C&T market experiences global retail shift

Market research company Kline has found that the C&T sector is undergoing a significant shift in the way consumers are shopping for their beauty products.

The global cosmetics and toiletries market posted a 3.8% growth in 2008, despite the global recession but interestingly retail channels are posting declines in one market and experiencing growth in another.

The phenomena is being spearheaded by the emerging markets of Brazil, Russia, India and China, which continue to see double digit gains, according to Kline’s Beauty Retailing 2008 – Global Series report.

Direct marketing is now seen as the fasted growing retail channel in the work, posting an 8.6% growth in the period 2003 – 2008, according to Kline. Chine saw the largest sales growth, up 27% in the last five years, while Russia and Brazil saw increases of almost 20%. As a result brands including Avon and Oriflame have launched their premium skin care products into these regions.

However in Japan, where direct marketing is more established, the channel is losing market share to other outlets such as department stores, speciality retailers and drug stores.

In the mass channel, the BRIC countries once again helped shore up sales with a collective growth of 14.1%. Russia and India posted a 25% increase in sales, compared to a disappointing 2.5% increase for the US mass market.

Kline says the double digit growth is due to mass merchandisers fine-tuning their product offerings and devoting more shelf-space to natural, luxury and men’s products, particularly in India in a bit to appeal to consumers.

Department stores have seen the most significant dichotomy, with the US market suffering sharp losses as shifting consumer patterns see traffic moved from the traditional mall set up to standalone stores and speciality retailers. India and China however have embraced the department store concept with sales up 21.3% in India and 19% in China. Kline says more than 5,000 department store doors have opened in China alone.

Looking forward, Kline predicts China will continue to stand out as the market leader for growth in C&T products, while Brazil will provide new opportunities for marketers despite the absence of an established department store channel. Russia will continue to benefit from modern retail establishments such as direct sales and mass channels, while India’s general stores channel, known as kiranas still represent a 78% share of the retail market, despite competition from department stores and mass channels.