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Changing Consumer Behavior Forces Shift in Global Beauty Retail Channels
Posted: December 16, 2009
Kline study reveals direct sales has emerged as the fastest-growing retail channel in the world for beauty products, posting an 8.6% increase.
As developing nations continue to embrace modern retail formats, beauty marketers in the Western world are working overtime to devise market-specific strategies to keep up with changing consumer behavior. According to data from Beauty Retailing Global Series, the latest research conducted by Kline & Company, the nuances of each individual market demand that beauty brands evolve alongside consumers to compete on the worldwide stage.
“The takeaway message is that there is no one-size-fits-all strategy for success,” says Carrie Mellage, director of consumer products research for Kline. “The unique features of each country require marketers to think globally but act locally to capitalize on specific opportunities. As an example, the rural population in Brazil is a huge potential market that depends heavily on direct person-to-person sales, while the more sophisticated and fickle shoppers in the mature beauty markets must be lured with exclusive offers, steep discounts, cool iPhone apps and social media connections.”
In the U.S., the weak economy has forced department store share of the total market down another two points versus 2003 levels. The decline has prompted both marketers and retailers to actively engage customers with purchase incentives, loyalty programs and even direct sales. Brands such as Lancôme, Estée Lauder and Clarins have stepped up marketing directly to customers with online enticements such as bonus gifts and free shipping with purchase.
As a result of stellar growth in developing countries, direct sales has actually emerged as the fastest-growing retail channel in the world for beauty products, posting a robust 8.6% increase in sales—nearly double that of the overall market. Driven partly by the earnings potential for person-to-person sales in light of a difficult job market, Internet sales have also contributed to channel growth, more than doubling over the past five years, as consumers have become increasingly comfortable making online purchases.