwhasoo are seeing contrasting fortunes in South Korea


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Despite what has been a difficult few years for the Russian beauty market, characterized by economic uncertainty and a fluctuating currency, companies

taking part in the Intercharm Moscow trade show this fall were positive overall about the sector. Figures from market-research company Euromonitor International show that the total beauty and personal-care market in Russia rose 3.6% last year to $9.64bn. Reed Exhibitions, which organizes the Intercharm Moscow show, points out that Russia accounts for 4% of the global beauty market and is the fourth-largest European cosmetics market after Germany, France and the UK. By category, skincare saw the strongest growth last year, with sales up 5.9% to

$2.02bn, according to Euromonitor. Intelligence firm Global Data expects Russia’s skincare category to grow at a CAGR of 3.9% from 2017-2022, driven by consumers’ demand for anti-aging products. Face masks and micellar products are gaining ground thanks to the growing popularity of Asian beauty trends, while superfoods such as probiotics, green tea, algae, moringa and kale are increasingly being used to differentiate products.

Niche fragrance growsAnother key category, fragrance is being boosted by demand for niche scents. “The niche fragrance market is growing. Our company started 10 years ago, [distributing] only niche brands and fragrances. And we saw that the public was not ready yet. But now this has changed and a lot of connoisseurs come to our boutique and [to our stand at the show], and they know the notes of the fragrances and specific details—[this is something you didn't see] even just five years ago,” comments niche fragrance distributor Exility Group brand manager Alla Sazanova. As for make-up, consumers are purchasing more.

"If four or five years ago the average consumer used three products—lipstick, mascara and maybe a foundation—on a daily basis, now she uses a minimum of six, including special primers and sculpting products,” explains natural personal-care brand Botavikos business development manager Karina Tysyachnaya. Italian make-up and skincare contract manufacturer B. Kolor's Francesco Savoca agrees: “Face and lips are n n n

BW Confidential reports on the Russian beauty market and the trends seen at the 25th edition of the Intercharm trade show in Moscow, which took place on October 24-27

Russian charms

Intercharm Moscow

Intercharm Moscow Took place: October 24-27, 2018Exhibitors: 1,117 (-4.9% vs 2017), from 38 countries Visitors: 71,686 (+4.2% vs 2017)

Russia beauty and personal-care sales* by category 2017Category Sales*

2017 $bn% change 2017/2016

Projected sales 2018 $bn

Skincare 2.02 +5.9 2.05

Fragrance 1.45 +1.7 1.44

Men’s grooming 1.45 +2.0 1.43Color cosmetics 1.30 +3.1 1.29Premium beauty & personal care**

1.70 +2.6 1.68

Mass beauty & personal care**

6.22 +4.0 6.25

Total beauty & personal care**

9.64 +3.6 9.65

Source: Euromonitor International *Retail sales price **Totals include categories not listed

Intercharm Moscow



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n n n growing and eyes continue to be an important category. In spite of prices [being a challenge], Russian consumers are still interested in variations in terms of formula. They are very curious and want to learn more about the products. It is no longer as simple as, ‘this is a foundation, this is a lipstick." However, business is tougher in nails, a category where sales are said to have dropped dramatically in recent years. Other key talking points at this year’s show were personalization, natural and organic

beauty and e-commerce, which is still in its infancy in the Russian market.

Anniversary editionThis year's show marked the 25th anniversary of Intercharm Moscow. While exhibitor numbers stood at 1,117, down 4.9% compared to 2017, visitors increased 4.2% to 71,686. New events this year included the Beauty Franchise Conference, where experts discussed the beauty franchise market and its development, and the Building a Beauty Brand business forum, devoted to media strategies. The show repeated its La Niche area for niche fragrances—a growing category in

Russia. Further sections included Green Valley, for natural and organic cosmetics, Farma + Beauty, for raw materials and ingredients, and IntercharmPack, dedicated to packaging and labeling. On October 24-25, organizers also hosted Intercharm’s Retail Connect Summit for

Supply and Retail featuring talks with experts from companies including market-research firm Global Data, Carlin Creative Trend Bureau and Russian retailer L’Etoile, while the IntercharmBeauty Talks on the same dates saw magazine editors, celebrities and bloggers discuss topics such as trends and healthy lifestyle.

Trends from the show• As in other markets, personalization is a strong trend.

From premium skincare brands that offer skin analysis and customized formulations to mass-market brands that add simple customization accessories to their products, Russian consumers have come to expect this type of offer, experts say.

One example is cruelty-free make-up brand Soda (pictured), distributed by Russian cosmetics and perfumery chain L’Etoile,

which attracts millennials by including stickers with its products to be added to the primary packaging.

• The show was popular with K-Beauty brands and local players inspired by Korean brands in terms of design and products. Popular booths included the colorful face-mask displays by Korean brand Kocostar and Russian player 7 Days, as well as the minimalist aesthetic of Korean skincare brand Pestlo (pictured). When it comes to mass-market appeal, Korean products are “affordable, good quality and fun”, explained Varvara Kulaeva, head of Perfumery Division, Private Labels Department at retailer Alkor & Co, which owns L'Etoile. n n n

Intercharm Moscow



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• Regional beauty regimens are driving the use of new ingredients, such as snail essence, yogurt, argan oil, jojoba oil, black pine and wild rose in Russia, according to Intercharm organizers. When it comes to skincare, brands should focus on specific ingredients in their marketing, said Google key account manager Julija Icikzonaite, speaking at the Retail Connect conference. She explained that consumers in Russia, as elsewhere, are now not just reading labels more carefully but are also searching online for products that promise benefits beyond the generic ‘anti-aging’ claim.

• While still in its infancy in Russia, the natural and organic trend is on the rise. The lack of local regulation for organic claims was a hot topic at the show, but players agree that consumers are increasingly looking to know what ingredients go into their cosmetics products. “Consumers are starting to notice the difference between organic and non-organic,” said Carlin Creative Trend Bureau’s Anastasia Kotova. Varvara Kulaeva, head of Perfumery Division, Private Labels Department at Russian retailer Alkor & Co (L'Etoile), agreed: “Some customers are looking for vegan, eco, organic or natural products—it is not such a wide audience, but it is growing every day.”

• Russia is seeing rising interest in men’s beauty. Figures from a RosIndex survey by Ipsos show that in the first half of 2018, 46% of Russian customers of beauty salons, hairdressers and manicure studios in cities of over 100,000 people were men. A RosIndex survey also found that men made up 29% of Russians who agreed with the statement, “I spend a lot of money on cosmetics and skincare products”. At Intercharm’s Retail Connect conference, Ipsos ComCon director of client relationships Irina Vasenkova noted that 12% of Russian men use skincare products and that the higher the income, the more male consumers care about their skin.

• Russian consumers in bigger cities are increasingly following style and color trends from the West. For example, while known for expressive, high-glamour features, urban consumers are starting to tone down their make-up look. “The glamorous woman is still very trendy in Russia—I think it’s the heart of the beauty market here. But glamour is becoming less flashy—she’s still quite expressive, but tries to keep a natural element, for example with big lashes but natural lips. However, outside of the big cities, the full-on glamour look is still popular,” noted Carlin’s Kotova.

• Made popular by niche fragrance houses, unisex fragrances are now gaining popularity in Russia’s mass market. “The line between male and female [fragrances] is disappearing,” said Alkor & Co’s Kulaeva, explaining that for example, ingredients such as oud or spices that used to be considered masculine are now generating interest among female consumers.

• Russian consumers may traditionally have leaned towards opulent design, but in niche fragrance, minimalistic packaging is key. “The simpler it looks, the more expensive it is perceived as being,” explained Alkor & Co’s Kulaeva. “We experimented with some minimalistic packaging, and it worked very well.” n

n n n Trends from the show


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California-based Beautycounter's first brick-and-mortar store offers fans of the digital-native cosmetics brand the opportunity to discover and try products in real life, but it

also aims to be a platform for the brand to take its clean-beauty activism to the streets and educate consumers about its cause. Founded by Gregg Renfrew in 2011 and launched in 2013, Beautycounter advocates

cosmetic reform. Its goal is to strengthen laws it says remain largely unchanged since 1938 and which ban only 30 harmful ingredients from being used in cosmetics sold in the US. The brand has trademarked its own The Never List of 1,500 questionable or harmful ingredients that it has pledged never to use in its cosmetics. Beautycounter develops and sells about 150 skus in skincare, color cosmetics, anti-aging, baby and personal care.The new 540ft2 (50m2) store located in New York stocks the brand's full skincare offer

as well as bestsellers including its Dew Skin Tinted Moisturizer and Sheer Lipstick. It offers different ways for customers to learn about or campaign for clean beauty. In-store iPads display facts on the clean beauty industry as well as information about Beautycounter products, providing reviews and details on new launches. An installation set up like a washroom shows customers how they can replace their regular personal-care products with clean options from brands other than Beautycounter. Customers are given ‘clean maps’ to take away, with suggestions for similar businesses near the store, as well as wallet-sized cards with information on the 30 most harmful cosmetics ingredients. At an in-store phone booth bearing a sign ‘It’s your call’, customers will find a branded,

‘blue pages’ phone book with the names and numbers of every member of Congress. Here, they are encouraged to call the politician of their choice and read a provided script to ask for reform on cosmetics safety laws.There is also a space set up as an old-fashioned beauty store, where consumers can have

a seat at the counter to test products and talk among themselves or with BAs. In addition to its new brick-and-mortar store, Beautycounter is sold through its own

website, at seasonal pop-up stores in the US and through about 35,000 independent consultants. It has also collaborated with retailers including Target, J.Crew, The Strategist and goop. n



More than a place to try and buy product, Beautycounter’s first brick-and-mortar store aims to be a hub for community engagement and clean-beauty activism

Squeaky clean

Beautycounter l Location: 51 Prince Street,

New York City, US l Size: 540ft2 (50m2)

l Opened: November l Special features: Vintage-look beauty counter for product

testing and conversation; ‘washroom’ with clean beauty

suggestions from other brands; phone booth to call politicians

s The store stocks the brand’s full skincare offer, and provides product information on iPads (left). The design mixes Beautycounter’s California heritage with vintage-New York references (right)

s An in-store phone booth encourages customers to call Congress members and ask for reform on cosmetics ingredients (left). At the ‘washroom’ installation (right), customers can discover clean personal-care products from other brands

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