Clarins opening beauty institute in Poland reflects market growth

Related tags Cosmetics Poland

As Clarins prepares to open a new beauty institute in Poland next
Thursday, Euromonitor has published a report forecasting growth for
the cosmetics and toiletries industry following the country's
accession to the European Union last month, writes Louise

The Warsaw Business Journal has reported a nearly 10 per cent increase in drugs and cosmetics sales after poor performance in recent months. It published official statistics for April that showed the retail sector had achieved more than 21 per cent month-on-month growth, or 56 per cent year-on-year.

The figures reflected strong sales in food and beverages, furniture and white goods, and particularly for auto sales as Germans consumers crossed the border to take advantage of price differences.

The cosmetics sector had fared less well according to the paper: "Drugs and cosmetics sales rose by 9.3 per cent after a 2.4 per cent increase in March and a 6.6 per cent February year-on-year decline. Monthly sales of drugs and cosmetics fell by 1.1 per cent."

Poland's cosmetics and toiletries market improves

These figures reflect a slight recovery from the stagnant market conditions of 2003, when the constant value growth rate was estimated at zero, as noted in Euromonitor's report entitled Cosmetics and Toiletries in Poland​. Euromonitor credited the poor performance to a recession and the resulting low disposable income among Polish consumers.

But while cosmetics and toiletries may not be experiencing the high levels of growth of other sectors, there seemed to be room for optimism as Euromonitor reported a noticeable increasing demand for cheaper cosmetics and toiletries and lowering of the average market price by manufacturers to generate sales.

There was further good news for the cosmetics industry in the report, which predicted that a "growing awareness of the importance of personal hygiene as well as higher disposable income among Polish consumers will create a shift in popularity of mass products towards mid-priced and premium products."

Poland's accession to the EU on 1 May 2004, the report claimed, would: "push manufacturers to produce a wider variety of products and come up with increasingly effective marketing campaigns".

Particular growth areas identified by the market analysts include depilatories, oral hygiene and sun care, because of their undeveloped character.

Euromonitor had noted a shift of shares from drugstores and specialist shops to super- and hypermarkets due to the increasing popularity of modern retail formats offering a wide variety of goods at cheaper prices.

Direct sellers had also considerably improved their performance, mainly due to a strong position in colour cosmetics and skin care. Cosmetics sales through department stores, outdoor markets and "others" experienced a falling tendency.

International companies seek to extend market share

One company hoping to reverse that trend and take advantage of the improving economic climate is French cosmetics company Clarins​. While small business owners in Poland have been reported elsewhere to be concerned about increased competition from the multinationals post-accession, companies looking to enter the market are presenting opportunities as they seek local partners.

Clarins is one example of this. Isabelle Lemonnier, who is responsible for the French company's financial communications said: "Poland is like the other Eastern European countries; the market is growing and there is lots of potential."

The company's international division vice president Isabelle Herbretaux explained to CosmeticsDesign that although the company has 20 subsidiaries around the world, it currently has no plans to establish one in Poland, preferring instead to maintain an existing relationship with a local distributor.

"We are very happy with the agent,"​ said Herbretaux. "In some countries we have subsidiaries, but Poland is one of those countries where there is a strong tradition of women going to beauty salons and so establishing a beauty institute was the perfect way to relaunch in Poland."

Asked to comment on the size of the potential market or what level of market share Clarins hoped to achieve in Poland, Herbretaux said that they are working with another company to try and compile some figures but no statistics were currently available.

"It is very difficult,"​ she pointed out, "because you can get figures from Asian department stores, for example, but even in some countries with mature markets, like those of Scandinavia, those figures aren't available, so you have to develop a good relationship with your best doors, and you can extrapolate the figures from them to give you something close to reality."

Collating figures is a task made harder by Clarins seeking to cultivate an air of exclusivity for their beauty institutes, as demonstrated by the fact there are currently only 14 such institutes worldwide, the Polish facility will be the fifteenth.

Clarins will retain control of the design concept and the marketing policy for the new beauty institute. Working closely with Clarins' Polish agent to establish the facility is Anna Lagodzinska, an economist by training, who returned to her native Poland in 1997 with her husband after living in Britain and Luxembourg for a number of years.

After learning that Clarins wanted to open one of its beauty institutes in Poland, Lagodzinska secured the partnership, thanks in part to her knowledge of Western business practices and her Polish roots.

Clarins new beauty institute will open in Poland on Thursday, 10 June 2004.

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