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Review of Russian Beauty Market

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The Russian beauty market decreased by 4% to 363 billion rubles in May 2017—June 2018, compared to the same period in 2016-2017, says the study by GfK Russia presented at the Think with Google Beauty conference. Analysts also note a fall in the average spend in this category by almost 5%. The market is now saturated, and buyers look for personal offers of cosmetics and skin care more and more often while they are not sufficient among beauty players yet.

Source: GfK Russia

According to GfK Russia, sales of beauty goods in kind basically remain at the same level—from May 2017 till June 2018, the growth was only 0.1%.

The largest categories of beauty and personal care goods are still hair care and perfumery (23% and 22% of the Russian beauty market respectively). The most dynamic ones are perfumery and skin care.

Source: GfK Russia

Major Cosmetics Sales Channels

The main scope falls on chain stores / drogerie (shops nearby home where non-food FMCG are sold), equal to 34%. 26% other purchases are made in hypermarkets, discounters, and supermarkets; by the way, sales in supermarkets have grown by 8% during the year.

Source: GfK Russia

In 2018, the best progress in both monetary and nominal terms was shown by online sales: +10% in rubles and +30% in kind. In online shops, purchases are less frequent than in chain stores and drugstores, but every purchase amount is 1.5 more.

Source: GfK Russia

Digitalization changed customer approach to the choice of personal care goods. 76% users make online beauty queries at least once a month, according to the Google study. When choosing a product, 28% follow recommendation on Instagram and 56% on Youtube. Beauty bloggers play an important role here.

What is more, online buyers are more eager to purchase goods that are promoted actively. According to GfK, online sales have grown by one quarter thanks to promo. That is why companies need to work on loyalty, contacting beauty enthusiasts who are able to actuate the channel.

Source: GfK Russia

Besides, one more growth driver is ‘shifting’ buyers over from online chain stores, as well as combination of channels.

‘People easily switch to online if they already tried something offline just because chain perfumery stores and drogerie give an opportunity to use, taste something etc.’, says Aleksandra Kryuchko from GfK.

In May 2017-June 2018, compared to the same period of previous years, a significant growth in online sales (by value) was shown by such categories of beauty goods as hair care, perfumery, and color cosmetics.

Source: GfK Russia

Consumer Demand and Its Development Trends

Just like in the global market, millennials model customer behavior. Russian audience aged 18-34 does not differ much from all other consumers. According to the study by Mediascope TGI / Marketing Index in 2018, male audience of beauty industry is growing, too, as 97% men aged 16 and older have used a cosmetic product or a perfume during 6 last months. At that, the most dynamic shares of male use of cosmetics are facial care (+4 points), body care (+3 points), and hair care (+3 points), as well as hairstyle aids (+2 points) and hair dye (+2 points). For women, shares of hair dye (+3 points), styling aids (+1.5 points), and facial care (+1 points).

As for factors of color cosmetics choice, for a younger audience it is important for a brand to be familiar: they cater to ads and friends’ reviews. Women aged 45+ learn ingredients and trust the country of manufacture (according to Ipsos Comcon, RosIndex, 2018).

According to the results of 2018 cosmetic market analysis in Russia, here are the most apparent customer behavior trends:

  • Change of heart. In spite of seeming emotional purchases, Russian women keep staying rational. Pragmatism persists in the principle of the classic approach—everyone needs the best value for money;
  • Buying preferences indicate practicality more and more. The economic crisis that has been ascendant since 2009 started providing for the choice in favor of local products due to their better quality and affordability;
  • Increase in demand for universal products as a result of the professional cosmetic market analysis. Products having a variety of benefits become popular more and more often;
  • A visible increase in demand for facial care. The consumption growth, starting from 2010, has become sort of exponential.

Sales kings in the Russian market are still Western brands L'Oreal, LVMH, and Procter & Gamble. Besides, Estee Lauder Companies, COTY, Puig Beauty & Fashion Group, Shiseido, Chanel keep a high profile. However, Avon, Oriflame, and Mary Kay lose their positions in the market, which may be in no small measure caused by reduction of direct sales as a distribution channel. Leaders among local producers are Nouvelle Etoile and Faberlic that are way below Western brands.

Do you produce cosmetics? Are you going to enter the fast-moving Russian market? Our experts will help you do market research, decide on brand positioning, and elaborate a strategy to win hearts of Russian buyers.

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About the Author

Digital marketing manager, editor-in-chief of the RMAA Group Blog

Author Yulia Vasilyeva
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